Davos elites see a major risk ahead for markets with looming U.S. debt standoff

The world's largest economy risks defaulting on its debt for the first time in modern history this summer as politicians wrangle over raising the country's debt limit, currently capped at $31.4 trillion. The U.S. is expected to reach its debt limit Thursday, Treasury Secretary Janet Yellen said last week. But coming to a deal to increase the U.S. debt limit won't be easy in a political environment that's grown even more polarized in the past decade. While conservative members of his caucus insist they do not want the country to default on its debt, McCarthy is under pressure to demand deep spending cuts. The situation is a "mess" with at least one possible solution: Congress could pass a "clean debt limit," according to Peter Orszag, CEO of financial advisory at Lazard.