This would be an unprecedented event in US history, and it would have serious consequences for the global economy. The US dollar is the world's reserve currency, and US Treasury bonds are considered the safest and most liquid assets in the financial markets. If the US government failed to pay its creditors, it would undermine confidence in the US financial system and trigger a wave of panic and uncertainty. Interest rates would spike, stock markets would plummet, and credit markets would freeze. The US economy would enter a deep recession, and millions of Americans would lose their jobs, incomes, and benefits. The effects would also spill over to other countries that depend on trade, investment, and aid from the US .
The only way to avoid this scenario is for Congress to act swiftly and responsibly to raise the debt ceiling without conditions. President Joe Biden has invited the four top congressional leaders to the White House on May 9 to discuss this issue. He has also said that he will not negotiate over the debt ceiling increase, but will discuss budget cuts after a new limit is passed. However, Republicans have insisted on linking the debt ceiling hike to spending cuts, especially in social programs such as healthcare and education. They have also passed a bill in the House that includes steep spending cuts that Democrats and Biden have rejected.
The political deadlock over the debt ceiling is not new. It has been a recurring source of conflict and crisis since 2011, when Republicans first used it as a leverage tool to extract concessions from President Barack Obama. Since then, Congress has raised the debt ceiling several times, often at the last minute and after tense negotiations. But each time, the brinkmanship has increased the risk of default and damaged the credibility of the US government.
The current situation is especially dangerous because it comes amid a global pandemic that has already strained the public health and economic systems of many countries. The US has been one of the hardest hit by COVID-19, with over 40 million cases and over 800,000 deaths. The Biden administration has enacted a $1.9 trillion stimulus package to help Americans recover from the crisis, but it also added to the national debt, which now stands at $31.4 trillion.
The US needs to act quickly and decisively to raise the debt ceiling and avoid default. This is not only a matter of fiscal responsibility, but also of national security and global leadership. The US cannot afford to jeopardize its reputation and influence in the world by failing to honor its obligations. The debt ceiling is not a bargaining chip or a political weapon; it is a legal necessity and a moral duty.