US Debt Default Update – the next crisis #debt #default

We are now coming to middle of July 2021 and there is still 2 weeks away from the Federal Borrowing limit expiry on 31st July 2021. As of current, the Democrats still have no clear plan on how to deal with the looming expiry.

There are 3 options
1. The first option would be to tuck a debt ceiling hike into the massive reconciliation bill Democrats plan to pass later this year. However the risks are high that USA’s credit rating will be undermined , raising interest rates.

2.second option would be to set up a stand-alone vote to raise the debt ceiling. However this is not popular with Democrats as it exposes them as irresponsible spenders.

3. Instead of raising the debt ceiling, Democrats could try to suspend the limit for another year, either through a stand-alone vote or as part of an unrelated  bill. A one-year suspension would need to pass both chambers, and the Senate’s 60-vote threshold means Republicans could hold up the bill’s passage until they win concessions from Democrats on any number of other issues.

From main stream media (MSM), it seems that there is a growing thought that the democrats may choose to go with Option 1.

Block is betting that Democratic leadership will try to include the debt ceiling provision in a large bill, such as the current infrastructure deal

That approach, he said, not only allows Republicans to save face by offering them a reason to vote for it, but it puts pressure on progressive Democrats who may otherwise demand even more from an infrastructure plan that excludes funding for climate change or social programs.”

To me , no matter which option the democrats eventually decides, the fact remains there’s only 3 weeks left. I foresee these last few weeks as having more room for volatility. What do you think ?

Do reference my post regarding the US Debt Default potential crisis here

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