(Washington) Finding an agreement on debt ceiling in the US Congress and preventing the United States from defaulting will have serious consequences not only on the American economy, but also on the world.
Debt ceiling is the amount of debt from which the country no longer financially issues new loans, which prevents it from honoring its payments.
This, in contrast to the “shutdown”, is a paralysis of the Federal State Services that can occur when Congress fails to agree on a budget before September 30th.
This year there are two subjects at once. To prevent a “shutdown”, the House of Representatives will adopt “a law to help the government financially until December” this week, Democratic House President Nancy Pelosi said.
The bill plans to lift the debt limit “until December 2022”, she said.
The power to raise this ceiling rests solely with Congress and with the text announced by Mr. Monday.To me Pelosi hopes Democrats will give themselves time, then rally the support of Republicans.
They are fiercely opposed to the $ 3.5 trillion social spending that Joe Biden wants. Democrats are also considering adopting a policy that would allow them to adopt these measures and do without the Republican vote.
They will have the opportunity to include a credit limit in this device called “Reconciliation”.
They came out against the September 30 deadline as negotiations stalled. Because there are differences of opinion even among Democrats.
“Democrats control the entire government. They think they can fix the debt limit on their own,” Senate Republican leader Mitch McConnell said on Twitter.
He alleges that Democrats want to get the votes of both parties to collectively approve the “historic debt”.
“The country must never fail. The debt limit must be raised, but it depends on who the American people choose,” he told the political news site PunchBowl News last week.
The Biden administration, including the Trump administration, is still reminded of the debt limit for already incurred expenses, which has not yet been approved.
Democrats and Republicans “have a responsibility to pay off the debt we have already made. This will always be done with the participation of both parties, “said Chuck Schumer, a Democratic majority leader in the Senate.
“This is not a new partisan struggle: it is to prevent a crisis that will destroy our country’s progress in recovering from the COVID-19 crisis,” he said.
“Historic financial crisis”
The Biden administration on Monday warned of the risk of a “historic financial crisis” because the United States has not been able to honor its financial commitments since mid-October.
Rising interest rates, low-income soldiers and retirees, another recession and millions of job losses for the United States: Treasury Secretary Janet Yellen captures an apocalyptic focus in an editorial published in the Wall Street Journal.
From 1 the credit limit came into force againIs August, $ 28.4 trillion – only $ 5 billion in the mid-1990s. Thanks to the agreement between former President Donald Trump and elected Democrats in Congress, it was terminated in August 2019.
The subject is a chestnut tree in American political life: since the 1960s, this ceiling has been raised or suspended 80 times. In the four years since Donald Trump ordered it, three suspensions have been voted on.
Failure to raise the debt limit could have “serious consequences unpredictable for experts,” a responsible federal budget committee said in a July 28 release.
The United States has never defaulted, but in 2011, under the Obama administration, the Standard & Poor’s rating agency withdrew an “AAA” rating from American debt due to political stalemate, causing unrest in the markets.