The US can default at any given moment – Entrepreneur Elon Musk

Washington – Leading entrepreneur Elon Musk has warned that the US could ‘default’ at any moment given the ruling regime’s and administration’s ongoing spending. At this time, Musk added that it is no longer a question of whether the American economy can ‘default’ but when it will reach that stage. Currently, there is a fierce struggle in the US Congress on this issue and the opposition Republican Party has demanded a reduction in the expenditure on health insurance and social security. Some economists and analysts have expressed fear that due to the current political conflict, we will have to face a financial crisis like in 2011 and 2013.

In December 2021, the US Congress set a debt ceiling of 31.4 trillion dollars. But in October 2022, the Biden administration exceeded the limit of 31 trillion dollars and then on January 19, 2023, the debt limit set by Congress was also achieved. After that, the US Department of Treasury announced the implementation of ‘Extraordinary Measures’. It is said that the limit of these measures will end in June or July. So before that, the US Congress has to increase the debt limit.

US Treasury Secretary Janet Yellen had written a letter to the Parliament warning that the US economy could ‘default’. ‘Expenses will be controlled by taking different measures. But these measures can continue till June. After that, the administration will be forced to repay the debt; if it does not, the economy will be labelled as a debt-ridden economy’; the finance minister made a serious realization in the letter. Despite this letter sent in January, Parliament has failed to resolve the debt ceiling issue in the last three months. The Biden administration had announced ambitious and expensive plans to stimulate the economy and spend on social programs. It also includes the decision to write off student loans in the US. Due to this plan, almost 400 billion dollars will have to be paid over the next 30 years. In the background of increasing inflation and signs of economic recession in the United States, there are also indications that the Biden administration will bring forward a new plan, and due to this, it is predicted that the debt burden will increase to an alarming extent.

Due to the increasing debt burden, the total interest on the debt is likely to reach five trillion dollars in the next decade, analysts said. It has also been warned that the interest paid by the US in the next few years will be more than the country’s defence expenditure. Against this backdrop, the Republican Party warned that spending would also have to be limited if the debt ceiling is to be raised. Speaker of the House of Representatives Kevin McCarthy warned we would change the administration cost. President Joe Biden has argued that Congress must increase the debt limit. If Republicans stand firm on the decision, some of the plans that are part of President Biden’s agenda could be in trouble. Therefore, the Democratic Party has strongly opposed it.

Meanwhile, think tanks have pointed out that while the US central bank’s interest rate is increasing, the debt increase is dangerous for the US economy. Finance Minister Yellen had already warned that the risk of debt default could seriously impact the economy. Against all this background, the statement of entrepreneur Elon Musk draws attention.

हिंदी मराठी