US President Joe Biden wants to use all his might to prevent his government from defaulting on payments. “I will not allow anyone to use full confidence in the creditworthiness of the United States as a bargaining chip,” Biden said Thursday in a speech in Springfield, Virginia. “We as the United States of America are paying our debts,” he said.
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the essentials in brief
- The background is a political dispute between Biden’s Democrats and the Republicans over raising the debt ceiling in the USA, which could also plunge the global economy into a crisis.
The applicable debt ceiling was reached last week. The US can no longer borrow to pay its bills. Although the USA is not yet insolvent, it is only a matter of time if there is no political agreement between the camps. A default by the world’s largest economy could in turn trigger a global financial crisis and an economic downturn.
Biden warned that the mere idea of such scenarios was incomprehensible. He said he would not engage in reckless threats that would hold the economy hostage and weaken the country internationally. “I won’t allow that.”
In the USA, Congress sets a debt ceiling at irregular intervals and determines how much money the state can borrow. With their newly won majority in the House of Representatives, the Republicans are now threatening to only raise the debt ceiling under certain conditions – for example in return for cuts in the social sector. The White House, on the other hand, warns against political tactics on this economically momentous issue.
