US Debt Ceiling Suspension: Reliable Legislation Is Essential

Published in Niigata Nippo
(Japan) on 30 May 2023
by (link to originallink to original)
Translated from by Dorothy Phoenix. Edited by Wes Vanderburgh.
Powerful nations have a responsibility to safely avoid situations that would strike a blow to the world economy. We hope for the speedy passage and establishment of necessary measures.

Regarding the U.S. federal government's debt ceiling, President Joe Biden and opposing Republican, Speaker of the House Kevin McCarthy, agreed to a suspension of the ceiling, which will be in effect until January 2025.

If the relevant law is established,* it will mean that the government will be able to borrow without any limit during that period.

In January of this year, the U.S.' remaining debt balance reached the upper limit of about $31.4 trillion (approximately 4,400 trillion yen).

If the debt ceiling is not raised by June 5, the U.S. might fall into default on its debt for the first time in history, possibly incurring a worldwide recession.

The bill is expected to be voted on by May 31. If it is approved and Biden signs it, it will become law. It can be said that a path to prevent a crisis is in sight.

But the bill's outcome will depend on how much support both Biden and McCarthy can gather from within their parties. The question is, can they demonstrate leadership ability?

According to the agreement between the administration and the Republican Party, spending for the 2024 fiscal year (October 2023 through September 2024) will be held to the same level as for 2023, except for defense spending, and employment requirements for low-income earners to be eligible for support will be stricter.

It can be said that the bill is a compromise that the main factions of both parties can agree upon.

However, during the negotiation process, Republican hardliners close to former President Donald Trump (known as the MAGA faction) sought to prevent a compromise, and the radical left progressive faction called on the Democrats to reject Republican demands for spending cuts. There is a chance of criticism of the compromise from both parties.

In both the House of Representatives and the Senate, there is not a big difference between the number of seats held by the Democrats and the Republicans.

The difficult negotiations also affected the Biden administration's diplomacy.

There was concern that Biden might not be able to travel to Japan for the beginning of the G7 Hiroshima Summit, and he ended up having to excuse himself during the conference in an impressive display of flexibility.**

Trips to Papua New Guinea and Australia were also canceled, and plans to drive a nail into the relationship with China, which has a growing influence in the region, were thrown into disarray. The move has drawn harsh voices from leaders of several Pacific nations.

As the next presidential election draws near, antagonism between the two parties is expected to intensify. For the sake of the international community's stability, it is critical that the division in the U.S. Congress does not deepen.

On May 29 at the Tokyo Stock Exchange, buying expanded due to favorable feelings about the debt ceiling agreement, and the Nikkei Stock Average surpassed 31,200 yen, the highest level in 33 years. However, a sense of uncertainty remains about whether the bill will pass, and the upward momentum did not continue.

The bill's outcome will have a significant impact on the Japanese economy, which is trending toward recovery. We want to carefully observe this movement without negligence.

*Editor's Note: The Fiscal Responsibility Act of 2023 was signed into law on June 3 and averted the debt ceiling crisis.

**Translator's Note: The implication here is that Biden had to be flexible during the G7 conference to deal with both the summit and the debt ceiling crisis at home.


米債務上限停止 確実な法成立が不可欠だ

大国の責任として、世界経済へ打撃を与える事態は確実に回避しなければならない。法案の速やかな可決、成立が求められる。

 米連邦政府が借り入れられる債務の上限について、バイデン大統領と野党共和党のマッカーシー下院議長が2025年1月まで効力を停止することで合意した。

 関連法が成立すれば、期間中は上限を設けずに政府が借り入れできるようになる。

 米国の債務残高は今年1月に上限の約31兆4千億ドル(約4400兆円)に達した。

 6月5日までに債務上限が引き上げられなければ、米国史上初のデフォルト(債務不履行)に陥る可能性があり、世界的な景気後退を招きかねない。

 法案は今月31日に採決される見通しだ。可決し、バイデン氏が署名すれば成立する。危機回避に向けた道筋が見えたといえる。

 ただ成否はバイデン、マッカーシー両氏が党内の支持をどれだけ集められるかにかかる。指導力を発揮できるか問われよう。

 政権と共和党の合意では、24会計年度(23年10月~24年9月)は、国防費を除く歳出を23年度と同水準に抑えることや、低所得者向け支援の就労要件を厳しくすることも盛り込んだ。

 両党主流派が賛成できる折衷案といえるだろう。

 しかし協議の過程では、共和党はトランプ前大統領に近い保守強硬派「MAGA(マガ)」が妥協を拒み、民主党は急進左派が、共和党の支出削減要求を突っぱねるよう求めた。両党からは妥協への批判が上がる可能性がある。

 米議会は上下両院とも与野党の議席数に大きな差はなく、速やかな法案可決には与野党双方の賛成が欠かせない。

 協議の難航は、バイデン政権の外交にも影響した。

 今月開かれた先進7カ国首脳会議(G7広島サミット)では、当初バイデン氏の来日が実現するか懸念されたほか、協議に伴い中座を余儀なくされるなど、余裕のなさを印象付けた。

 パプアニューギニアやオーストラリアの外遊も取りやめになり、地域で影響力を高める中国にくさびを打ち込む対中戦略にも狂いが生じた。太平洋諸国の指導者からは厳しい声が上がった。

 次期大統領選が近づけば与野党対立は先鋭化が予想される。国際社会の安定に向けても、米議会の分断を深めないことが重要だ。

 29日の東京株式市場は、債務上限問題での合意が好感して買いが広がり、日経平均株価は3万1200円を超え、33年ぶりの高値水準となった。ただ法案可決に不透明感が残ることもあり、上昇の勢いは続かなかった。

 法案の成否は回復基調にある日本経済にも大きく影響する。油断せずに動向を注視したい。
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