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It’s always the same tragedy. Whether under Barack Obama (61), Donald Trump (76) or currently Joe Biden (80) – when US governments want more than they can afford, there is a regular risk of state insolvency.
The scenario of state bankruptcy is also part of the repeated political deja vu: millions of Americans would no longer receive wages, welfare or medical attention. Pensions would be in jeopardy. There would be no government money for infrastructure and the country would struggle to pay off its government bonds. The credit rating of the world’s greatest power would be reduced, the US dollar devalued and national security weakened. This would also have devastating consequences for the rest of the world.
There is only one solution: raise the debt ceiling!
On January 19, 2023, it was that time again: with a national debt of USD 31.4 trillion, the Biden government reached the debt ceiling set last year. Since then, the US state has been virtually unable to borrow money. Reserves only lasted until June, in the worst case until September, Treasury Secretary Jane Yellen (76) warns.
So: up with the debt ceiling! Since this is only possible with the consent of both chambers, the big gamble begins. The opposition is using the government’s bottleneck as a bargaining chip or for its own election campaign. Weeks of fighting are part of the ritual. But in the end, reason and new debt usually win out.
Ultra-conservatives do not accept compromises
But this time, observers of the usual “happy ending” are no longer so sure. The reason is a small group of Republican hardliners. Trump’s 20 staunch supporters include right-wing populists such as Scott Perry (60), Matt Gaetz (40) and Marjorie Taylor Greene (48). They all believe in Trump’s big “election lie”, want to pardon the Capitol strikers and consider climate change a hoax.
The radical rebels reject the Democrats’ social security and health care systems and their immigration policies. They also want to stop aid to Ukraine. The Trump rebels made it clear weeks ago that they would not accept compromises in the debt ceiling dispute.
Christine Lagarde: “A big, big catastrophe”
The Republican majority with only five seats in Congress is paper thin and the ultra-conservative group is quite small. But the Trump rebels have already been very successful in blackmail. So it was only on his 15th attempt – and with concessions – that they supported fellow party member Kevin McCarthy (58) for the position of Speaker of the House of Representatives. One: A single MP is now enough to get a vote of no confidence in McCarthy.
Even if the Trump rebels can’t immediately brush aside a potential majority in favor of raising the debt ceiling, they could dangerously delay the vote through internal blockades.
So unless the debt ceiling is raised soon, the US government could default on its historic debt. This would be a “major, major catastrophe” for the world, as Christine Lagarde (67), president of the European Central Bank, recently said. The largest economy in the world should not allow default.
Source: Blick
I am Amelia James, a passionate journalist with a deep-rooted interest in current affairs. I have more than five years of experience in the media industry, working both as an author and editor for 24 Instant News. My main focus lies in international news, particularly regional conflicts and political issues around the world.
