US debt ceiling: A nation divided and indebted cannot stand
That a default may occur in the future is a risk that must be addressed. But a voluntary default is the financial equivalent of driving a car off a cliff
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THE United States hit its US$31.4 trillion debt ceiling on Jan 19, 2023, a limit Congress approved only two years ago. The US Treasury is now taking extraordinary emergency measures to prevent the nation from defaulting.
The current battle over the debt ceiling reveals a painful reality that the nation must confront. There are two important principles at stake. The first is that maintaining US creditworthiness is essential to the nation’s economic health. To voluntarily default on the federal debt would compromise the very foundation of the country’s economic success. The second is that the current path of unsustainable fiscal deficits could lead to an involuntary default in the years ahead that would be just as catastrophic.
These uncomfortable truths have some critical implications:
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