STOCKS | U.S. Election Could Deepen Washington's Looming Fiscal Crisis

Washington's next fiscal crisis is already near, but resolving it may be difficult. According to Sina Finance, analysts expect the United States to hit its $41.1 trillion debt ceiling at some point in 2027, and Congress must raise or suspend the limit before the Treasury exhausts its extraordinary measures to avoid a catastrophic default. If Democrats win one or both chambers of Congress in the November midterm elections, the two parties could enter a standoff, with Democrats seeking policy concessions from U.S. President Donald Trump in exchange for avoiding market turmoil tied to the fiscal cliff. If Democrats win in November, Republican plans to solve the debt issue while they control Congress would also be disrupted. Some Republican lawmakers want the debt ceiling raised this year to get ahead of next year's political fight, ideally during the lame-duck session after the midterm elections. But with national debt having topped $40 trillion, many Republicans oppose an unconditional increase and want deep spending cuts attached. Missouri Republican Representative Eric Burlison said the party is already discussing handling the issue in the lame-duck session if Republicans lose the midterms. He has also proposed a constitutional amendment requiring a balanced federal budget and calling for limits on future federal borrowing. Other conservative lawmakers agreed, and the recent rise in U.S. Treasury yields has become another argument for cutting spending and rejecting unrestricted borrowing.