Biden Defaulting on the Debt to Own the Crypto Bros?
Well Friends the president has gone and again made the debt ceiling political for the crypto crowd. And so today we are diverting temporarily from our normal Bitcoin and crypto industry coverage to move into the most significant market issue right now, which is the debt ceiling debate. This will serve as a bit of a primer. I will avoid the temptation to get political with it, as always, and we'll just try to understand exactly where we are going into this critical week. Right now, the debt ceiling is currently at nearly $31.4 trillion, with around 24.6 trillion held as bonds by investors, private institutions, and other market actors. The U.S. debt is the largest of any nation state, exceeding the amount currently outstanding for the next four countries combined. In mid January, the limit of borrowing was reached, leading the US Treasury to begin what's known as extraordinary measures to stretch the remaining cash a little further. These measures trim budget expenditure around the edges by deferring time and sensitive spending, such as making contributions into government worker savings plans, and topping up the assets held in the exchange stabilization fund. Earlier this month, treasury secretary Janet Yellen announced that despite these measures, the treasury looked set to run out of cash by the beginning of next month, leaving officials precious little time to sort out a deal. The negotiations had been ongoing for the better part of the last few weeks, although heading into the weekend the tone had soured. Earlier last week, both President Biden and House Republican speaker Kevin McCarthy, who is heading up negotiations for the GOP, expressed optimism that a deal could be close. And yet as the weekend rolled around, no deal was there to be had. Now part of the reason is that the two parties are very far apart in terms of what they want. The GOP are asking for significant budget cuts. In particular, they're looking for cuts across social spending by ramping up work requirements for government aid, as well as kneecapping flagship democratic policies like clean energy incentives with the inflation reduction act, and additional funding for the IRS. Last month, Republicans passed a House bill which would suspend the debt ceiling until March of next year, but the bill contains such deep spending cuts that it was viewed as a nonstarter for Senate Democrats to consider.