What:

As the U.S. Congress and President Biden scramble to avert a catastrophic default on the debt, American University experts are available to comment on a wide range of issues related to the debt ceiling.

When:

Monday, May 22, 2023 - ongoing

Where:

Skype, Zoom, phone, in-person

Background:

American University experts who are available to comment include:

Valentina Bruno is a professor of finance at the Kogod School of Business and holds a Ph.D. in Finance from the London School of Economics. Her research interests include international finance, macro-finance, global liquidity, corporate governance, and banking. Prior to joining KSB, Prof. Bruno worked at the World Bank in the Financial Sector Strategy and Policy Group and in the International Finance Team. She can comment on issue related to a possible spike in volatility in the U.S. Treasury market in the case negotiations over the debt ceiling collapse, and how financial risk has migrated from credit risk to interest rate risk.

Bruno says: “It appears that some investors are increasing their leveraged positions in some government bonds as they did back in 2019, to seek to arbitrage differences in the basis trade, which then led to the March 2020 “Dash for cash” as volatility hit the markets back then. Will history repeat if negotiations over raising the debt ceiling collapse, thus causing a turmoil in financial markets?”

Jeffrey Harris is a professor of finance and the Gary D. Cohn Goldman Sachs Chair in Finance at American University’s Kogod School of Business. Harris has an extensive background in market microstructure and regulatory issues, oil markets and the economic downturn. He recently served as Chief Economist and Division Director for the Division of Economic and Risk Analysis at the U.S. Securities and Exchange Commission. Previously, he served as Chief Economist at the U.S. Commodity Futures Trading Commission and as Visiting Academic at the Nasdaq Stock Market. Harris can comment on the financial market and the expected impact of the impasse on various aspects of the economy.

Harris says: “The uncertainty that the debt ceiling injects into the economy adds another element of risk to the tenuous economic conditions that we are already experiencing. On top of the added burden of inflation and higher borrowing costs, consumer confidence is already near all-time lows. The possibility of a continuing U.S. impasse driving rates higher would compound current consumer issues and threatens to push the economy into a worse state.”

Thomas Kahn is distinguished faculty fellow at American University’s School of Public Affairs. As the longest serving House Budget Committee staff director in history, Prof. Kahn helped to negotiate the 2011 debt ceiling increase. In his December 2022 Chicago Tribune op-ed, he warned it was vital for Congress to raise the debt ceiling last year. Kahn is available for interviews to share his lessons from 2011 and explain why the situation is far more dire now.

Kahn says: “Today, America is facing the gravest debt ceiling crisis in the nation’s history and the chances of default this year are extreme.”

Gabriel Mathy, associate professor of economics in AU’s Dept. of Economics, specializes in macroeconomics and economic history. During the height of the pandemic, he predicted macroeconomic outcomes from the world's first “services” recession as the service sector worldwide closed down during the pandemic. Mathy predicts a deal will happen at the last minute that will include some spending cuts.

Jordan Tama is a provost associate professor in the School of International Service and specializes in bipartisanship, presidential-congressional relations, U.S. foreign and national security policy, foreign policy national security strategic planning, the politics of economic sanctions, the foreign policy views of U.S. elites, and the value of independent commissions. His book, Bipartisanship in a Polarized Age: When Democrats and Republicans Cooperate on U.S. Foreign Policy, is scheduled for publication this fall. Tama is available to discuss the prospects for bipartisanship on the debt ceiling and other domestic and foreign policy issues.

Tama says: "At a time when American politics are more polarized than ever, the debt ceiling crisis creates an opportunity for Democratic and Republican leaders to find common ground. Just don't expect bipartisanship on the debt ceiling to lead to more bipartisan cooperation on other issues."