May 28 (QNA) – The issue of raising the US debt ceiling has attracted widespread attention along with US public opinion in recent days, with observers and economists anticipating the outcome of the latest developments in this file. The US is deciding whether to raise its debt ceiling. As the United States enters a critical period in overcoming daunting fiscal challenges, it can either avoid a fiscal setback or face overwhelming challenges in the coming months.
Michael Deitch, head of the economics department at Guilford College in North Carolina, said in an interview with QNA that although there was discussion between the White House and Congress regarding the U.S. debt issue, the pace of conflict and tensions has slowed this year. . Exceed all expectations.
He noted that Republicans in Congress are trying to tie a deal to raise the debt ceiling with cuts to government spending. In addition, Republicans are calling for about $130 billion in cuts to public spending, with a cap on public spending equivalent to 2022 levels, Deitch outlined.
He said he was setting out three conditions, including amending the ratification mechanism for energy projects, tightening requirements for benefit recipients, and restoring unspent funds previously allocated to containing the coronavirus. But Democrats rejected the proposal and demanded their demands, he added. He said the general debt ceiling increase was approved without any preconditions.
Concerning future concerns on the mainland, U.S. economist Gerald Dillard told QNA that a prolonged stalemate could increase the risk of the U.S. defaulting on its debts on time. It outlined that the issue raises concerns and questions about the potential impact on the stability and strength of the global economy. US dollar as a world currency.
Meanwhile, Marcus Noland, executive vice president and director of research at the Peterson Institute for International Economics, told QNA that a U.S. debt default would imply lower U.S. bond rates, higher interest rates, a devaluation of the dollar, and a spike in volatility. he said. He added that the default was likely related to the decline in the US stock market due to increased pressure on the US banking and real estate sectors.
Meanwhile, Dean Lueck, a law professor at Indiana University Bloomington, said in a statement to QNA that the likelihood of a U.S. debt default remains low, adding to the conflict and debate over the U.S. debt ceiling and brinkmanship. He pointed out that at this stage, it caused a public backlash. Concerns in domestic and international financial markets.
If the debt ceiling issue is not successfully addressed in the coming days, high confidence in U.S. Treasuries will be affected over time, exposing the U.S. economy and dollar to volatility, he added.
US President Joe Biden and Republican Kevin McCarthy have reached an agreement in principle to raise the US debt ceiling.
The agreement marks a breakthrough after long negotiations between the two sides, with a deadline set by the US Treasury to reach an agreement of June 5, 2023.
U.S. House of Representatives Speaker Kevin McCarthy said an initial deal has been reached to raise the U.S. debt ceiling, noting that the deal includes landmark spending cuts, but sources familiar with the negotiations said confirmed that the White House and Republicans had reached an agreement. Agreed in principle on an agreement to raise the debt ceiling and spending ceiling.
(QNA)
