Budget changes in the US
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The U.S. House of Representatives, the Democratic Alliance, has imposed a government ban on October 1 and extended the U.S. border until December next year, creating serious threats to Republicans that could be exacerbated by the economic crisis.
Voting for the party line Tuesday night, with 220 Democrats voting for the bill and 211 Republicans vying for it, marks a major overhaul of Congress on key issues.
Legislation passed by the House will not be approved by the Senate, while 10 Republicans may need to support it in order to move forward.
If the government’s suspension is not met by the end of the month it could lead to the closure of most corporations on October 1 – and if no agreement can be reached at the lender level, the US could be forced to liquidate all its debts. Earlier this month Janet Yellen, Treasury Secretary, warned Washington that she could run out of money in October unless Congress intervened to increase debt.
“The failure could be a major risk factor for economic recovery from the Covid-19 epidemic,” Mark Zandi, an economist at Moody’s Analytics, wrote in a letter Tuesday. “The global financial market could be transformed and even if responded promptly, the American people will pay for this for generations to come.”
In a letter sent to Tuesday by Yellen, senior members of the U.S. Treasure Bond Advisory Committee warned of “serious risks” if the department were left with insufficient funds to repay its debts.
“If a short-term debt crisis raises doubts about US government debt repayment or its debt stability, the Treasury market could be severely disrupted which could lead to many market problems,” said Beth Hammack, Goldman Sachs global treasurer and chairman of TBAC. The letter is co-chaired by Brian Sack, global director of economics for DE Shaw.
“We are concerned that the uncertainty of long-term debt potential could lead to a long-term financial impact on Treasure,” he added. “Legal disputes that put the federal government at risk of undermining the trust of the rich, raise low expectations of debt in the US, and could have a negative impact on the search for wealth as our debt goes up.”
“Failure to act may be unthinkable, but even placing such a risk would be negligent and reckless,” warned Hammack and Sack.
The DRM Republican has opposed the expansion of credit unions for reasons that could spell endorsement by President Joe Biden, who is spending a lot of money, which he is trying to curb. However, rising debt could allow Treasure to be borrowed to use past money, including Republican-approved methods during the Donald Trump administration.
Political disputes over government funding and debt repayment between Democrats and Republicans come as lawmakers in Biden work to implement a plan to improve its social security spending, including climate change and taxation. Independent Democrats want a smaller package, combined with a lower tax rate for the rich and business, but progressive Democrats are deteriorating.
The House of Representatives on Tuesday will also provide more than $ 34bn in funding for Afghan refugees and disaster relief in the wake of the recent floods and fires in the US in recent weeks.
Rana Foroohar and Edward Luce discuss major topics in the financial and power struggle in U.S. politics every Monday and Friday. Enter a newsletter Pano