Hold your breathe for today is going to be interesting….or even comical….either way the theater will be massive…..
Today’s a milestone day for the Treasury Department, though it’s one it had hoped wouldn’t arrive. Thursday marks when the United States is expected to hit its $31.4 trillion debt cap, a borrowing limit set by Congress that means Treasury will now have to get creative with other ways to pay the nation’s bills. Per the New York Times, the development is expected to set off a contentious debt-ceiling fight between Democrats, who want to lift the cap, and Republicans, who say no way unless President Biden OKs significant spending cuts. “At a moment of heightened partisanship and divided government, it is … a warning of the entrenched partisan battles that are set to dominate Washington in the months to come, and that could end in economic shock,” the paper notes. More on what’s ahead:
- A feud that may ‘cross the Rubicon’: That’s how Axios paints the “fraught and perilous” debate, in which it anticipates neither side will do much negotiating. That’s not good news when the US is perched on the precipice of a recession. The outlet notes it could also be “an avatar of what some have argued is a US democracy that’s become increasingly polarized, ungovernable, incapable of tackling major challenges—and could be on the verge of outright destabilization.”
- What it means for Americans: CNN notes that “every American could feel the pain” of what’s to come, and USA Today delves further into the ways the debt-ceiling fight could impact our finances, from how it will affect tax refunds and 401(k) accounts to what it means for Social Security, Medicare, and Medicaid.
- What it means for investors: The New York Times offers its take on where to put your money during such turbulent times. One takeaway: Sticking with stocks and bonds over the long haul will probably serve you well.
- Looking to the past for precedent: CNN takes a look back at other debt standoffs, including in 1995, when the debt was a mere $4.9 trillion. NPR, meanwhile, talks to two key players during the 2011 debt-ceiling impasse—Jason Furman, an economic adviser to then-President Obama, and Rohit Kumar, an adviser to Mitch McConnell, the Senate’s top Republican that year—to see if there are lessons to be gleaned.
- But this isn’t 2011: Participants in a roundtable discussion at the Times note that things are very different than they were a decade ago—including “a worrying trend of edging closer and closer to red lines because lawmakers think there’s political benefit and that there won’t actually be consequences.” In other words, it’s become a high-stakes game of chicken that could have far-reaching repercussions.
Let the games begin!
House GOP will inflict as much pain as they can on Americans…..
Thursday, January 19, 2023 as the day the United States is likely to reach its debt limit, although she has also said that she can keep the federal government open through June by resorting to “extraordinary measures.” Yellen has stressed that the sooner Democrats and Republicans in the U.S. House of Republicans can reach some type of agreement on the debt ceiling, the better. But the two major parties appear to be at a stalemate in the House, where Freedom Caucus and Tea Party Republicans are demanding major spending cuts and Democrats are maintaining that vital programs like Social Security, Medicare and Medicaid should not be on the chopping block.
Meanwhile, countless economists are warning that if the U.S. defaults on its debt obligations, the results would be disastrous economically and trigger a painful recession. Liberal economist Paul Krugman, in his New York Times column, has warned that House Republicans are happy to risk a financial calamity in the hope of butchering Social Security and Medicare. And Never Trump conservative Charlie Sykes has argued that House Republicans aren’t being “fiscally conservative” when they play “chicken” with the U.S. economy and risk a default on the United States’ debt obligations — they’re being reckless and irresponsible.
May I suggest that you invest in some Vaseline and just bend over….for the Repubs are coming.
I Read, I Write, You Know
“lego ergo scribo”