U.S. Braces for Debt Ceiling Battle

• January 17, 2023
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The U.S. House of Representatives is bracing for a bitter struggle over the federal debt ceiling. While the issue is usually one of political theater that tends to be resolved before the country shoots itself in the foot with a voluntary default, things may turn out a little differently this time.

Toughness on spending plans and debt levels was one of the conditions extracted from new House Speaker, Kevin McCarthy, in return for the support of Republican hard-liners.  

The government will hit the Congressionally-approved ceiling on Thursday, Treasury Secretary Janet Yellen told both parties in a formal letter last week. After that, it will implement emergency measures to continue operating, but these will be exhausted by June. That timeline suggests nearly five months of effective paralysis on Capitol Hill as the two parties indulge in their usual game of trying to shift the blame.

McCarthy said at the weekend the GOP, which took back control of the House in November’s mid-term elections, will require spending cuts in return for agreeing to raise the ceiling