In a column published in the “Wall Street Journal” on Sunday, the Secretary of the Treasury of the United States calls on Congress to raise the debt ceiling as soon as possible. But beyond this urgency, Déclic asks this question: can the United States continue to widen, at this rate, the abyss of their debt?
A proportionately larger debt than that of Belgium
The figure is impressive: the public debt of the United States amounts to 28.529 billion dollars, or the equivalent of 125% of its GDP.
If we make the same calculation for Belgium, our country has a proportionately lower debt since it amounts “only” to 113% of the GDP, which is however already very high.
What is most striking is the speed at which the US debt has grown. Practically multiplied by 7 since the beginning of the 90s and, with the Covid, the movement has further accelerated in recent years. The curve takes on the appearance of exponential.
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A debt that keeps breaking ceilings
Since 1960, the various American governments and presidents have had to negotiate, with Congress, suspensions or increases in the debt ceiling more than 80 times.
This is what is playing out once again, right now, in Washington. If Joe Biden fails to secure a majority to raise the debt ceiling, the United States could run out of new money as early as next October. We are therefore witnessing a great political bargaining in which the president hopes to obtain enough elbow room to be able to ensure the financing of his various stimulus plans.
Can the United States go into debt like this indefinitely?
“The United States can go into debt as long as it finds creditors explains Philippe Ledent, economist at ING, and right now they have no trouble finding them because US Treasuries are considered one of the safest investments in the world. “. “This is the exorbitant advantage of the Dollar, adds Xavier Dupret, economist at the Joseph Jacquemotte Foundation, as the dollar is the world reference currency, there are more creditor at the gate than there are bonds to buy “.
But doesn’t that one day risk collapsing like a house of cards? “For the moment, the system holds explains Philippe Ledent, the problem could come if one day the dollar lost this status of reference currency. What could change the situation is geopolitics! But today, the country that most contests the economic supremacy of the United States is China. However, China is also one of the main creditors of the United States … and therefore has no real interest in a loss of value of the American debt “.
WHAT if one day the United States does not find any more creditors?
For Xavier Dupret, we must not forget either that if the United States were one day to lose this great facility to borrow, they would still have the possibility of activating fiscal levers. “Today the tax revenues of the United States represent 24.27% of its GDP, in Belgium it is 42.92%. The USA therefore have possible margins in this area that Belgium does not “.
Click, another way to tackle the news. Every evening from 5 p.m. to 7 p.m. on La Première and at 7 p.m. on La Trois.
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