Opinion| The American debt crisis and the 2024 elections

There is a direct link between the 2024 elections and the government debt ceiling crisis. That is the government’s plans and economic directions are part of the US presidential election campaign between the Republican and Democratic parties.

Markets began to prepare for the possibility of a US faltering or government shutdowns pending an agreement. This is because there are only days before the first of June when voting in both houses of Congress and the Senate needs additional time. The two councils may also meet on an emergency basis during the “Memorial Day” holiday, which will last for a week.

Usually, presidential candidates try to win voters’ support by presenting their economic and financial plans, which may directly affect the country’s public debt and debt ceiling. For example, a presidential candidate proposing a plan to significantly reduce taxes without identifying alternative financing sources could greatly affect the country’s public debt. This is because a reduction in tax revenues can lead to an increase in the budget deficit and an increase in public debt.

In addition, the presidential and legislative elections may affect the ability of the US government to deal with the debt ceiling crisis. This is because if there are sharp differences between the political parties on how to deal with the crisis, this may lead to delays in taking the necessary decisions to avoid reaching the permissible maximum debt limits.

In this way, the US elections and the debt ceiling crisis are highly intertwined and require effective political and financial solutions to avoid their negative effects on the US and global economies. In general, politicians and fiscal officials must work together to determine the steps necessary to avoid reaching maximum debt limits and ensure the stability of the US and global economies. 

The US debt ceiling crisis is dangerous because it can lead to slower economic growth and higher unemployment. That is if the government is allowed to reach the permissible maximum debt limits. The crisis could also cause a decline in the value of the US dollar and a negative impact on the global economy in general. The first repercussions of that crisis have already appeared when Fitch Ratings put the US economy under negative watch.

Dr. Hatem Sadek: Professor at Helwan University