Biden hopes to solve debt before potentially catastrophic Oct 18th
The debt ceiling is becoming a real problem for President Joe Biden and his administration, Biden hopes to solve debt. The U.S. could default on its debt for the first time on October 18 when House of Representatives voted to suspend the debt limit.
When will the U.S. default on its debt?
According to some experts, October 19 may be a terrible day for America’s economy if politicians in Washington do not reach an agreement.
Treasury Secretary Janet Yellen has been keeping the country’s finances afloat since August 1 by using creative and extraordinary measures. However, around October 18, she will be running out of options.
Some experts have claimed that the actual date is October 20 and that Yellen is just trying to be conservative. A few economists even suggest that it may take November 10-15 for the country to hit default.
Regardless of the date, people in Congress do not have much time to fix the situation.
Republicans reject bipartisan option for debt limit
At this point, Republicans have rejected different proposals that would have lifted or suspended the debt limit. They are taking this tough position to protest Democrats’ spending.
Elected officials on the left say that the country’s debt should not be political because inaction could have a catastrophic impact on the economy.
For almost 20 months, the U.S. economy has dealt with damage caused by the coronavirus pandemic and the ensuing lockdowns. So, a default would be a devastating blow. Some people in the financial sector remain optimistic about the situation because Congress always finds a way to avoid a default. The debt limit was put in place in 1917 and was raised over 50 times in the past half-century.
Default has never happened. It came close in 2011 and, to some extent, 2017, but a last-minute deal managed to save the day in both cases.
On Saturday, President Biden slammed the GOP for refusing to lift the debt limit. Senate Minority Leader Mitch McConnell claims that Democrats should do this on their own via a budget reconciliation bill that does not require 60 votes to pass the U.S. Senate.
Can Democrats fix debt ceiling problem alone?
The process is not simple and, requires the support of all 50 Democrats in the Senate. Two senators on the Democratic side have refused to support a $3.5 trillion reconciliation package in recent weeks.
Senators Joe Manchin and Kyrsten Sinema say the bill is too large and want to reduce the final price tag. While this positioning is excellent for their standing at home, respectively, West Virginia and Arizona. The whole process is slowing down the Biden agenda.
Progressives have grown frustrated with the two conservative Democrats because they believe the party has a unique opportunity to enact many of its economic priorities.
It is not clear that the Democratic Party can even reach an agreement on reconciliation before October 18. The United States Congress has introduced a bill to eliminate the debt ceiling, but it is unlikely to get Republican support.
Many experts say this is the right thing to do. Getting rid of the debt limit would prevent the minority party from holding the economy hostage.
Some economists on the left have also encouraged Biden to ignore the debt limit and mint a $1 trillion coin. The administration has already rejected this possibility.