In the United States, the legislative limit on the amount of national debt that can be incurred by the US Treasury has reached its absolute limit. As it stands, the US government is limited by law to borrowing no more than $31.4 trillion, this debt ceiling is routinely reached, but once that happens Congress can simply vote to raise the ceiling and allow the US to borrow more money, and thus continue to pay the nation’s debts.
This time around, Republicans have put pressure on President Joe Biden by refusing to raise the debt limit unless they see some tangible federal spending cuts imposed as well as assurances on future spending. A preliminary deal has been struck, named the Fiscal Responsibility Act, it would suspend the debt ceiling until 2025. It must be voted through the House of Representatives today Wednesday May 31st before it can make its way to the Democrat-controlled Senate later this week.
Will the deal satisfy both sides? And what would happen if the US defaulted on the debts it owes?
Host Ciarán Hancock is joined by Irish Times Washington Correspondent Martin Wall and Jack Kelly, Senior Contributor to Forbes and Chief Executive of recruitment firm Wecrutir and The Compliance Search Group.