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Debt limits of rich countries hurt poor countries' growth, says World Bank's Malpass
Does the global financial system need a major overhaul?
In his final interview on GZERO World as president of the World Bank Group, David Malpass discusses a serious problem with host Ian Bremmer: the consolidation of economic and political power in the hands of the wealthiest countries. The world is facing a massive debt crisis––60% of low-income countries are now in debt distress or dangerously close to it. The poorest countries are paying an average of 16% of revenue on servicing loans.
Decades of low interest rates and cheap goods, followed by the pandemic and runaway inflation led countries to borrow huge sums of money. But it didn’t happen in an equitable way. Wealthy nations like the US and the European Union pumped trillions into their economies to keep them afloat. But poor nations kept borrowing money they couldn’t afford to pay back.
“The poorer countries are not catching up, and we really want a world where the people in lower income levels actually get to grow faster,” Malpass tells Ian Bremmer. “That’s what creates stability."
Malpass says that the goal of the World Bank, and any value-based society, is faster growth in poorer countries so they can catch up with advanced economies and stabilize. And that means integrating the economies of developing countries better with the West, which can at odds with nationalist economic policies like “Buy America,” near-shoring, and inshoring.
“I think there’s plenty of room in a logical world to say we don’t want dependency,” Malpass stresses, “But we also want to have a vibrant, global marketplace that is competitive. And the US needs to lead and be the starting point for a lot of this rethinking of the global system.”
Watch the episode of GZERO World with Ian Bremmer: World Bank's David Malpass on global debt & economic inequality
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Will the US default on its debt? Ask GZERO World's guests
It's the question swirling around Washington this week (and last week, and the week before, etc, etc). It's of concern to US allies and of great interest to US adversaries: Will the United States government default on its debt for the first time in history? Depending on the day of the week, or the hour of the day, you may get a different answer from politicians and pundits alike.
On GZERO World with Ian Bremmer, though, guests from the past few months, including Utah Senator Mitt Romney, World Bank Group President David Malpass, former New Jersey Governor Chris Christie, and US Transportation Secretary Pete Buttigieg, have struck a common chord: it won't happen, but if it does, we're in for a hurting. Catch GZERO World with Ian Bremmer on public television stations nationwide. Check local listings.
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US debt default would be "destabilizing," says World Bank's David Malpass
The debate in the US Congress around the debt limit and a potential default is like spending money on a credit card but refusing to pay the bill, according to David Malpass, outgoing president of The World Bank Group.
On GZERO World with Ian Bremmer, Malpass discussed the ongoing negotiations in Washington to avert a default and raise the debt ceiling before the federal government runs out of money on June 1. If the two sides can’t come to an agreement, Malpass says, the economic consequences will be “destabilizing.”
As a global financial leader, Malpass believes the US should consider rewriting the law so there’s no threat of default and adds that putting pressure on lawmakers might be the most effective way to get Congress to take action.
“If you’re over the debt to GDP limit, don’t pay salaries to senior government workers, to congressmen,” Malpass argues.
In this clip, learn why Malpass thinks Congress will come to a last-minute agreement and why minting a trillion-dollar coin to solve the problem is a very bad idea.
Watch the full episode of GZERO World with Ian Bremmer on PBS airing soon on US public television. Check local listings.
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Podcast: Conservatives no more? Why Chris Christie is criticizing Trump and DeSantis
Listen:The upcoming GOP presidential primary will be many things – expensive, long, chaotic – but one thing we know for sure is that it won't be pretty. And one potential Trump rival, former New Jersey governor Chris Christie, is ready to embrace the ugly. In a wide-ranging interview with Ian Bremmer on the GZERO World podcast, Christie outlines the stark reality he sees as things begin to heat up on the campaign trail. "I think there's one lane for the nomination, and right now, Donald Trump's in the front of that lane," Christie tells Bremmer. "And if you want to get in the front of that lane, you better intervene and go right through him because otherwise, trying to go around him, I don't think it's a strategy."
While Christie is still playing coy on whether he'll throw his hat in the ring or simply influence the conversation from afar, he spoke with clarity and confidence on a wide variety of issues. On the debt ceiling, he's confident that Republicans and Democrats will avert disaster; on DeSantis, he thinks the Florida governor has made his Disney-doomed bed and has to sleep in it. On the culture war issues...well, you'll just have to listen to the show. They also talk foreign policy and specifically Russia/Ukraine, where the former Governor's insistence on continued support for Ukraine is decidedly starker than what President Trump said on CNN last week.
