US Debt Ceiling Saga Just ‘Sabre-Rattling’ Across Party Divide

US House Speaker Kevin McCarthy and House Minority Leader Mitch McConnell hold a news conference on May 9, 2023, following a highly-anticipated meeting on the debt ceiling at the White House.InternationalIndiaAfricaJames TweedieThe US debt ceiling crisis rumbles on as the June 1 deadline for raising the government borrowing limit looms. Economist, professor and consultant Mark Frost said there was no need to panic, but Todd “Bubba” Horwitz, chief market strategist at BubbaTrading.com, warned the taxpayer would pay the government’s credit addiction.The partisan row over the debt ceiling crisis is just a show of sabre-rattling, an economist has argued.Tuesday’s meeting between Democrat President Joe Biden Republican Congress leaders Kevin McCarthy, the House of Representatives speaker and Senator Mitch McConnell, failed to yield a deal on cutting spending in return for lifting the federal borrowing limit from $1.1 trillion to $1.5 trillion.Treasury Secretary Janet Yellen warned earlier this month that if the limit was not raised by June 1, the government would have to default on some of its obligations.Mark Frost told Sputnik that everybody needed to calm down because “we’re not going to go over the cliff.””Let’s define the cliff as we’re going to default on the interest owed on our bonds. That’s the only thing that matters,” Frost said. “And as long as we don’t do that, everything’s fine.”The economist argued that the partisan fighting over the government borrowing limit was just theatrics.”Everybody got to rattle their swords,” Frost said. “McConnell could read the news headline: ‘California Falls off into the Ocean’ or ‘Nuclear War Begins’ and it would get lower energy.”The academic was also blasé about the risks of a credit rating downgrade for the US if the government is forced to temporarily stop interest payments on Treasury bonds or social security benefit payments to citizens.”It doesn’t matter whether it gets resolved, it will automatically resolve itself because they’re not going to do it. It’s just something they’re not going to do,” Frost said. “Because if they do it, it’s a giant neon sign that says we’re not taking inflation seriously.”He insisted the two rival parties would never “let the debt default,” and that Social Security payments “can always be made back up” without undermining the value of the dollar.”What will hurt the dollar positioning directly is if the dollar no longer is a good store of value like it has been traditionally,” Frost warned. “If that stops, that’s a nightmare scenario. Social Security payments being suspended for two weeks or whatever, that will work itself out politically as the as old people start complaining.”EconomyUS Debt Ceiling Crisis Сasts Shadow on G7 Finance Meeting06:40 GMTTodd “Bubba” Horwitz told Sputnik that Biden was not in a strong position to bargain with the Republican-controlled House of Representatives as the economy has faltered under his leadership.”He’s totally blown the entire situation. We don’t have full employment. We have the worst employment we’ve had in 50 years. You look at the jobs and maybe it’s 3.5 per cent unemployment, except that those are part time jobs,” Horwitz stressed. “We are in as bad a shape as we can possibly be. The failing banks, overspending, too many social programs and not enough hard work to put the country back to work,” he added. “Plus, the fact that you’ve given up all your power to China and Saudi Arabia and you’ve basically turned the United States to a virtual sewer right now.””The fact is that the average American doesn’t have $400 for an emergency. The fact is that we’re in a major recession, which nobody will admit to. Okay, I don’t know about you, but these people are not able to spend what they’re about to spend and are paying so much more at the store.”The market analyst said that contrary to former vice-president Dick Cheney’s assertion that “deficits don’t matter”, the federal government should not be “operating in a negative.” The “assumption that we can create debt and print money and they’re buying our debt” was wrong, and in fact “the American taxpayer is paying for that debt,” Horwitz said.For more cutting-edge commentary on current affairs, check out our Sputnik Radio shows.

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