In the United States, the two-year agreement on the national debt limit has expired, writes Bloomberg.
The debt limit was set at $ 22 trillion in 2019, but the debt increased to $ 28.5 trillion in June of this year. According to the agency, if Congress does not take any action, the Ministry of Finance will have to go to extreme measures. Now the agency will be able to dispose only of funds in the accounts — $ 450 billion.
“The moment has come when it is necessary to draw the attention of congressmen to this problem and sit down at the negotiating table,” said David Wilcox, a senior researcher at the Peterson Institute for World Economics.
In August 2019, the national debt limit was suspended for two years after the decision of Congress. Since a new plan to increase the “threshold” or freeze it has not yet been developed, officials have stopped selling securities of state and local authorities that help invest income from bonds.
The Democrats can independently decide on budget cuts or agree with the Republicans-then they will have to make concessions, for example, by revising some budget items.
The United States has been actively increasing foreign borrowing since the 2008 crisis. Under Barack Obama, debt obligations increased by nine trillion, under Donald Trump — by another seven. In 2018, it was already 78 percent of GDP — a level that the World Bank calls dangerous.
According to forecasts, the national debt was supposed to exceed the size of the American economy in ten years. However, due to the coronavirus pandemic and the costs of supporting the national economy, this happened earlier. As a result, this spring, the US national debt reached $ 28 trillion, or 101 percent of GDP. Similar things happened only after the Second World War.