Disagreement over US debt ceiling – government deadlock looms

A new dispute over the debt ceiling has erupted in the US Congress. In the past, the dispute had already erupted several times into a dead end for the government. Without a raise, the $28.5 trillion cap at the end of the month is essentially exceeded.

Treasury Secretary Janet Yellen can then use bridging measures to avoid a government shutdown only for a short period, as many federal authorities have to halt operations due to lack of funds.

This has already happened three times in the past decade — most recently in early 2019. On Wednesday, the presidential office called on Congress to overcome partisan political feuds and quickly raise the debt ceiling.

Republican Senate Chairman Mitch McConnell said earlier that members of his party were unlikely to agree to an increase in the debt ceiling.

Republicans agreed early in the Senate that increases in debt limits should go hand in hand with spending cuts. But Democratic President Joe Biden wants to bring a billion-dollar investment program through Parliament, which Republicans reject as too costly in this format.

The United States has a legal limit on how much new debt a government can take on to pay for its expenses. The limit is raised at relatively regular intervals, but Congress has to agree.

If the upper limit is not increased, the state cannot borrow more money, meet its debts, and pay off old outstanding debts.