With new leadership in the U.S. In The House of Representatives, the risk of deadlock over the debt ceiling may lead to a fiscal crisis the highest ever, according to Jason Furman, former top economic adviser during the administration of President Barack Obama.
The Debt Ceiling is the maximum amount of money the United States can borrow by issuing bonds. After 2011, there are fears of debt ceiling risk for the market again in 2023.
Currently, the debt ceiling is under $31.4 trillion U.S. government debt, which is not comparable.
Since the debt ceiling calculation stands at $31.3 trillion. Most estimates show that the debt ceiling will reach late in 2023, but it is very close.
The Treasury Secretary may take extraordinary measures to buy several months of additional time beyond that, but still, the best ceiling will likely approach at some point in 2023.
Some reports suggested that the debt ceiling would be raised during the lame session after the midterms.
What Happened In 2011?
The U.S. government came into debt a few days back in August 2011, and this promoted the sell-off in the stock market. The sell-off was raised in the final weeks of July 2011 and continued the days after the ceiling was raised due to S&P’s rating downgrade of the U.S. government’s credit rating.
At that time, many countries, such as Canada, Germany, and Australia, held higher S&P ratings than the U.S. The outcome is a reflection of the debt ceiling negotiations of 2011.
2011 debt ceiling problems came after the Republicans won control of the House and Senate in the 2010 midterms under a Democratic presidency, which looks similar in 2023. Most importantly, debt ceiling negotiations will likely be a key leverage point for Republicans.