Project SyndicateProject Syndicate

The US debt ceiling debacle is not over

By Kenneth Rogoff

29 Mar 2023 · 3 min read

informed Summary

  1. A tentative deal has been struck to raise the U.S. debt ceiling, but the underlying problem of partisan standoffs remains.

CAMBRIDGE – The tentative deal that was just struck to raise the United States’ debt ceiling won’t make the problem go away. Partisan standoffs over the federal debt limit have become a predictable feature of American political life. And while some blame an ill-conceived rule, that argument misses the point.

The real source of the problem is that politicians today have little incentive to compromise. In an environment of gerrymandered electoral districts and ideologically-siloed traditional and social media (amplified by bots, algorithms, and economic incentives), the instability will only worsen in the foreseeable future. That could mean more frequent government shutdowns or more restrictions on central bank independence. With former US President Donald Trump very much in the mix to return to the White House after the 2024 election, who knows what else.

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