26 Jan Debt Ceiling State of Play
Posted at 20:15h
in Monthly Outlooks
| Politicians, pundits, and the news media are sounding alarms because Washington hit its borrowing limit on January 19th. The Treasury Department is taking extraordinary measures to ensure the United States does not default on its debt, but this will only buy the Federal government a few months before Congressional action is needed. Treasury Secretary Yellen has estimated these extraordinary measures will prevent a default until June 5th, seemingly giving Congress five months to act. Although Yellen stated that this forecast is “subject to considerable uncertainty,” and called for urgency. Historically, raising the debt ceiling is a frequent, routine, and bipartisan procedure (without conditions), but as of late, it has evolved into a process with risky political maneuvering and complex economic calculations. What started as a procedural vote has become a vigorous, robust debate about the nation’s approach to fiscal responsibility – and the stakes couldn’t be higher. While we agree that the circumstances surrounding the debt ceiling in 2023 are politically and procedurally complex, we still believe there is ample time for the executive and legislative branches to reach a deal and avoid a default. |