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Chris Christie weighs in on US debt limit fight
Unless lawmakers in Washington can work out a deal to raise the debt ceiling, there will be “serious consequences for our economy,” says rumored GOP presidential candidate Chris Christie. The former governor of New Jersey spoke with Ian Bremmer on GZERO World to talk about the 2024 presidential race and the issues currently facing the Republican Party, including the House Speaker Kevin McCarthy’s current fight with the White House to raise the debt ceiling in exchange for deep cuts in federal spending.
The stakes are extremely high: If McCarthy and President Biden can’t agree on a deal, the federal government is at risk of defaulting on its debts, which would cause chaos in global financial markets. McCarthy and Biden met on May 9 to discuss the debt limit, but walked away without any real progress, aside from agreeing to meet again later in the week. Still, Governor Christie is confident both sides will eventually come to the bargaining table because the risk of not raising the federal debt is just too high.
Governor Christie points to the shakiness of the post-pandemic economy, including rising inflation and the banking crisis, as reasons why neither side will want to add to the current market instability. Also, he makes the argument that government spending rose significantly during both the Trump and Biden administrations, so there is some room for a compromise in both camps.
Christie is confident that, despite the current impasse, Biden and McCarthy will work out an eleventh-hour deal, “I think there will be a moment where they both say, ‘All right, I'm going to give you a little bit of what you need. I'm going to give you a little cover for what you need and we're going to move on.'"
Watch the full interview on the upcoming episode of GZERO World with Ian Bremmer, airing on US public television nationwide. Check local listings.
- Christie: US should keep leading Ukraine aid - GZERO Media ›
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US House Republican Leader Kevin McCarthy (R-CA) waves after speaking to supporters on midterms election night.
What We’re Watching: Domestic & foreign policy implications, lame-duck maneuvers, Trump 2.0?, a Lake of doubts
Probe payback incoming?
After being on the unhappy side of a raft of Democrat-led House investigations the last few years, incoming GOP House leaders are itching to launch a number of their own. Subjects may include the Biden administration’s clunky withdrawal from Afghanistan, the origins of the COVID-19 virus, the alleged politicization of the Justice Department, and of course, the GOP’s favorite target, Hunter Biden. What about impeachment? The Dems did it twice to Donald Trump. Could Republicans return the favor? Likely incoming House Speaker Kevin McCarthy says the GOP would never pursue it for “political purposes.”
Will foreign policy change under a GOP House?
The biggest immediate issue will be Ukraine, where McCarthy will try to balance the views of establishment GOP Russia hawks against those of MAGA members who want to limit aid to Kyiv. McCarthy’s already pledged to scrap what he calls a “blank check” policy and to scrutinize more closely the content and aims of US aid to Kyiv. Also, expect an even harder line against China, focusing on Beijing’s trade and industrial policies, its role in the opioid crisis, and a sharper focus on the activities of Chinese students, companies, and investors in the US. In principle, whacking China is a rare bipartisan winner.
Can outgoing Dems beat the clock?
If Democrats lose their House majority, they still control the chamber for two months of a lame-duck session before the 118th Congress begins. Expect action on two Biden administration priorities. First, Dems might try to pass a big Ukraine spending package to lock in funds for Kyiv before the GOP takeover. Second, Democrats want to raise the debt ceiling so the government can borrow more to pay its bills and avoid default. If there's no agreement, House Republicans might use the debt limit as leverage to force Biden to accept painful entitlement cuts.
Trump teases 2024 announcement
We’re officially on Trump watch. On Monday, the former president told an Ohio crowd to expect a “very big announcement” from his Mar-a-Lago home next Tuesday, and there isn’t much mystery about what he means. The big looming question is whether other viable challengers for the GOP’s 2024 presidential nomination will emerge, how Trump will respond to them, and how they will respond to him. In 2016, Trump’s Republican opponents tried many tactics to take him down while protecting their opportunities to win over his supporters. Will Florida Gov. Ron DeSantis succeed where Ted Cruz, Jeb Bush, and Marco Rubio failed?