Translation of "Schuldengrenze" in English

With the debt ceiling unchanged, this would require some legal sleight of hand.

The United States has raised its legal debt limit by $2.1 trillion.

The crisis is the debt itself.

But now America’s debt ceiling has become the subject of intense political posturing and touch-and-go negotiations behind closed doors.

Frankly, no one knows what legislative deal will be struck to raise the debt ceiling.

The federal “debt limit” was never a firm construct, and under pressure it became a squishy “ceiling suspension” that allows the government to borrow as much as it wants.

Nobody knows whether the debt-ceiling tripwire will be evaded; if so, how; or what will happen if it is not.

If no deal to raise the debt ceiling is reached by August 3, interest rates on United States Treasury bonds could spike, or they could remain stable, as investors decide they have other problems to worry about.

Solving any of these three problems would go a long way toward resolving the long-run financing imbalance between current tax rates and America’s long-run social-insurance promises that the debt-ceiling debate’s instigators supposedly want to address.

Coming so shortly on the heels of the subprime crisis, the debate over the debt ceiling and the budget deficit is the last straw.

Given these repeated breaches of the SGP’s deficit requirements, together with a similar lack of commitment to the pact’s debt limit (60% of GDP), it is hardly surprising that punishment for some states has come from the markets.

The medium-term fiscal outlook continues to deteriorate while, in the short term, politicians play with the country’s valuable AAA credit rating by arguing like schoolchildren over how to extend the debt ceiling.

The House and Senate Republicans who do not want to raise the debt ceiling are playing with fire.

Indeed, to the extent that reliance on debt finance undermines self-governance, debt-ceiling abuse for partisan gain becomes more likely.

Another battle looms early next year, when the US government’s debt ceiling will have to be raised again.

Expectations of less political turbulence were enhanced at the start of 2013 by a bipartisan agreement that avoided the so-called fiscal cliff (though at the last minute and with much rancor) and a deal reached later in January to raise the debt ceiling (albeit temporarily).

The Democrats had argued that the increase in the debt ceiling and extension of appropriations should last for only three months, thus forcing the Republicans to take electorally risky votes before the 2018 elections.

The threat, for example, of a eurozone implosion, another government shutdown or debt-ceiling fight in the United States, a hard landing in China, or a war between Israel and Iran over nuclear proliferation, will be far more subdued.

Hobbled by the self-inflicted wounds of the debt-ceiling debacle in the summer of 2011 – which undermined economic growth and job creation, and further damaged Americans’ confidence in their political system – the US Congress and President Barack Obama’s administration recognized the need for a measured and rational approach to fiscal reform.

The economy in 2013 was held back by tax increases, government spending cuts mandated by the sequester process, the temporary government shutdown, and the possibility that a binding debt ceiling would require further cuts in government outlays.

And, given America’s political polarization and policy gridlock, we can expect more fights on the budget and the debt ceiling, another rating downgrade, and no agreement on a path toward medium-term fiscal consolidation and sustainability – regardless of whether President Barack Obama is reelected in November.

Reducing deficits in order to raise the debt ceiling was the right thing to do, but the August 2 law does it in the wrong way.

With the US government now borrowing around 40% of every dollar it spends, a truly binding debt ceiling would immediately force the government to reduce spending radically and in a disorderly fashion.

The overwhelming – and sensible – expectation is that the two parties will compromise and raise the debt ceiling before inflicting serious economic and financial dislocations.

And the longer America’s politicians take to resolve the debt-ceiling issue, the greater the risk of an inadvertent accident.

But the more their politicians argue over the debt ceiling, the greater the risk that the wiring will become irreparably frayed.

The same is true of US fiscal policy, with an event-driven debate that now has ever-shorter time horizons: the fiscal cliff on January 1, sequestration of expenditures on March 1, expiration of the continuing budget resolution on March 27, and the new May 18 debt-ceiling limit.

The expenditure cuts mandated by the outcome of the debt-ceiling debate will reduce economic activity, thereby undermining growth and making debt reduction even more difficult.