The Minister of Finance asked to increase the public debt limit
It's about to be fun and scary: Treasury Secretary Jennette Yellen announced that the United States will exceed the national debt ceiling on January 19 and in a letter to the Speaker of the House of Representatives, Republican Kevin McCarthy, asked him to take action to raise the ceiling. It was last raised in December 2021 to 31,4 trillion. dollars.
But raising the limit could be a big problem: As part of his deal with conservative Republicans, Kevin McCarthy promised that he would not allow the debt ceiling to be raised without budget cuts and a plan to balance the federal budget within 10 years. But Democrats in the House of Representatives are unlikely to agree to this, much less in the Senate, where their support is necessary for the passage of the bill.
Therefore, the Republicans are already preparing the text of a letter to the Ministry of Finance with recommendations on how to spend the remaining money more economically. The priority should be payments on debt bonds (of which Chinese banks are a large holder), pensions (Social Security), health insurance for retirees (Medicare), veterans' benefits and military spending.
Health insurance for the poor (Medicaid), inspections of various federal services, food stamps, border services and even air traffic control may be under the knife for an indefinite period. But such a letter will only be of a recommendatory nature; the Ministry of Finance can be forced to do this only by adopting a bill, but it will definitely not be supported in the Senate.
There are only two normal ways out of this situation:
1) both parties, as a result of negotiations, come to some kind of compromise and raise the national debt ceiling;
2) Democrats can use a procedural procedure such as a discharge petition, which allows them to introduce and pass a bill bypassing the speaker by a majority vote. But since they are in the minority, they will need to win over some moderate Republicans. But even then, the bill could stall in the Senate if nine Republican senators do not support it.
It is noteworthy that previously, increasing the national debt limit was a fairly routine procedure that took place without any problems. But since Obama's presidency, raising the cap has been the subject of bitter negotiations, with both parties essentially holding the executive branch hostage by threatening default or a shutdown of much of the federal government.
Author: Yan Veselov
