What Happens if the US Hits its Debt Ceiling. Hint: It is Not Going to be Good

May 17, 2023 - 17:14
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President Joe Biden’s departure Wednesday to the G7 in Japan was meant to launch a geostrategic masterclass on rallying the world’s democracies against China. Instead, he will limp into an abruptly truncated journey facing concerns that the US debt ceiling row is about to tear up the global economy.

Biden arrives Thursday in Hiroshima, one of the two cities hit by US atomic bombs in 1945 — a closing chapter to World War II and the start of an era of US leadership across the Pacific that Beijing now seeks to supplant. He will meet leaders from the rest of the G7 club — Britain, Canada, France, Germany, Italy, Japan — that has been so crucial in the US-led drive to enforce unprecedented economic sanctions on China-ally Russia for invading Ukraine.

However, visits next week to Papua New Guinea and to a Sydney summit of the Quad, comprising Australia, India, Japan and the United States, were canceled so that Biden can rush back Sunday and negotiate with Republican opponents on the debt ceiling. For a president who often warns that democracies are in an existential fight to prove their viability against the world’s autocracies, it’s a sobering moment.

“It’s extraordinarily hard… to go to the G7 and talk about economic unity against Russia, economic unity against China, when the dysfunction is coming from inside the house," Josh Lipsky, at the Atlantic Council, said. Biden downplayed the reshuffling of his schedule, saying, “the nature of the presidency is addressing many critical matters all at once."

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