Interview: U.S. likely to have short-term extension of debt ceiling amid unfavorable fundamentals, says expert

NEW YORK, May 23 (Xinhua) -- The United States is overwhelmingly likely to have a short-term extension of the debt limit as there is no basis for a bipartisan deal, said an expert from Georgetown University.

There probably will be an agreement to extend the U.S. debt limit soon by around two months and the negotiations of the debt limit will continue for most of the summer, said David A. Super, professor of law and economics at Georgetown University Law Center.

A short-term extension of the debt limit is overwhelmingly likely and it will materialize very soon, Super said in an interview with Xinhua last week.

"A deal is possible, but I think there's a good chance we won't get a deal and there's also a good chance that House Republican Speaker (Kevin) McCarthy agrees to a deal and then his members reject it," Super said.

As Democrats aren't going to support deficit reduction to pay for tax cuts that drive back up the deficit and Republicans are not going to agree to anything that limits tax cuts, so there's really no basis for an agreement, according to Super.

Super added that the fundamentals don't favor a deal because McCarthy does not have the support of his members to make any significant concessions.

The current debt ceiling talks follow a very familiar pattern at the beginning with both sides complaining about the other's negotiating position, followed by constructive meetings and complaining again on the other side's unreasonable demands, according to Super.

"Then we'll have a short term extension, and we'll repeat this cycle. I don't think we learn very much from this," Super said.

Super expected that U.S. President Joe Biden would invoke the 14th Amendment of the U.S. Constitution and declare the debt limit unconstitutional once both sides fail to reach a deal.

The brinkmanship in debt ceiling talks certainly can unsettle the financial markets in the short term and it does put jobs at risk, Super warned.

If the United States goes into recession, because of mishandling of the debt ceiling or for any other reason, that will certainly have a big impact on developing countries around the world, Super said.

"Many of them are already under great stress because of the war between Russia and Ukraine. And this would certainly make things much worse for them," he said.

Though there certainly is a need for a limit on deficit spending, the debt ceiling is not the way to do that, said Super.

The way to rein in deficit spending is to have limits on spending and tax cuts that apply on an on-going basis and keep the United States from taking on these obligations in the first place, according to Super.

"Once we've taken them on, we have to pay the bills. There shouldn't be any choice about that," Super said.

Now, with the parties so extremely polarized, they cooperate on fewer and fewer things than it used to be, noted Super.

The situation will only change if one party gains enough control and dominance and the other party feels that it has to moderate its approach, said Super.

He added that with the country almost evenly divided, "I'm not sure that that's likely to happen very soon."

The United States is "highly likely" to default on government obligations by early June and potentially as early as June 1 if the Congress fails to raise or suspend the debt limit, according to Treasury Secretary Janet Yellen.

The White House and House Republicans are in the process of negotiations on debt ceiling and budget spending.

The United States hit its 31.4-trillion-U.S.-dollar debt limit in January and the U.S. Treasury Department has employed accounting maneuvers, known as "extraordinary measures," to keep the government paying its bills so far. Enditem

(Hu Yousong and Zhang Juan also contributed to this story.)