Democrats in Congress are crawling to get the way to raise the US debt ceiling and avert potential “catastrophic” default in less than three weeks. DXY +0.38%, EUR USD down 0.41%
- Republicans have continuously refused to support raising the country’s borrowing limit.
- On Tuesday, the Republican Party, led by Senate Minority Leader Mitch McConnell, blocked a route that would have allowed Democrats to raise the limit with a party-line vote.
- The stalemate implies the Senate Majority Leader, Chuck Schumer, now has nearly 20 days to find a way of increasing the debt ceiling ahead of October 18, when Treasury secretary Yellen warned of a default.
- Jim Manley, a former aide to Democratic senators Harry Reid and Ted Kennedy, stated that the only way Congress agrees on policy objectives is by being pushed to deadlines.
- Manley further stated the US has not suffered the economic impacts from such political gamesmanship, but at some point, somebody will make a mistake, and something bad will happen to the country.
- Investors are becoming increasingly concerned over the prospects of “stagflation,” with US stocks plunging their most significant loss since May on Tuesday.
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