The Biden drama of raising the debt ceiling

The Biden drama of raising the debt ceiling

mode in United State About a possible default (debt default) leaning more towards a potential political career than towards an important economic decision.

he US President Joe BidenHe urged an expansion of the country’s debt ceiling as a measure to take the economic path, however, as each year the budget approval process passes through Congress, but on this occasion the pulse began to be felt, Because the Republicans did not give in to the proposals so that President Biden could implement the proposals he made.

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according to Alejandro Osichi, Professor at the University of RosarioAnd Republicans are demanding from Biden that in order for him to consider approving the budget and increasing the debt ceiling, certain requirements must be met.

For example, there is a decline in public spending and fiscal stability at a time when the country is going through a complex situation.Useche explained.

(Biden is advancing negotiations with the opposition to raise the debt ceiling.)

According to the teacher, in the past 70 years that the current budget approval system has been implemented, the debt ceiling has been increased 78 times, which will not be the exception again.

Taking a look at what would happen if the debt ceiling is not raised and the US enters into default, Professor Oseshi states that this would be an unprecedented event, and he believes that the political parties in this country are also aware of it.The seriousness of not reaching an agreement, because not only the country’s economy will be affected, but also the global economy“, It is to explain.

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What is near and possible, more than a default, is to delay this agreement because the first date of approval is not necessarily to be fulfilled, But the following discussions will be discussed in the coming weeks.

Useche explains that if no consensus is reached, President Biden will have to reorganize the budget, prioritizing debt payments, and interest, which means delaying certain payments such as public employees, veterans, and teachers.

It has also been argued that if the increase is not made, the US will find itself in a position where its securities will lose their historically risk-free character, which could lead to a decline in GDP.”, the academician noted.

Arrears as of June 1

The US Congressional Budget Office (CBO) has warned that if an agreement is not reached between Democrats and Republicans to raise the debt ceiling, this country could find itself in default from early June.

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It should be noted that the debt threshold is currently around $31 trillion, according to the federal government.

Likewise, according to information from Agence France-Presse, The Treasury Department has already mentioned a June 1 date for the possibility of default.

According to CBO forecasts, if the debt limit remains unchanged, there is a high risk that sometime in the first two weeks of June, The government can no longer pay all of its debt obligations.

The ability to fund ongoing government operations will remain uncertain through May, even if Treasury funds finally run out in early June.They pointed out.

Diana K. Rodriguez T.
Portfolio journalist

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