Briefly: US spy chief Avril Haines has warned that China and Russia would “love” to see the US descend into chaos if Congress can’t agree to extend the country’s borrowing limit.
The US is one of only two industrialised nations with a hard debt ceiling. In the other nation (Denmark), the government’s borrowing limit attracts little attention and is seen as a formality or technicality.
But in the US, the debt ceiling periodically triggers a broader debate about spending and the role of government. That’s now happening again, and the resulting brinkmanship risks the US defaulting on its debts. That would mean:
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- 📉 The immediate halt of 10% of US economic activity
- 👷 The loss of between 1 and 7 million jobs
- ⬆️ A further spike in interest rates
- ⬇️ A share market crash, and
- 🌏 Global turmoil.
Intrigue’s take: A needless US debt default would be the biggest self-inflicted PR mess since United Airlines beat up “re-accommodated” a passenger. And it’d play neatly into a narrative of Western decline that’s been getting plenty of airtime with propagandists in Moscow, Beijing and beyond.
Also worth noting:
- The US has raised its debt ceiling 78 times since 1960. Denmark has raised its own ceiling once, when lawmakers doubled it in 2010.
- The ‘X-date’ (the point at which the US might default on its debts without increasing the debt ceiling) could be as early as next month.