The Treasury Department estimates the federal government will run out of money by November 3. With that deadline less than two weeks away, Republicans and Democrats are facing intense political pressure to lift the legal cap on government borrowing as soon as possible.
However, the two bills suggested so far have been criticized by the White House, which seeks to increase the debt cap without any extra provisions.
The first bill, which allowed the government to prioritize its debt obligations, was seen by the administration as inefficient and dangerous for the country's "creditworthiness".
The second piece of legislation provided for a 1.5 trillion dollar increase of the debt cap, but at the price of massive cuts on social spending.
Market analyst at financial broker City Index Ken Odeluga spoke to Sputnik in an exclusive interview.
“The context is the same as in 2011, when the US was also on the verge of breaching its debt limit. The same situation and the same factors were at play at that time. To a large extent it looks like the Congress has stumbled into this situation again.”
He also said, “They announced the resignation of the speaker that caught people off guard and distracted them. You mix that with a bit of opportunism as one should expect and we reach the point where we are today,” Odeluga told Sputnik.
He went on to say that, “It is a serious matter but it is not a deeper crisis than it was in 2011.” According to him he doubts that the limit will be breached. He goes on to explain why he thinks that.
“The US Treasury said that it would delay the upcoming auction of the debt crunch that was due to happen on Tuesday. This is a serious matter; the funding of government is the first symptom of it. It impacts on the strategic effectiveness of the United States,” the broker said.
Unless a solution is found, the government could default on its loans for the first time in modern US history.
