The U.S. threatens to default again because of the national debt
In the United States, the agreement on the maximum size of the national debt has ended, but there is no new one yet. The Ministry of Finance will have to cut costs.
The SSO was on the verge of default after the expiration of the agreement to suspend the government debt limit, writes Bloomberg.
The debt limit was set at $22 trillion in 2019, but debt rose to $28.5 trillion in June. If Congress takes no action, Treasury will have to go to extremes. Now the department will be able to manage only the funds in the accounts вЂ” $450 billion.
When the limit is reached, the United States in October or November will be on the verge of default on regular spending obligations or will default on government securities.
The US Treasury has already suspended the issuance of a number of special securities, and also began to use special debt instruments that are not taken into account when calculating the debt limit. Another opportunity to save money will be the suspension of investment in funds for public sector retirees.
The publication reminds us that the United States has been facing a similar situation since the 1980s. In some cases, the federal government, except for certain departments, had to suspend work pending an agreement between the two parties. In the last ten years alone, this has happened three times.
In the current environment, the Democrats can go for budget cuts, which eliminates the need for negotiations with the Republicans, but this will make the party alone responsible for the unpopular decision. In the event of an attempt to negotiate an increase in the national debt, the Republicans will seek consent to revise the budget items they need or exchange their support for the Democratic plan for other bills.
Despite the current situation, the US Senate approved a bill on $1 trillion in investments in roads, bridges, ports, high-speed Internet, and other infrastructure.
TAGS: USA, ECONOMY