The US had debt ceiling legislation. In simplest terms there is legislation into the amount of national debt can be incurred by the US Treasury. Once that amount is reached, legislation must be passed to allow the debt amount to go higher. Once that debt limit is reached, the US Treasury can take “special measures” in order not meet financial obligations, in order not to go into default. That has happened on a few occasions. However, once those “special measures” are exhausted, the US would go into default. That has never happened. The economic impact would affect the US and the world. Stock markets would crash, recessions would occur.
The US has been reached today The US Treasury, by taking “special measures” can avoid default until June. The debt is on expenditures already approved, such as the 1.7 Trillion dollar budget passed in December The debt limit has been raised at 100 times, including a number of times under the Trump presidency.
Congress has never had this kind of personality make up A few hard light crazies have power over the slim Republican majority These crazies such as Greene, Boebert, Gosar and Gaetz have no appreciation at all as to the disaster that would occur if the US defaults. Think of these people as Steve Bannon anarchists who want to tear everything down. These two following quotes put the loggerhead scenarios in perspective.
Andy Biggs from Arizona states that,
“We cannot raise the debt ceiling. Democrats have carelessly spent our taxpayer money and devalued our currency. They’ve made their bed, so they must lie in it.”
Biggs ignores the fact that the Trump presidency, a Republican led congress approved major increases in the debt.
Meanwhile, a White House spokesman stated the following,
“Rep. Biggs is dead wrong to actively support the ruin of millions of American livelihoods, 401k plans, and small businesses, all in the name of scorched earth partisanship. “Default would needlessly plunge the country into economic chaos, collapse, and catastrophe while giving our competitors like China an historic boost against us.”
Speaker McCarthy, perhaps could find a solution by negotiating an agreement with House Democrats, therefore not needing the support of the crazies. However, if he were to do that he would guarantee losing his House Speakership.
The US has been put on the brink before, usually put there by Republicans. But they have always pulled back from the brink, in the past. There is no such guarantee that pulling back from the brink will happen this time. This is scary.