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Failing to lift the debt ceiling has catastrophic effects for the US and the world. It could bring down the entire international financial system. This in turn could devastate the world gross domestic product and create mass unemployment
US president Joe Biden has been considering the ‘14th Amendment’ option to avert a debt ceiling crisis, as the deadline to resolve an impasse on lifting the borrowing limit fast approaches. There could be legal challenges if the 14th Amendment is invoked, but not doing so poses risks too
The U.S. Treasury warns that it might exhaust its ability to borrow money as early as June 1 if Congress does not raise the debt ceiling.
President Joe Biden emphasizes that a US default is not an option in discussions with Republican lawmakers regarding the debt limit. Progress has yet to be made, and the consequences for the world's largest economy remain at stake.
House Speaker Kevin McCarthy said the US would not default. But he is still linking that issue directly to spending cuts in a way that Joe Biden wants to avoid. His debt limit bill would reverse discretionary spending to 2022 levels, then place a one per cent cap on increases going forward