"We strongly urge the United States to bid farewell to this bad habit" debt | default | United States
The Nippon Keizai Shimbun published an editorial entitled "Farewell to the bad habit of taking the economy hostage" on June 4, with an excerpt as follows:
The United States, which led the world economy, finally avoided the first treasury bond default in history. US President Biden has reached an agreement with Republican Speaker of the House McCarthy to pass the Financial Responsibility Act, suspending the debt ceiling until January 2025.
The unstable factors that shook the world economy have finally moved away. On the other hand, it is evident that fruitless political struggles have led to a decline in the credibility of the United States, which is in a position dominated by Western style democracy. The United States is not only taking its own economy, but also taking the world economy as a hostage. We strongly demand that the US government and Congress bid farewell to this bad habit.
The United States has passed a bill to establish a government borrowing limit. Affected by the COVID-19, the US debt reached the ceiling of US $31.4 trillion in January. The opposition Republican Party is demanding that the government reduce fiscal spending, while the ruling Democratic Party is hoping to maintain the current policy. The opposition between the two parties has increased the risk of the government defaulting on its debt on June 5th.
On May 22nd, US President Biden and House Speaker McCarthy held talks on the debt ceiling issue in the Oval Office of the White House.
The downgrade of the US sovereign debt credit rating in 2011 caused severe financial market chaos, and the same chaotic situation may reappear. This may lead to a cooling of the US, Europe, and even the world economy, while the US and Europe are struggling to address inflation issues. Biden had to shorten his visit abroad, and the debt crisis caused damage to the credibility of the United States in the monetary and diplomatic fields.
The two parties in the United States reached an agreement at the last minute to reduce fiscal expenditures other than social security and defense costs, and strictly set standards for distributing food subsidies to low-income individuals. The government may reduce the fiscal deficit by $1.5 trillion within ten years. The United States has not set a temporary suspension of its debt ceiling before the November 2024 US presidential election, with the aim of not using government debt as a tool for political struggle.
At present, the gap between the rich and the poor is widening, and extreme ideas are spreading on the Internet. Against this background, the division of American society is intensifying. There are also strong opposition within the ruling and opposition parties to reaching a compromise this time.
Biden delivered a speech on the 2nd, boasting that "we have avoided economic crisis and chaos", and McCarthy also emphasized the results of reducing fiscal spending, saying "we have made history.". The question is whether it is possible to reflect on this chaos and effectively apply the lessons and achievements of the agreement to repair social division.
The mechanism for maintaining fiscal discipline is essential. I hope that the US Congress will continue to work hard to find a rational solution through sincere consultations. If the Democratic Party and the Republican Party engage in infighting and artificially lead to economic deterioration, it will only expose the chaos of Western style democracy.
