Shang Xuanxuan: The debt limit negotiation has become a political show in the United S

Source: Beijing Daily

Author: Shang Yixuan

U.S. President Biden recently invited the leaders of the two institutes to hold a debt limit meeting. However, because the two parties could not reach an agreement on whether the two parties would reduce expenditure with the linked linked debt limit and did not achieve any results.

The upper limit of debt is the highest amount set by the US Congress for the federal government to fulfill its payment of payment obligations.In 1917, in order to facilitate the financing of World War I, the US Congress formulated a second free bond bill, stipulating that the Ministry of Finance could issue bonds in the exclusive upper limit set by Congress for different bonds.In 1939, Congress passed the bill to cancel the upper limit of various types of bonds, setting the unified upper limit of almost all government bonds to $ 45 billion, and the debt limit system was officially established.

The upper limit of debt is to facilitate government governance while controlling the level of debt and avoid financial out of control.However, in the 84 years of the upper limit, it has been exceeded 106 times.The last time was in 2021, the upper limit of debt increased from 28.9 trillion to US $ 31.4 trillion, which was more than 600 times when it was initially set up.But less than two years, the upper limit was "out of date" in January this year.The New York Times pointed out that the expansion of debt in the United States is the result of the common choice of democracy and Republican parties.In order to please voters when the two parties were in politics, Trump had "reduced taxes" during his tenure, and Bayeng pushed "infrastructure" since he took office.breakthrough.

Due to the frequent increase in debt limit, how to increase the upper limit has become the "routine" work of Congress, and as the party's competition has intensified, this has also become the main "arena" in the struggle between the two parties.Since 1978, the Democratic and Republican parties have struggled 32 on the issue of increasing debt limit. The opposition party hopes to "use private goods" in the bill of raising debt limit, otherwise it will refuse.As a result, the United States has faced the debt limit crisis many times in recent years.From the past, the outbreak of the debt limit crisis is roughly divided into four stages: debt reaches the upper limit, unconventional measures, US government closes, and federal debt defaults.The U.S. Treasury Department said that "unconventional measures" have been adopted to continue to fulfill the payment obligations, but relevant measures are expected to adopt only until August.If the two parties cannot compromise, they will soon enter the third stage.

At present, the focus of the contradiction between the two parties is whether it will reduce expenditure and increase the upper limit of debt.The parliament of Congress McCarthy proposed that the 2023 -year restriction, savings, and growth bill will reduce the combination of US $ 4.5 trillion expenditure with an increase of 1.5 trillion US dollars.Wait, the essence is to cancel almost all the iconic policy plans during Biden.In this regard, the Democratic Party will never give up, and insist on improving the debt limit and no conditions shall be attached.

The two parties show a tough posture on the issue of debt limit, and the essence is still a "political show".At present, the Republican leader Trump's lawsuit is involved. After four days and 15 rounds of voting, McCarthy, who was eventually "approved" by Trump, naturally did not dare to make a slightest compromise with the Democratic Party.Biden officially announced the re -election recently, let alone abandon the main political performance projects in the past three years.However, the impact of debt defaults may also be unacceptable.According to the White House Economic Consultant Committee, short -term defaults will reduce 500,000 jobs, the unemployment rate will increase by 0.3 percentage points, and the annualized GDP will decrease by 0.6%.US debt defaults may lead to depreciation of the US dollar, further triggering the trend of bank failure of the United States, and re -created US credit.

With the angle of the US election in the 2024 election, the two parties regard various conventional operations as the wrestling of political chips.Democratic and Republican parties have reached a compromise on the upper limit of debt. It is only a matter of time, but similar incidents will still be staged frequently in the future.As Reuters said, the "Black Swan" incident, which has been considered to have a significant impact on the world, has now become a "white swan" incident that is "fully predictable and occurred very frequently".As long as the US Yin's fiscal model remains unchanged, the polarization political pattern remains unchanged. The party's competition with the United States and the global economy as the "hostage" will not end.