Treasury Secretary Janet L. Yellen announced last week that America had reached its existing borrowing cap of $31.4 trillion, starting the debt issuance suspension period. After this point, the US will begin to default on its debt, which risks plunging the country into recession.
Mr Wessel told Express.co.uk: “In the past, there have been agreements to create a commission to find ways to reduce prospective deficits (that’s not likely to fly this time) or agreements to cap certain categories of spending.
“If, as I anticipate, Congress will fail to raise the debt ceiling in time for the federal government to pay all its bills, there’ll be a crisis – perhaps a big financial market reaction – and that may push both sides to find some face-saving compromise.”
Mr Wessel said he doubts “there’ll be a compromise before June” on how to raise the ceiling, adding: “I think this is going to go down to the wire.
“The White House and Treasury argue correctly that the federal government borrows heavily because it spends more than it takes in as a result of spending and tax laws passed by Congress.
“This is like running up a credit card tab and then refusing to pay the bill. It’s irresponsible.”
