The Debt Ceiling


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Background of many american one hundred dollar banknotes

Nika Anderson, Editor-in-Chief

The debt ceiling, as described by the U.S. Department of the Treasury, is a limit of federal spending that curtails the amount of money America is allowed to borrow. It does not authorize any new spending but allows financing existing obligations. The debt ceiling has been raised and suspended in the past to avoid a default. A default is when the US recognizes that it cannot pay its debt; it is the worst-case scenario when markets would plunge, the dollar would fall, and would spell recession for the country’s economy. Both Democrats and Republicans are struggling to find solutions regarding this crisis while trying to avert government shutdowns.

It is notable that America is one of the few democratic countries to even have a debt ceiling. Financial analysts and experts argued whether it is constitutional because it is a guideline that is often ignored, while others argued it regulates government spending. Democrats and Republicans had differing views on how to end this crisis, while Treasury Secretary Janet Yellen implied that the debt ceiling should be abolished. On September 30, 2021 Yellen had issued various statements condemning the current situation and inferred that the debt ceiling was “very destructive” at the House Financial Services Committee.

Democrats wanted to avoid the reconciliation process, even though it would allow them to pass legislation and bypass a filibuster. Reconciliation is a tool one party would use to pass bills on their own. Democrats felt that if they passed the reconciliation bills themselves, Republicans would be unfairly absolved from the debt they had also helped create. 

“We cannot let the full faith and credit of the United States lapse and we are focused on getting this done in a bipartisan way,” Senate Majority Leader Chuck Schumer said in a Tuesday press conference, as per Business Insider.

The GOP explained that since Democrats control the White House and Congress, they may as well fix the debt ceiling on their own. Biden also highlighted that the debt ceiling had nothing to do with his proposed infrastructure plan that totals in the trillions; they are separate issues.

Republicans expected Democrats to raise the debt ceiling without bipartisan support; many expressed no interest in cooperating. Senate Republican leader Mitch McConnell categorically refused to help lift the debt ceiling, as he wants to use this crisis as a means to manipulate Democrats against government spending; it is a strategy that leverages power. The GOP did not want to claim any fiscal responsibility for these expenditures and would rather politicize the issue at hand. It is also noteworthy to bring up that President Joe Biden himself had voted against the debt ceiling when he was a senator for similar reasons.

Those that argued for the nullification of the debt ceiling claim that there would be no negative repercussions for ignoring this guideline, besides mounting debt. There would be no threat of default and this issue would not be politicized. Other economists deemed this idea as irresponsible and that overspending must be addressed. On a brighter note, legislation has been passed, guaranteeing no economic collapse until early December.