Democrats and Republicans are fighting to raise the US public debt ceiling, a necessary legislative move so that the world’s largest economy can continue to pay its bills, the costs of the state apparatus and its creditors. Donald Trump believed that a default was still likely to be avoided, predicting that the Democrats would eventually “give up”, notes AFP.
However, his Democratic successor, Joe Biden, has ruled out talks on budget cuts for now, accusing Republicans in Congress of holding the economy “hostage”. Without a vote in Congress, the United States could be in default as early as June 1 of this year. This situation, according to the White House, will be disastrous for the country’s employment and economic growth, and also destabilizes world finances.
On Wednesday, Biden threatened “problems for the whole world” in the event of a US default. He explained that such an option will come if Congress fails to agree on raising the national debt ceiling. The White House is calling on Congress to raise the public debt ceiling by $31.4 trillion. Biden said right now you can’t risk sliding into a recession, millions of jobs, America’s status in the world. The standoff over the US debt ceiling is an example of a dysfunction in Washington that could spill over to global financial markets, Bloomberg notes.
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