Every American could get hurt if the new hardline Republican House’s dangerous game of roulette with a still vulnerable economy backfires.
The nation reaches a first, critical threshold Thursday in the brewing Washington showdown over the national debt that could define the tenure of the new GOP majority and the final two years of President Joe Biden’s term.
Republicans are demanding significant spending cuts in return for fulfilling the routine duty of allowing the government to borrow more money after its credit limit is reached. But the White House is refusing to negotiate. If the standoff lasts until a drop-dead date in the summer, it could trigger a financial and stock market cataclysm and crash the retirement savings of millions. The government might also not have enough cash to pay Social Security payments, federal workers or veterans’ benefits.
Officially, the Treasury is expected to reach its $31.4 trillion dollar borrowing limit on Thursday, but it plans to take extraordinary budgeting measures to stave off disaster until June. Until that deadline looms, neither side is likely to budge.
Since the government spends more than it makes in revenue, it must borrow money to service its debt and pay for spending that Congress has already authorized. It has no problem getting more credit since the US always pays its bills and has always had a stellar credit rating, despite one previous downgrade from the threat of default.
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