Washington at a Standstill: The Fight to Increase the Debt Ceiling
The U.S. government has reached the debt ceiling and has begun taking “extraordinary measures” to keep paying bills already incurred. With Ukraine war allocations and other discretionary spending on the rise, the Congress is expected to raise the debt ceiling, allowing the government to borrow more funds.
Due to having a slim majority in the House, Speaker Kevin McCarthy, R-California, had to promise his caucus members to reduce spending in order for them to support his speakership. Their intention appears to be to not pay the country's debt in order to accomplish their objectives. The White House, meanwhile, has said the Biden administration will not entertain negotiations about cutting spending to raise the debt limit.
This time, the Republicans are preparing to stare down the White House with no clear consensus on what they want in exchange for keeping the U.S. financial system afloat. The prevailing principle appears to be extracting a degree of political pain for President Joe Biden.
In response, Senate Majority Leader Chuck Schumer, D-New York, has dared House Republicans to propose and vote on the deep spending cuts they demand in exchange for lifting the debt ceiling later this year.
In 1917, Congress implemented the debt ceiling, which restricts the amount of money the government is allowed to borrow. If they exceed this limit, it indicates that their expenses exceed their income. The debt ceiling currently stands at about $31 trillion, and the Republican-led lawmakers in Congress say that they will not raise the limit unless there is a large cut to social safety net programs.
If Congress fails to raise the debt ceiling, the country would default and be unable to pay interest and principal on outstanding Treasury notes. The bank doesn’t care what Congress thinks, and if payments are not made, it will foreclose. Defaulting on the national debt would have real-life consequences, and the fallout from an actual default would be far worse.
Speaker Kevin McCarthy has offered to come to the negotiating table with President Biden, and it would be beneficial for the President to accept this offer and have McCarthy state his party's demands publicly. It is likely that these demands would involve significant cuts to Social Security, Medicare, Medicaid, and other widely used programs. The president would be able to present his argument to the public by illustrating what the Republicans are requesting.
Washington is currently embroiled in a dispute over raising the federal debt ceiling.
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