U.S. debt ceiling fight is warming up

Treasury Secretary Janet Yellen this week again urged Congress to address the so-called debt ceiling

  
Crown Resorts Ltd's flagship tower nears completion at Barangaroo, Sydney, Australia, April 17, 2020.

Crown Resorts Ltd's flagship tower nears completion at Barangaroo, Sydney, Australia, April 17, 2020.

REUTERS/Stephen Coates

(The author is a Reuters Breakingviews columnist. The opinions expressed are their own.)

NEW YORK - The spectacle of U.S. lawmakers arguing about the level of government borrowing after they have already decided what to spend is back. Having a separate statutory limit on Washington’s debt is an anomaly of America’s budgeting process that needs fixing.

Treasury Secretary Janet Yellen this week again urged Congress to address the so-called debt ceiling. After lawmakers temporarily suspended the borrowing limit back in 2019, it’s now once again a matter for separate debate, inviting partisan bickering. If agreement isn’t reached to increase it, the Treasury will gradually run out of money, shutting down parts of the government along the way.

That’s manageable for the short term, but federal government debt benefits from being perceived as the safest in the world, despite now exceeding 100% of GDP. A standoff that raises the specter of default could put that perception at risk. While this mechanism for budgetary second-guessing remains, a few lawmakers might be willing to go against the widely accepted notion that finance is a confidence game. They’d regret it. (By Richard Beales)

(The author is a Reuters Breakingviews columnist. The opinions expressed are their own.)

(Editing by Lauren Silva Laughlin and Marjorie Backman) ((SIGN UP FOR BREAKINGVIEWS EMAIL ALERTS: http://bit.ly/BVsubscribe))


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