On Jan. 19, the U.S. reached its debt ceiling, the maximum amount the federal government can borrow to pay for obligations that lawmakers and presidents have previously approved.
That debt ceiling currently stands at $31.4 trillion. It was established more than a century ago and has been adjusted more than 100 times since World War II.
Reaching that cap limit has triggered the U.S. Treasury Department to take extraordinary measures to prevent defaulting. Analysis of the situation in major news outlets say these efforts primarily consist of shifting funds to postpone a potential default, but warn those measures will only buy about six months of time. A Jan. 19 letter from Treasury Secretary Janet Yellen to House of Representatives Speaker Kevin McCarthy notes that such actions have already begun.
What happens if Congress and the White House can’t strike a deal to raise the debt ceiling? Nothing good for the economy. In a Jan. 13 letter to congressional leaders, Yellen warned that deadlock on the matter could cause “irreparable harm” to the U.S. economy and perhaps global financial stability.
The National Association of Wholesaler-Distributors — which brands itself as the voice of the $8.1-trillion-dollar wholesale distribution industry — issued a statement from CEO Eric Hoplin on how a U.S. debt default would impact the sector.
“The United States government has nearly exhausted its borrowing capability and is now at risk of running out of cash and defaulting on its debts, putting our nation at tremendous risk for economic devastation and hardship. Washington has once again shown that out-of-control government spending will directly have a negative impact on American households and businesses during an already difficult economic time. Political leaders must come together and discuss real solutions to this problem and find ways to correct the behavior that has led us to this point.
The wholesale distribution industry and its workforce would immediately feel the impact of the United States defaulting on its debt potentially later this year. It is a national embarrassment that the government has essentially maxed out its credit card and it now has limited ways to pay off the balance. Instead, the government wants to increase that credit limit even more so it can continue to spend borrowed money to fund wasteful programs and legislation that do not yield positive economic growth. Our political leaders cannot continue down this wasteful path and must find a real solution as soon as possible.”
NAW will host its annual Executive Summit Jan. 31-Feb. 2 in Washington D.C., and MDM will be in attendance.