• Fri. Sep 24th, 2021

World Observer

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The Debt Ceiling And A Government Shutdown Haunt Congreso de EEUU

BySam Brad

Sep 14, 2021

The US Congress will have to raise the debt limit in mid-October, although the Treasury Department may be able to operate under the current limit until early November if the deficit is lower than expected. However, the quarrels in the Capitol sound the alarms when comparing the current situation with that experienced in 2011, when the reaction in extremis of the legislators culminated with the reduction of the sovereign rating of the country by Standard & Poor’s.

Today, Democratic leaders in the House and Senate can take two procedural routes to avoid potential default. Legislators would not need Republican support if they used the budget reconciliation process, but they would face other procedural and political drawbacks. That is why including the suspension of the debt limit in the next spending bill seems the most likely option, but this could not be successful and culminate in a government shutdown.

Avoid a default
Most likely, Democratic leaders will combine the suspension of debt limits with an interim spending bill (an “ongoing resolution”) that extends spending authority beyond the end of the fiscal year in addition to providing funding for disaster relief and resettlement of Afghan refugees.

At the moment, the vote on that bill seems likely for the week of September 20, although it could be delayed. Although it seems likely that the Treasury Department will continue to write down maturing Treasuries and make coupon payments, if Congress does not raise the debt ceiling on time, the Treasury would have to stop more than 40% of the debt. expected payments, including some payments to US households.

Beyond the direct impact, the debt cap could also affect the medium-term prospects for the spending plans of the Biden Administration and more progressive Democrats. Although there is not necessarily a direct relationship between the debt cap and the $ 3.5 trillion tax package to be financed with tax increases, the more these issues become tangled, the more pressure there may be from more moderate Democrats to reduce the size of the tax package.

Expense expectations will also influence prices on this side of the Atlantic. Data released Tuesday by the Bureau of Labor Statistics indicated that core CPI inflation, which neglects food and energy prices, fell slightly to 4% from 4.3% at its rate. y-o-y in August. Headline inflation fell to 5.3%, from 5.4%.

Sam Brad

The Great Writer and The Passionate Poet As Well, He Graduated from University Of Florida in Journalism and Brad have around 12 years of experience in news and media section.

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