The United States government has spent three months juggling taxes to avoid an event that would be apocalyptic for financial markets around the world: the default of the world’s largest economy.
The crisis that is brewing has much more to do with a complicated political environment than with a bad economic-financial situation in that country.
Of course, that the United States has a debt ceiling of 31.4 trillion dollars (trillions, to understand it in the measurement there) and that they have already exceeded it does not sound like something very healthy. But hey, we are talking about the economy that has a monopoly on the printing of the dollar and to which everyone runs for refuge when there is turbulence.
The problem is not in the enormous amount of the debt, but rather in the fact that the US government can no longer borrow to meet its commitments, which also implies stopping paying pensions, suspending basic social services, or failing to comply with the service of its financial commitments.
It was last January 19 when that indebtedness ceiling was reached and since then the Treasury Department has made adjustments in its expenses to cover those shortages left by the impossibility of borrowing.
But this time that the Treasury, in charge of Janet Yellen, has gained, only opens a window of opportunity that would close in a little more than 40 days, the calculations are that on June 4 it would default on some of its many obligations of expense.
The financial cost that such a situation would imply is something that is difficult to calculate, because the market reaction would be panic at the expense of all economic agents, whether or not they have Treasury bonds, stock shares or assets in the financial markets.
What is needed to avoid a catastrophe of this magnitude for the government of Democrat Joe Biden?
Basically, that the Republican majority of the House of Representatives contribute the necessary votes to modify that margin of indebtedness. Yes, the same ones that exalted Donald Trump who was in charge of triggering spending in an enormous way, after Democrat Barack Obama had achieved fiscal balances.
But this issue is political and that Republican majority woke up Tuesday with the news of President Biden’s reelection intention.
Now that Biden’s political intentions are clear, it will be difficult for Republicans to back down from their strategy of supporting an increase in the level of public debt in exchange for a cut in the emblematic programs of the Democrats.
The level of polarization that US politics has reached is more than evident, and this more radical environment must also be pointed out to Trump, but it is necessary to see what are the scope of the politicians of the two parties to stretch the financial league until an eventual breaking off.
For now, as the fatal date approaches, greater pressure from the markets will begin to be noticed.
