https://www.reuters.com/world/us/us-...ts-2023-01-19/
Perhaps unsurprisingly, the GOP run House is using the debt ceiling as a political cudgel to get concessions out of the Democrats within the politically mixed legislature. If protracted too long, the harms to financial stability to all Americans is quite real. Personally, I don't know if there is much else I can add to this potentially severe event.The U.S. government hit its $31.4 trillion borrowing limit on Thursday, amid a standoff between the Republican-controlled House of Representatives and President Joe Biden's Democrats on lifting the ceiling, which could lead to a fiscal crisis in a few months.
Treasury Secretary Janet Yellen informed congressional leaders including House Speaker Kevin McCarthy that her department had begun using extraordinary cash management measures that could stave off default until June 5.
My prediction is that the GOP is fully willing to drive off the cliff of debt default in a game of chicken with Democrats. As made clear by events earlier in the year, the hardcore, anti-government fringe of the Republican party is willing to tear down whatever parts of the government they can with contempt and they have McCarthy's balls in a vice. I am less certain as to what the Democrats are willing to do in this chicken game, they essentially have two options: 1) Offer whatever concessions are viable and hope the GOP demands won't be too severe (doubtful), or 2) Let the GOP drive the nation off the cliff and hope they get burned for it. Defaulting on the national debt would be quite damaging to the financial wellness to the US, but I doubt the GOP care. The latter option may even be politically preferable to Democrats as I feel the GOP's extreme rhetoric and motives underserved them in the 2022 midterm elections and there would be no way to divorce themselves from the political fallout of something like debt default. Let them crash themselves, in another sense. However, that would be quite damaging to Americans all over the nation, but there may be no other viable political path for Democrats. Caving to large demands from the GOP would just encourage a repeat of this stunt in the future.
Any other opinions on this matter?