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Will the United States default on its debt? | ticker VIEWS



US President Joe Biden on jobs

Across the United States and around the world – markets, business leaders, financial institutions, governments, citizens – are anxiously monitoring the question of whether the United States will default on its $28.43 trillion debt that it is carrying today

The United States has never, ever defaulted on its debt.

The political leaders in both parties have never let that happen.  Until possibly right now.

Australia, to its credit, abolished the statutory debt limit in 2013 and does not face this crisis management issue. 

The US statutory debt limit – the amount of money the United States Government can finance – has been raised over the decades by law and is today at $28.4 trillion.  That ceiling was broken in July. 

The United States Treasury is undertaking “extraordinary measures” to manage the inflow and payment of funds

Money coming in from tax receipts and going out in interest and other payments due, to keep the daily aggregate debt under that statutory ceiling.

But those measures will be exhausted on or near October 18.  When that happens, the United States will no longer be authorised by law to pay its creditors. 

It is like your credit card reaching its limit – you can’t buy anything further on it.  You need a higher credit ceiling from your card’s issuer to keep spending.  Good luck!

This is why Congress needs to raise the existing debt limit.

While it sounds simple, it is immensely, intensely, fraught with the rudest, most confrontational politics. 

If you are a Democratic president of the United States, and you need to raise the debt limit, your political opponents, who want you exorcised out of office, will call you irresponsible, radical and guilty of fiscal recklessness – and no, we will not give you the votes in Congress to raise the debt limit.

The debt limit has been raised some 80 of times since 1917 – generally on a bipartisan basis. It was raised three times under President Trump.  But under President Obama, and now under President Biden, Republicans in Congress are refusing to vote in any way, shape or form to raise the debt limit.  

Every responsible economist believes that a default by the United States on its debt will have catastrophic consequences

This includes the possibility of market crashes and recessions in the US and in countries around the world. In the United States, the ability of the government to make cash payments and to continue programs like Social Security and child care and veterans support, could be sharply curtailed and possibly stopped.

Treasury Secretary Janet Yellen has relentlessly argued the urgency of this looming crisis:

Treasury Secretary Janet Yellen

“I believe the only way to handle the debt ceiling is for Congress to raise it and show the world, the financial markets, and the public that we’re a country that will pay our bills when we incur them. 

When Congress legislates expenditures and puts in place tax policy that determines taxes, those are the crucial decisions Congress is making.

If to finance those spending and tax decisions, it’s necessary to issue additional debt, I believe it’s very destructive to put the president and myself — the treasury secretary — in a situation where we might not be able to pay the bills that result from those past decisions.”

US Treasury Secretary Janet Yellen

The Republican leadership in Congress is arguing: The debt limit is being breached because of all the Biden spending. 

You have majorities in the House and Senate – this is your problem, you fix it

As a political ploy, it sounds pretty effective.  But the debt limit is always reached on spending that occurred earlier – not the big spending Biden is asking Congress to approve today.  A trillion dollars plus  of today’s debt is due to the Trump tax cuts. 

The Biden spending hasn’t been enacted much less booked yet.

While Republicans say the Democrats have the votes to raise the debt limit, the problem is that Senate Republicans will not let the debt limit extension pass with just a simple majority of 51 (all the Democrats plus Vice President Harris)– they will not yield on the 60-vote supermajority protected by the filibuster.

No one has found a way out of this nightmare yet

The truly frightening undercurrent that is becoming visible is that some Republicans now seem to believe that it is OK for the United States to default – that if that occurs, then the ensuing catastrophe will be at the feet of Joe Biden and the Democrats. 

They lose. We win because they will own the country’s agony.

This is not going away.  It is not even close to getting solved.  The United States may well plunge over the fiscal cliff later this month.

Bruce Wolpe is a Ticker News US political contributor. He’s a Senior Fellow at the US Studies Centre and has worked with Democrats in Congress during President Barack Obama's first term, and on the staff of Prime Minister Julia Gillard. He has also served as the former PM's chief of staff.

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Trump’s campaign tactic – debase and disgrace the legal process



Donald Trump, former president of the United States, hated Arraignment Day I in Manhattan two months ago, the first time a former president had been criminally charged. 

Trump was being forced against his will into a proceeding he had utter contempt for.  He was being arrested and fingerprinted and photographed under an indictment under the jurisdiction of Manhattan in New York City for allegations of hush money payments and fraudulent bookkeeping practices to conceal criminal activity. Trump heard the charges read out against him and he entered a plea of not guilty.

Trump had a terrible day. Trump wore a scowl throughout. His countenance was fearsome.  What Trump hated most about his arraignment in New York is that he had to sit at a table with his counsel side by side with him — equal to him — and with the judge above him looking down on him. Trump could not control the discussion and could not interrupt to make his points.

Trump was subordinate to the judge. He was subordinate to no one as president.

Arraignment Day II

Arraignment Day II in Miami will be worse from Trump, even more stressful.  The charges are substantially more serious:  the alleged violation of federal criminal statutes involving the alleged mishandling and illegal possession of classified documents, lying to legal authorities, and obstruction of justice.  Potential penalties run to years in prison and millions of dollars in fines.

