GOP Prepares To Cripple U.S. With Slashed Debt Ceiling

The debt ceiling debate is this fun little phenomenon that emerges in DC every few years, like leap year or a meteor shower, where our nation's elected officials take pettiness to the next level and drive the US economy to the brink of a calamitous default, Allison Morrow reported for CNN Business.

Photo Insert: House GOP leader Kevin McCarthy, who is vying to be House Speaker, told CNN before the midterm election that the GOP would demand spending cuts in exchange for lifting the debt ceiling.

This week, Goldman Sachs warned that the 2023 debt ceiling battle could be on par, disaster-wise, with 2011's —the one that cost the United States its perfect AAA credit score and sowed chaos on Wall Street.

Raising the debt limit, the bank wrote, will be "necessary but hard to achieve" even as the GOP cannot push it in the Senate, where Democrats took 51-49 control after Georgia Democratic Sen. Raphael Warnock mangled Republican rival Herschel Walker in a runoff.

The "debt ceiling" is simply the federal government's borrowing limit. Congress set it up over a century ago to keep borrowing in check.

Historically, it wasn't a big deal for lawmakers to agree that they'd raise the limit, because failing to do so would be really bad for the US. Interest rates would shoot up, the stock market would be a mess, and the value of the US dollar would tank. The economist Mark Zandi once called it "financial Armageddon."

Already, Republicans are drawing battle lines, Matt Egan reported for CNN Business.

House GOP leader Kevin McCarthy, who is vying to be House Speaker, told CNN before the midterm election that the GOP would demand spending cuts in exchange for lifting the debt ceiling. Senator John Thune told Bloomberg last week the debt ceiling could be a way to push through budget cuts.

Goldman Sachs noted the environment next year will have "echoes of 1995 and 2011" — the two most tense standoffs over the debt limit in recent history. However, the good news is we have time before things get wild. Economists at Jefferies said in a recent research report that default risk is unlikely to emerge until "at least" the end of September of next year.

WEEKLY FEATURE : MVP Group Keeps Lights On During Pandemic