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US debt limit: default unlikely, dysfunction probable

US debt limit: default unlikely, dysfunction probable
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Ian Bremmer shares his insights on global politics this week on World In :60.

Is the United States at real risk of default over the debt limit?

I say no. More importantly, the markets say no. Investors certainly aren't concerned about it. But of course, the fact that investors aren't concerned about it is part of the reason why the politicians will get closer to breaking the debt limit without an agreement. It's good that Biden and McCarthy are finally talking to each other, but in the near-term, if June is really the X date, the date where you would hit a default, what looks more likely, since there's not enough time to really agree to anything, is they punt for a few months with a very short-term extension, and then you're still in the same soup. And some level of credit crisis is probably required to make the deal painful enough that McCarthy feels like he can get away with it, not lose his job, Biden, get away with it, and not lose political support in the election. So that's the dysfunction of Washington around the debt limit.

The "godfather of AI "says we may be approaching a "nightmare scenario." What should we do about it?

This is the fellow, Hinton, that just resigned from Google, and now is coming out and speaking pretty strongly. The issue is what can we do about it? In the near-term, everyone I talk to that's involved in developing AI is spending all of their time ensuring that they are not left behind. So it's a massive amount of investment and a massive amount of effort that is gas pedaled down, full steam ahead, less the Chinese win, less your competitors in the United States win. And there aren't a lot of people in the US government that really understand the issue. There aren't a lot of people that would agree on what regulation should look like, and there's no one serious that controls and releases these tools that's prepared to do a pause or any real limitations. So I hate to say it, but I think what we should do about it is get as educated as humanly possible, get the government leaders up to speed so that when the initial major crisis hits, as it will, there's more capacity to respond and start formulating what some of the institutional responses and some of the constraints will be. But until that crisis hits, the likelihood that you slow this down is virtually zero. And also, I'm a huge enthusiast for all the upside that comes from AI. So it's not like I'm thinking, "Oh my God, this is all dystopian." No, it's great, and it's driving a lot of progress and driving a lot of efficiency, which is why there's so much money coming into it. But it's also why we're not going to slow it down until something pretty bad hits.

As the coronation of King Charles approaches, what's the state of the United Kingdom?

Well, I mean, better in the sense that Rishi Sunak is a credible, capable, solid pair of hands, at least in terms of his economic rule of the UK, as well as engagement with the EU, engagement with Macron in France, resolution of the Northern Ireland-Ireland border issue. And therefore, the person who can finally put a stake in Brexit and get the country moving on. You'd still be betting on Labour and Keir Starmer as the next prime minister in a general election, but it's no longer inconceivable that the Tories can be competitive and Sunak deserves a lot of credit for that. So have to say, I suspect he's going to have quite a positive trip to the United States the next month, and I look forward to spending a little time with him when I'm in the UK too.


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