CBO warns of catastrophic debt default this summer
The U.S. Congressional Budget Office released a report on the 15th that if Congress does not authorize the federal government to raise the debt ceiling in time, the U.S. may face a catastrophic debt default from July to September this year.
or burst debt crisis
The debt ceiling refers to the maximum amount of debt set by the U.S. Congress for the federal government to meet its incurred payment obligations. Hitting this “red line” means the U.S. Treasury Department’s borrowing authority has been exhausted.
According to Reuters, citing the Congressional Budget Office report, if the debt ceiling is not raised or suspended before the Treasury Department exhausts special measures, the federal government will not be able to fully meet its obligations, resulting in “partial delays in payment, debt defaults, or both.”
The Congressional Budget Office provides “early warning” for the federal government to avoid costly political and economic crises. It is estimated that July to September will be the time for “thunderstorms”. A default could be triggered before July.
According to the “Washington Post” report, members of Congress may only have 5 months to raise the debt ceiling or set a time limit to suspend the debt ceiling from taking effect.
According to a poll jointly conducted by Reuters and Ipsos Group from 6 to 13 this month, three-quarters of American adults who participated in the survey believe that Congress must reach an agreement on the debt ceiling, otherwise it will increase their debt. family financial burden.
Bipartisan bickering continues
The outstanding debt of the U.S. federal government has reached the upper limit of 31.4 trillion US dollars on January 19, forcing the Treasury Department to take special measures to start the “suspended bond issuance period” on the same day. Fund injects new capital.
The Treasury Department has set a June 5 deadline to avoid a default on the federal government’s debt. That deadline differs from estimates made by the Congressional Budget Office, but the final decision rests with the Treasury Department, according to NBC News.
According to Reuters, entering 2023, there will not be a day when members of Congress will not debate the debt ceiling issue. Democrats want a quick, no-strings-attached increase in the debt ceiling, while Republicans want significant cuts in government spending before talking about the ceiling. The Democratic Party accused the Republican Party of intentionally “hijacking” the economy and wanting to use Americans’ social security and medical insurance funds, but the Republican Party denied it.
According to the NBC report, the Democratic Party also pointed out that the Republican Party could not come up with a specific plan to cut spending. Senate Minority Leader Mitch McConnell “throws the blame” on his Republican colleague, House Speaker Kevin McCarthy, saying that the latter has an obligation to propose a debt ceiling bill and push it through.
debt cannot be sustained
Although the two parties are constantly torn apart, in the eyes of the American media, the high debt of the federal government has something to do with both parties.
The former Republican President Donald Trump advocated tax cuts during his tenure, and the federal government’s debt soared by trillions of dollars. However, Republicans blamed the government’s inability to keep balance of payments as a result of the anti-epidemic aid issued by Democratic current President Joseph Biden. However, the Biden administration has indeed yet to announce a budget aimed at reducing the fiscal deficit for the next 10 years. Moreover, lawmakers from both parties have worked together to legislate additional veteran benefits and military spending, which will also drive up debt.
Total debt is also affected by persistently high inflation and rising interest rates.
On the 15th, the Congressional Budget Office also released the US Ten-Year Budget and Economic Outlook Report. Philip Swagol, director of the office, said at the report conference on the afternoon of the 15th that “in the long run, our estimates show that fiscal policy reform is imperative” and that large and growing debt will have “adverse consequences.” . It is estimated that the fiscal deficit of the US federal government this year may reach 1.4 trillion US dollars, and by 2033, the proportion of the federal government’s public debt to GDP may rise from 98% this year to 118%. (according to Xinhua News Agency)