Trump throughout his business life had always crafted his affairs to avoid being a defendant. But in his term in office, he was caught up in it big time. He was a defendant in two impeachment trials – again, unprecedented events – and left office in disgrace.

But Trump does not feel disgraced. He never does.  Trump does not have a reverse gear.  He never retreats.  Never admits. Never concedes. Never yields.  Trump is never embarrassed. Trump never feels ashamed. When something goes wrong, it is always the fault of someone else.

And Trump never repents.

Trump can feel this way because Trump is waging war on behalf of his armies in “the final battle” for the future of the county. In his first, fiery post-indictment speech in Georgia, Trump said, “They’ve launched one witch hunt after another to try and stop our movement, to thwart the will of the American people.  In the end, they’re not coming after me. They’re coming after you … “Either we have a Deep State, or we have a Democracy…Either the Deep State destroys America, or WE destroy the Deep State.”

It is a powerful formulation, and his true believers love it.

Hours later, In North Carolina, Trump mainlined his distilled message for the Republican crowd:

“We are a failing nation. We are a nation in decline. And now these radical left lunatics want to interfere with our elections by using law enforcement.

It’s totally corrupt and we cannot let it happen.

This is the final battle.

With you at my side we will demolish the Deep State.

We will expel the warmongers from our government.

We will drive out the globalists.

We will cast out the communists.

We will throw off the sick political class that hates our country.

We will roll out the fake news media.

We will defeat Joe Bide and we will liberate America from those villains once and for all.”

Any lesser mortal would be staggered by these events.  Any other presidential candidate would be driven from the race.  But not Trump.

Debase and disgrace

Trump is using the same playbook today as he successfully triggered after being charged in New York:  debase and disgrace the legal process by terming it completely political.  Trump said the federal indictment is “election interference at the highest level.”

Almost every other Republican running for president has adopted this line, insulating Trump from pressure to leave the field.

Trump’s chief opponent, Florida Governor Ron DeSantis said after these indictments: “The weaponization of federal law enforcement represents a mortal threat to a free society. We have for years witnessed an uneven application of the law depending upon political affiliation.”

Republican congressperson Nancy Mace: “This is a banana republic. I can’t believe this is happening.” Rep. Marjorie Taylor Greene: “Democrats are arresting their political enemies. and they work together in their corrupt ways to get it done.”

Trump is using his affliction to raise millions of dollars from his base.

Trump will likely face Arraignment Day III in Georgia in August.  A state prosecutor is expected to charge Trump with criminal interference in the certification of Georgia’s vote for Joe Biden in the 2020 presidential election.

As of now, there is no sign of cracks in Trump’s support among Republican voters.  There is no surge to another candidate.  What remains to be seen is whether Republican voters, as they see Trump spend his days in courtrooms and his evenings at rallies around the country, reach a conclusion that this is a spectacle too far, too much to bear, and that they want to turn to another conservative populist who stands for them in the political trials— and not the criminal trials – of 2024.

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Donald Trump’s legal woes will serve him well



It’s not often that a U.S. President faces federal indictment, but if it’s going to happen to anyone, it might as well be Donald Trump first.

The news that Donald Trump is facing a federal investigation over the removal of secret documents from the White House in 2021 came as no surprise.

Keen watches of the Washington soap opera have seen this playbook before, albeit in a different form.

There is no doubt that Donald Trump is a Washington outsider. But as seriously damaged as he may be (thanks to the events of January 6), his support base has only grown whenever he faces scrutiny.

For his supporters, his legal woes mirror their own relationship with the government – a giant, unfair beast that picks and chooses its fights.

Trump is accused of storing sensitive documents—including those concerning matters of national security—in boxes, some even in a shower.

The documents were seized last August when investigators from the FBI executed a search warrant at Mar-a-Lago.

The Department of Justice has historically avoided charging people who are running for public office. Whether they should do that is a debate for another day. But it’s happening now. And it’s making it all too easy for Trump to claim there is a concerted campaign to get him away from the White House.

Trump exposed the deep state. IF they exist, they probably don’t want him back in power. Whether they exist doesn’t matter really, because plenty of Trump’s supporters agree with him, and believe the secret state is working against them. Call it QAnon, call it a conspiracy – it doesn’t matter in a democracy.

The DoJ now has to go all in. Failing to secure a conviction would be a serious embarrassment for the department.

This is the second time Trump has been indicted in recent months, yet the opinion polls show he only increases his popularity among MAGA and Republican voters. It leaves the Republican party in a difficult position. Support their leading candidate or support the law?

As other Republicans rallied around the embattled candidate, Trump held on to his loyal base of supporters.

For the Democrats, and for Biden, another reality will soon sink in – if Trump becomes President, and they lose office next year, how will a Trump-run DoJ deal with them?

Broadly, the tit-for-tat one-up-manship of U.S. politics is breaking tradition and potentially breaking the country.


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