The US president, Joe Biden is facing a lot of resistance in his decision of raising the debt ceiling to pay all the bills the country is liable to pay by next month. Whether to increase the debt limit of the country or not has become a point of argument between the democrats and the republicans.
Treasury secretary Janet Yellen predicted that the country is going to exhaust all the borrowing capacities by October 18th. After this date, the country will no more be able to use any kind of credit as the debt ceiling will be touched and can’t be crossed.
The impact of the finishing off of the debt limit will be experienced in terms of unemployment, declined economic activities, loss of stocks, and will lose the household wealth as well. If the limit is not lifted the country may have to cut off its other expenses that are carried out by the treasury. They will majorly include the healthcare facilities given to the citizens and the privileges being given to the military families for their essential contribution. The country will face many adverse effects that will majorly change the economic conditions of the country.
The republicans are opposing the proposal of raising the debt limit. They are of the view that a budget reconciliation can be done to fight the current problems rather than increasing the debt limit. Mitch McConnell, the leader of the Senate Republicans, is putting forth the idea of budget reconciliation over the limit extension. Republicans believe that this step will increase the problems for the country as the debt is increasing more and more.
As a follow-up, Joe Biden remarks that the Senate has raised the debt ceiling several times in the past and doesn’t understand why the Republicans are obstructing the path of the same move now. He even stated that if the republicans don’t want to save the country in any way, they should not act as an obstacle either.
McConnell has whereas stated that if the democrats believe that lifting the debt ceiling would do wonders for the country, the democrats do not need the approval of the republicans and can move forward with their decision.
Schumer, the Senate majority leader has whereas approved of the disposal of the debt limit and has brought the quarrel to an end. He has taken the matter to be solved with the help of voting in the senate. The Senate is supposed to settle the issue on Wednesday and pass the bill that has been proposed to lift the ceiling of debt by the process of voting.
If the debt ceiling is not lifted, the budget reconciliation is the option for the US government to tackle the dues. Whereas it may take a lot of time and discussion and the deadline is the 18th of October. Another alternative for the US government to deal with the situation is to issue a $1 trillion platinum coin and deposit it in the treasury. This has been quite controversial since the past days as the lawmakers and the treasury secretary consider this to be quite unusual and think that raising the debt limit will be more beneficial.
The officials believe that they want the country to settle its bills as soon as it incurs them and set it as an example for the financial markets and the public as well.
The US economy is one of the largest and the strongest economies of the world and if the situation continues to worsen, the whole world will feel the after-effects of the debt ceiling crisis.
The tension is impacting the stock market and the forex as well. The US dollar is expected to jump higher in rate as the country will be facing a country-wide crisis and will try to get back on its feet as early as possible. This can create havoc in the forex market as all the currencies will see major changes as the US dollar is used universally and is a very crucial part of the forex market.