As negotiations continue in Congress over a potential deal to raise the debt ceiling, the full picture of the risk to the US economy of the current debt levels and fiscal gap remains under-expressed.
The major players in the negotiations currently hold the following positions.
The Biden Administration believe they have some room to make a stand and refuse to negotiate with new Speaker of the House Kevin McCarthy, who would like to see spending frozen at 2022 levels, on the grounds that Democrats passed a no-fuss debt ceiling increase under the Trump Administration.
Treasury Secretary Janet Yellen has pressed that Congress “must” raise the debt ceiling from its current position at $31.4 trillion, that tying any debt ceiling raises to reductions in spending is “very irresponsible,” and that markets must continue to believe that the US “will pay its bills”.
House Speaker Kevin McCarthy would pass an increase in the debt ceiling if it would mean seeing spending frozen at 2022 levels, and a plan to place America on track for a balanced budget by 2033.
What goes unsaid is any indication of how much debt the US Government is actually liable for, what the government has already signed the US taxpayers onto, and how much danger it all poses for the country in the long term.