Lawmakers in the United States are set to leave for a two-week recess, leaving the issue of the debt ceiling unresolved. This has raised concerns among economists, including Heather Boushey - member of the Council of Economic Advisers and Chief Economist to the Invest in America Cabinet.
Boushey reportedly expressed urgency in dealing with the debt ceiling crisis, as a concrete outcome is yet to be achieved. The debt ceiling is a legal limit on how much money the US government can borrow to meet its financial obligations. If this limit is not raised or suspended by Congress, it could lead to a default on payments and have severe economic consequences.
According to Boushey, failure to address this issue could result in higher interest rates for consumers and businesses alike. She also warned that an increase in borrowing costs would put further strains on already struggling families who are still recovering from the impacts of COVID-19.
The debate over raising or suspending the debt ceiling has been ongoing between Democrats and Republicans. While Democrats argue that it needs to be addressed urgently through bipartisan support, Republicans have said they will not provide their votes unless Democrats agree on spending cuts.
As lawmakers head off on their recess without resolving this pressing matter, there remains uncertainty around what will happen when they return. The potential consequences of political deadlock and delay could have long-lasting effects on both national and global economies.
It remains unclear what actions will be taken upon lawmakers' return from their break; however, economists like Boushey continue urging them towards immediate action before either party's agenda causes irreversible damage.