New York (Armfalcon.com) – The United States is likely to have a short-term extension of its debt limit because there is no basis for a bipartisan agreement, said an expert from Georgetown University.
There will probably be a deal to extend the US debt limit in about two months and debt limit negotiations will continue for most of the summer, said David A. Super, a professor of law and economics at the Georgetown University Law Center.
An extension of the short-term debt limit is very likely and will materialize soon, Super said in an interview with Xinhua last week.
“A deal is possible, but I think there’s a good chance we won’t get a deal and there’s also a good chance that the Republican Speaker of the House (Kevin) McCarthy approves a deal and then his members reject it,” Super said.
Because Democrats won’t support reducing the deficit to pay for tax cuts that push back the deficit and Republicans won’t agree to anything limiting tax cuts, there really isn’t a basis for a deal, according to Super.
Super added that the fundamentals were not in favor of a deal because McCarthy did not have the support of his members to make any significant concessions.
Current debt ceiling talks follow a very familiar pattern at the start with both sides complaining about the other side’s negotiating position, followed by a constructive meeting and complaining again about the other side’s unreasonable demands, according to Super.
“Then we’ll have a short-term extension, and we’ll repeat this cycle. I don’t think we learned much from this,” Super said.
It is highly expected that US President Joe Biden will invoke the 14th Amendment to the US Constitution and declare the debt limit unconstitutional after the two sides failed to reach an agreement.
The deadline in debt ceiling talks could definitely unsettle financial markets in the short term and it is putting jobs at risk, Super warned.
If the United States goes into a recession, due to a mishandling of the debt ceiling or for some other reason, it will certainly have a huge impact on developing countries around the world, Super said.
“Many of them are already under great pressure because of the war between Russia and Ukraine. And this will definitely make their situation worse,” he said.
While there is indeed a need to limit deficit spending, a debt ceiling is not the way to do it, Super said.
The way to control deficit spending is to limit spending and perpetual tax cuts and prevent the United States from taking on these obligations in the first place, according to Super.
“Once we pick it up, we have to pay the bill. There should be no choice about that,” Super said.
Now, with the parties so polarized, they cooperate on less and less things than before, Super said.
The situation will only change if one side gains sufficient control and dominance and the other feels compelled to moderate its approach, Super said.
He added that with the country nearly evenly split, “I’m not sure that’s going to happen any time soon.”
The United States is “highly likely” to default on government obligations by early June and potentially as early as June 1 if Congress fails to raise or suspend the debt limit, according to Treasury Secretary Janet Yellen.
The White House and Republicans are in the process of negotiating a debt ceiling and budget spending.
The United States reached its $31.4 trillion debt limit in January and the US Treasury has implemented accounting maneuvers, known as “extraordinary measures”, to keep the government paying its bills so far.
Also read: US Finance Minister: The US will most likely default on debt payments in early June
Also read: The Biden-McCarthy meeting ended without an agreement on the debt ceiling
Translator: Apep Suhendar
Editor: Guido Merung
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