The following guest post from Sylvia.
The ongoing debt ceiling has somewhat simmered down as the Congress has shifted its attention to the more important issue now, the budget and the fiscal condition of the country. But it’s predicted that the issue may resurface in the near future and that may create new debates again.
What do the experts comment on the debt issue?
The Administration was completely for raising the debt ceiling as the country will be fraught with dire consequences if the debt ceiling is not raised beyond $14.3 trillion. But the Republican lawmakers have refused to comment on the situation until President Obama takes some valid steps regarding Medicaid, Medicare and Social Security that is weighing down the pockets of the country.
According to Senate Minority Leader Mitch McConnell, the Republicans in the Senate wouldn’t vote for raising the debt ceiling unless something important is done with the debts that the country has incurred. Serious discussions are waiting and the time is already wasted. These are the words of the Senator McConnell.
What are the repercussions suffered if the debt ceiling is not raised?
The Senate Republicans worked on the Balanced Budget Amendment to formulate a budget for the whole year. The amendment is a Constitutional one and that it’s a condition to raising the debt ceiling. The budget amendment and the debate over debt limit is much of a far cry for most of the Americans. The most important part of raising the debt limit is not to raise the expenditure but to help the Treasury to pay the vendors according to the budget system.
If the debt ceiling is not raised, the Treasury may not be able to make payments to the agencies and they may in turn delay the Social Security and Medicare checks. Many of the repercussions may get delayed if the debt ceiling gets raised. There are quite a lot of mechanisms in check by the Treasury if the debt ceiling is raised. The two parties may also reach a sound decision before the situation gets out of hand.
What steps can be taken to avoid sudden crisis?
The growth-enhancing strategies have to be made so that America can move forward. This can be done by making more opportunities for jobs and hiring more people. The corporations can try to invest more as the jobs and the demand for them grow. But the growth is not without any risks. But if the risks are averted, the growth can easily be experienced. Usually the risk of a fiscal stimulus must add up to the growth or it may add up to the debt burden.
What are the three risks attached to the fiscal growth?
There are some of the risks that have to be tackled. Take a look the risks that are discussed below:
There are few things that are needed to achieve lower liabilities, a better asset base, and a reduced rollover risks. To achieve these, certain things have to be kept in mind, such as spending cuts, increasing the debt maturity time, and increasing the taxes. But any sudden changes in any of the policies can be harmful for the economy of the country. So, a prudential and well-thought plan is necessary. Tax cuts are important to provide for the health care benefits and also the employment benefits.
The American debt crisis is steeped in lot of risks. The investors and other countries would try to go into more diversified base so that they can get the returns for their investments. The borrowing costs will likely increase and will also ruin the liquidity premiums that are built into different end of the Treasury.
If the fiscal matters are not managed now, then the country may fall into bigger risks later on. The political scenario is more into borrowing now and passing on the risks for the future. Any political party would like to borrow more to solve the current problems rather than think of ways to reduce that. It’s anytime better to think of the fiscal problems while undertaking the risks at the same time.
It’s imperative that the government think about the country well before they take any step in solving the debt problems. A slow and definite fiscal growth is very important to tackle any risks coming in the way of growth.
This article was written by Sylvia, she writes content mostly for financial communities and on daily basis, she performs research on the US market and covers debt, debt relief, saving, investing, budgeting, being frugal and credit cards. If you need any additional information regarding debt you can visit her website at DebtConsolidationCare.com