The US debt ceiling: What it is and what happens if Congress doesn't raise it...
Actions by Senate Republicans could lead to the US defaulting on its debts. The effect "would be catastrophic," according to Treasury Secretary Janet Yellen. https://www.cnet.com/personal-finance/us-debt-ceiling-what-it-is-and-what-happens-if-congress-doesnt-raise-it/
The US government has never defaulted on its debts -- but actions by Senate Republicans are threatening to shatter the nation's financial track record. At the center of the congressional fight is a somewhat obscure bureaucratic mechanism: the debt limit, which is the amount of money the government is legally allowed to borrow. Failing to raise (or suspend) it could lead to dire financial consequences that could impact every part of the US economy.
The Democratic-led House of Representatives narrowly passed a bill along party lines last week to fund the US government through the beginning of December and suspend the debt ceiling until the end of 2022. But Senate Republicans blocked the measure on Monday -- not a single Republican voted in favor -- setting the stage for a clash. The US government could run out of money as soon as Oct. 15, according to an analysis published by the Bipartisan Policy Center.
The stakes are high. If the ceiling isn't raised or suspended, it will almost certainly impact the US economy at a macro level, with experts forecasting interest rates spikes and stock price plunges. But the effects will surely be felt on an individual basis, too, as a government spending freeze would reduce or eliminate funding for vital programs, including food assistance for low-income Americans, Medicare and Social Security, and payouts to retired veterans.
GOP plan to block House measure could trigger an unprecedented $28tn default...
Opposition from Mitch McConnell means the spending package is dead and the US faces a shutdown and default...
Top Republicans in the Senate are poised to block a key spending package advanced by Democrats in a move that could precipitate the dual fiscal crises of a government shutdown and an unprecedented US default on its colossal debt obligations.
The House has approved a combined stopgap funding measure that would keep the federal government open until early December and suspend the debt limit until after the 2022 midterm elections, sending the legislation to the Senate.
But the Senate minority leader Mitch McConnell swiftly announced that Republicans would sink the measure with a filibuster and prevent it from receiving the 60 votes needed to pass – causing a government shutdown on 1 October and a default weeks later.
Opinion | How the Debt Ceiling Turned into a Doomsday Cult
The end never actually comes but we love to obsess about it anyway.
The United States is careening toward an urgent financial crisis starting in less than two weeks, as a political standoff on Capitol Hill threatens to shutter the government during a pandemic, delay hurricane aid to millions of Americans and thrust Washington to the precipice of defaulting on its debt. As the White House has warned Republicans, a federal default — something that has never happened — could push the economy into recession or worse. The GOP’s financial “blob”—former Republican Treasury secretaries—have been warning McConnell and other party leaders that the economy might topple off a cliff if the ceiling goes unrepaired.
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