Let go completely regardless of the 46 Republican senators who issued an open letter refusing to participate in the adjustment of the debt ceiling |

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Original title: Let go of it completely

  News from the Financial Associated Press (Shanghai, editor Shi Zhengcheng),After the U.S. Senate launched the budget mediation process for the $3.5 trillion spending bill on Wednesday, Capitol Hill, which has entered adjournment, has left a lot of uncertainty on the capital market. The most urgent one is the debt ceiling that is about to reach its peak. Now this problem also exists. Increasingly complicated tendency.

According to media reports on Wednesday, 46 Republicans in the Senate stated in a collective letter on Tuesday that they would never vote to raise the debt ceiling, which will also force the Democrats to continue to use the budget mediation process to adjust the debt ceiling.

(Source: Open Letter)

Republican lawmakers expressed in the open letter their anger at the Democratic government’s use of the budget adjustment process to spend money uncontrollably. They made it clear that the Democratic Party can only unilaterally raise the debt ceiling through this process, and emphasized that if the US sovereign debt defaults, it can only be The Democratic Party’s problem.

Considering that the budget adjustment process passed on Wednesday did not include an increase in the debt ceiling, this also means that Senate Democrats can either find 10 Republicans to support the legislation after starting work in September, or they can only quickly initiate another mediation. program. The four Republican lawmakers who did not sign the open letter are all members of the Appropriations Committee, which is responsible for overseeing government spending.

The background of the whole thing is that US government spending has increased significantly in the past year, and the legislation to suspend the debt ceiling rule also expired at the end of July. After reaching the current limit of 28.6 trillion US dollars, the US Treasury Department will not be able to continue issuing bonds to pay for a series of government expenditures, such as federal government employee salaries and social welfare expenditures. In theory, it will cause US Treasury bonds to default in extreme cases. U.S. Treasury Secretary Yellen has warned that shortly after members of Congress return to work in September, the Treasury Department will exhaust all means to face debt-free status.

Yellen’s speech is not alarmist. The US Congressional Budget Office estimates that the debt ceiling will be triggered in October or November.

What needs to be explained is that for the US Congress, the debt ceiling, a policy of restricting government spending, has become a mere legislative soap opera. According to statistics from the Federal Budget Committee, the U.S. Congress and the White House have had a history of adjusting the debt ceiling nearly a hundred times since World War II. The debt ceiling soared from US$1 trillion to US$3 trillion in the 1980s, and further rose to US$6 trillion in the 1990s, and doubled again in the following 10 years.

Republican lawmakers also stated in an open letter that “shameless” Democratic lawmakers expect a series of spending bills to make the US debt level reach $45 trillion by 2031.

Although no one would think that the debt ceiling issue will eventually lead to a US sovereign default, it does not mean that this matter has no impact on the capital market. At present, bond traders have begun to prepare for the sudden drop in U.S. bond issuance, and during the standoff between the two parties over the same issue in 2011, the S&P 500 index fell by 18% in four months.

According to the schedule, the Senate recess will last until September 13. Although the House of Representatives has indicated that it will return to Washington on August 23 to vote on the budget mediation process, it has not announced any plans for the debt ceiling.

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Editor in charge: Zhang Yujie SF107



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