Bank of America CEO: We are preparing for a possible default

The latest debt ceiling drama has led to some calls for the government to get rid of it altogether. The argument is that political wrangling should not prevent the United States from meeting its financial commitments.

Moynihan is not a fan of this idea. He told Harlow that “there needs to be a debate about how we make sure we live within our means as a country” when asked whether or not the United States should eliminate the cap on the debt.

“Congress has the purse strings. I would be careful about trying to restructure the US Constitution,” he said. “I think we should leave it alone and make sure it works properly.”

But he acknowledged the government had to spend a lot more on various stimulus programs since 2020 due to the Covid-19 crisis, saying the US had to take on “a lot of debt over the past two years to overcome the pandemic”. slow down the economy.”

The economy has rebounded strongly from the depths of the brief Covid recession. So much so that inflation is now arguably the biggest problem facing the country, along with the Federal Reserve.

The Fed has raised rates aggressively over the past year in an attempt to stifle inflation. Rate hikes have started to bear fruit, but the US labor market remains surprisingly strong.

“The unemployment rate has remained very low. Extremely low,” Moynihan told Harlow. “That’s one of the challenges for the Fed.”

Moynihan also didn’t seem overly concerned that any geopolitical tension between the United States and China stemming from the recent spy balloon incident would have a lasting impact on the global economy.

He told Harlow that given China’s importance in the global supply chain, it’s in everyone’s interest not to see economic tensions escalate.

“It’s interesting to watch the shadowboxing between these two countries,” Moynihan said. “But the best thing in the world is to have free trade.”