US hits debt ceiling as partisan standoff sparks economic worries

“EVERY TIME”

The prospect for brinkmanship has raised concerns in Washington and on Wall Street about a bruising fight over the debt ceiling this year that could be at least as disruptive as the protracted battle of 2011, which prompted a downgrade of the US credit rating and years of forced domestic and military spending cuts.

Moody’s Investors Service on Thursday said it believed Congress would reach a deal to avert default, but that negotiations would go down to the wire, contributing to market volatility.

“We’re not going to default on the debt. We have the ability to manage servicing and paying our interest. But we similarly should not blindly increase the debt ceiling,” Representative Chip Roy, a leading conservative, told Reuters.

Roy dismissed concerns about unsettling markets and risking a recession.

“That’s what they say every time. It’s like clockwork,” Roy said in an interview. “We’re already barreling toward a recession. The question is what it’s going to look like – unless the combination of monetary policy and fiscal policy saves us from our stupidity of having spent so much money.”

But corporate leaders expressed concern over the standoff.

“I’m concerned and I’m going to take any opportunity that I can, and we can as a firm, to engage with people in Washington to try to make sure they understand that we don’t think that this is something that should be played with,” Goldman Sachs Group chief executive David Solomon said in an interview on Thursday.

Senate Republican leader Mitch McConnell predicted that the debt ceiling would be lifted sometime in the first half of 2023 under conditions negotiated by Congress and the White House.

“It’s always a rather contentious effort,” McConnell told reporters at the University of Louisville.

“The important thing to remember is that America must never default on its debt. It never has, and it never will,” McConnell said, adding, “The very basic business of funding the government has become very controversial in my party.”

Congress adopted a comprehensive debt ceiling, the statutory maximum of debt the government can issue, in 1939, intending to limit its growth. The measure has not had that effect, as, in practice, Congress has treated the annual budget process – deciding how much money to spend – separately from the debt ceiling – in essence, agreeing to cover the costs of previously approved spending.

The Republican plan calls for balancing the federal budget in 10 years by capping discretionary spending at 2022 levels.

In the meantime, House Republicans are vowing to reject sweeping government funding bills from Senate Majority Leader Chuck Schumer, akin to the US$1.66 trillion bipartisan omnibus package that Congress passed late last year.

Schumer, the Senate’s top Democrat, said in a statement: “Political brinkmanship with the debt limit would be a massive hit to local economies, American families and would be nothing less than an economic crisis at the hands of the Republicans.”

“We are optimistic that Democrats will come to the table and negotiate in good faith,” said Republican Representative Ben Cline, who leads a conservative task force on the budget and spending. “There’s a lot of room to negotiate when it comes to steps that can be taken to address the fiscal crisis that we find ourselves in.”

For all the latest world News Click Here 

Read original article here

Denial of responsibility! TechAI is an automatic aggregator around the global media. All the content are available free on Internet. We have just arranged it in one platform for educational purpose only. In each content, the hyperlink to the primary source is specified. All trademarks belong to their rightful owners, all materials to their authors. If you are the owner of the content and do not want us to publish your materials on our website, please contact us by email – [email protected]. The content will be deleted within 24 hours.