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“It seems unlikely that Congress will tackle the debt limit until the last minute, and there appears to be a significant risk that Congress will not act before the October 18 deadline,” Goldman Sachs economists wrote. in a note.
The Wall Street bank added that a “disruption in borrowing power appears to be a real risk”, even though the disruption would “likely be brief.”
“While this is not our baseline scenario, we also believe there is a real risk that Congress may miss the deadline,” Goldman Sachs economists wrote in the report.
“It is impossible to completely rule out these or other measures, but we are skeptical that such measures will come into play this year,” economists said in the report.
A big downside here is that it would likely force Democrats to specify a new dollar amount for the debt limit, likely close to $ 31 trillion, instead of just suspending it, Goldman Sachs said.
“Of course, these drawbacks are the reasons Republicans would want to demand Democrats to use it. Nonetheless, it seems to be the most likely option at the moment,” economists said.
Goldman Sachs stressed that any disruption in borrowing power would likely be short because “the response from the public and financial markets would likely force a swift political resolution.”
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