Analyst says flawed debt cap plan to tilt U.S. economy further into recession

DOHA, May 5 (Xinhua) -- The U.S. House of Representatives narrowly passed a Republican-proposed plan to tie spending cuts to raise the debt ceiling, while enactment of such a plan would ramp up the likelihood of a recession, according to a Moody analyst.

Speaking to a senate committee on Thursday, Mark Zandi, chief economist of Moody's Analytics, placed next year's U.S. GDP growth at 1.61 percent if the Republican plan were enacted, which would also lead to 790,000 fewer jobs, Qatar-based broadcaster Al Jazeera reported.

Republicans are urging the Biden administration to agree to cut spending on the condition of raising the 31.4 trillion debt ceiling. But Democrats insist on a relaxed cap without conditions.

Making no change to the debt-limit plan would sacrifice the growth, but keeping an unadjusted debt ceiling would make the country more exposed to a "catastrophic" default, said Zandi, pointing to a real dilemma behind the bipartisan standoff over the Republican proposal.

"We need to end this drama as quickly as possible, If we don't we'll go into a recession and our fiscal problems will be made even worse," Zandi was quoted by Al Jazeera as saying.