- United States: The Country’s Level of Debt Has No Limits Anymore
Occurring against a background of relative indifference, the US federal debt ceiling has been suspended until March 2017. Many voices were raised for a long time against this ceiling, as it was considered an artificial constraint, oscillating between too restrictive and a generator of political obstacles on one side, and not restrictive enough on the other, due to its ultimate constant rise. Everyone is happy now: this time, the ceiling has not only been raised, it has been suspended in a landmark precedent.
The agreement reached at the end of October is generally considered a victory for Obama, as he will no longer have to worry about the debt limit until the end of his term. Nevertheless, and our readers are suspecting it, our team does not see it exactly that way.
First, on the content of the expenditures: Obama must have conceded an equal increase in both domestic and military budgets. This means approximately a 3% increase for the defense budget, against only 0.7% for the rest. This shows already that it is rather the Republicans who got what they wanted. Yet, we also understand that the risk of shutdown is still an imperative motivation to the current government, forcing it to negotiate with the parliamentary majority.
Moreover, it is probably in anticipation of a possible alternate to the US presidential election of 2016 that Republicans have easily voted for that agreement. According to our team, the fate of the debt ceiling is now sealed – it was too much: everyone understood that the ceiling was useless, and it will not be difficult for the future president to permanently abolish it, or to indefinitely extend the suspension. The frail US firewall against debt has fallen, because it was not able to stop the fire…
(Read more in the GEAB 99, Nov 2015)