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President Joe Biden talks about passing an assault weapons band as he delivers the State of the Union address to a joint session of Congress at the U.S. Capitol, Tuesday, Feb. 7, 2023, in Washington.InternationalIndiaAfricaIt’s time for Washington to clean things up at home as the US has no more room on the national balance sheet to absorb more deficits, financial and geopolitical commentator Tom Luongo told Sputnik, while speaking on the unfolding fight between the GOP and the Democrats over the debt ceiling increase.”[US President Joe] Biden wants a clean raise without strings, exactly the opposite of the November 2021 fight where [then-House Speaker Nancy] Pelosi demanded tying spending bills to the debt ceiling,” said Tom Luongo. “The GOP won that fight. Or, in my view, the Fed and New York banks won that fight. It was the beginning of the current era of tight monetary policy in the US. Biden lost that fight because he never had a majority in the Senate. This time, he’s facing the same challenge, but with a GOP majority in the House willing to burn the speaker to the ground, if he doesn’t cut spending.”
US Heading Into a Wall
Treasury Secretary Janet Yellen sent a letter to US lawmakers on Monday urging them to hurry up with their debt ceiling decision since the agency may be “unable to continue to satisfy all of the government’s obligations by early June, and potentially as early as June 1.” The Treasury secretary cautioned, however, that the projection is imprecise. The Congressional Budget Office (CBO) on Monday raised the red flag too, warning that there is now a “significantly greater risk” that the US could run out of funds in early June. Previously, the CBO suggested that US lawmakers should decide the debt ceiling fate until September 2023.Luongo believes that Yellen and Team Biden are deliberately fanning up hysteria to twist the hand of US lawmakers.
"[Yellen] has been playing up this debt ceiling fight going back to November, as a warning that she will get her way to continue unlimited spending or she will force a default," he said. "This was a warning to the incoming GOP majority in the House (and de facto majority in the Senate) that she and President Biden will force a default by not paying on US Treasuries rather than the Executive Branch, i.e. the president, shut down portions of the government until a deal is reached. The big picture here is creating chaos for the financial markets to consider – freezing foreign capital that may want to flee into the US. That’s the goal. Yellen doesn’t have a lot of cards but she and Biden will bluff until the very last minute."
At the same time, the financial commentator acknowledged that it is non-sustainable for America to keep increasing its national debt. According to him, the US has no more room on the national balance sheet to absorb more deficits. Luongo lashed out at Team Biden for their unwillingness to make even the barest attempt at changing course and called them “vandals put in charge to ensure the destruction of the US.””This is a serious problem because of the degradation of our political sphere here in the US. Janet Yellen and the Biden administration do not represent the American people at all,” the commentator remarked.AmericasBiden Grudgingly Agrees to Discuss Debt Ceiling With GOP 14:49 GMT
Debt Ceiling Fight
As a response to Yellen’s statement, Biden called the top four congressional leaders, including House Speaker Kevin McCarthy, to discuss raising the debt ceiling. Reportedly, the meeting has been set for May 9.As per Luongo, the upcoming fight over the debt ceiling raise is of utmost importance.Biden has long refused to negotiate the raising of the nation’s borrowing with McCarthy. Meanwhile, on April 26, House Republicans adopted the Limit, Save, Grow Act of 2023 to raise the US debt ceiling by $1.5 trillion in exchange for the substantial reduction of spending levels for most recent federal programs. In response, the US president threatened to veto the initiative.Biden and the majority of the Democratic Party earlier signaled that they would accept nothing less than a standalone debt ceiling increase. However, late last week, Axios reported that divisions have been brewing for quite a while between House and Senate Democrats. In addition, Democratic Senator Joe Manchin also demonstrated some dissent, signaling that even though he does not agree with all the provisions of McCarthy’s debt ceiling legislation, it presents a good platform for further negotiations.AmericasHouse and Senate Democrats Divided Over Debt Ceiling Talks30 April, 16:00 GMT
"In the Senate, Chuck Schumer is Majority-Leader-In-Name-Only, able to only set the committee populations and leadership," Luongo said. "Legislatively, he’s a lame duck. Joe Manchin is in charge of this negotiation. The closer we get to 2024, the more DNC solidarity on insane spending against the wishes of the American people will fail. Manchin can force a Biden veto. Biden’s legal troubles are also mounting. If Schumer loses this fight Biden will lose his political cover over the Hunter Biden laptop and his corruption in Ukraine."
Clouds have been gathering on Biden’s horizon for quite a while with various American commentators suggesting that the US intelligence community and some senior military figures have grown disenchanted with Team Biden. Hence the Nord Stream and Pentagon leaks, which alleged dangerous political gambling by Biden operatives, according to the observers. In addition, a new IRS whistleblower complaint pertaining to the ongoing investigation into Joe Biden’s son, Hunter, threatens to taint the incumbent’s 2024 reelection bid.”A settlement is inevitable,” Luongo said. “The question is who will win. If the GOP holds their water and gets most of the spending cuts it wants, it will set off a chain of events that Biden cannot control politically. It will be a good thing for the US.”AmericasGOP Lawmakers ‘Free’ IRS Whistleblower to Testify About Hunter Biden28 April, 17:38 GMT