The Biden administration is warning that unless Congress acts, the federal government will not be able to pay its bills by June.
This week, the US Treasury Department announced that it would take “extraordinary measures” to prevent the debt ceiling from hitting and government financing would remain in place until early June. But those moves are temporary, only lingering over the nation’s financial responsibilities between President Joe Biden and a divided-right Congress.
What is the debt ceiling?
Every year since 2001, the US government has spent more than the revenue it generates through taxes and fees. The government borrows money to fill funding gaps so it can continue to pay for various federal programs and agencies, from the military to Social Security to Medicare for retirees. The government raises this money by selling interest-bearing securities, such as treasury bonds.
The debt limit, or debt ceiling, is a federal law that limits the amount of money that can be borrowed in the United States to meet these legal spending obligations.
Contrary to some public perceptions, raising the debt ceiling does not allow the government to spend more money. Congress has the ultimate authority over the budget process, and each year lawmakers vote on spending bills. But since 1917, a legal limit has also been set on the amount of debt the US government can take. The debt relief method simply allows the Treasury Department to pay expenses that Congress has already approved.
The United States has increased its debt ceiling 78 times since 1960, according to the Treasury Department. Congress kept votes on the debt separate from votes on government spending or paying taxes.
Many Republican lawmakers argue that the government has spent too much money. Some suggest that they are not willing to increase their debt as a way of giving the government credit.
But some economists warn that the first non-payment of interest on the US national debt of $31.4 trillion will trigger far-reaching global consequences, including a rise in US credit and a devaluation of the US dollar, which could lead to some market crash in the stock market and coaching trucks.
What are the extraordinary measures?
The US Treasury can temporarily delay reaching the debt ceiling through creative means. These may include moving debt between public agencies to meet payments, suspending investment in the purchase and sale of foreign currencies, and delaying investment in pension plans for public sector employees.
It is not clear how long they will buy these shares. In a January 13 letter to the US Congress, Treasury Secretary Janet Yellen wrote: “money and extraordinary measures are unlikely to run out before early June.”
At some point, the U.S. will have to pay off the debt ceiling or massively cut debt obligations. For the vast majority of lawmakers, both Democrats and Republicans, it is unthinkable to stop funding the military or cut Social Security payments.
What do the Democrats and Republicans propose?
Biden and the Democrats, who hold a slim majority in the Senate, want to lift the debt ceiling, as has been done repeatedly with little to no debate in recent decades.
But in 2011, when the United States was nearing the debt ceiling breach, the Republican-majority House of Representatives asked then-President Barack Obama for a series of spending cuts in exchange for paying off the debt ceiling. Two days before the Treasury Department estimated that the cap had been exhausted, Republicans voted to increase the exchange rate for a package of future spending cuts.
Despite avoiding a fiscal disaster, the United States’ long-term credit rating was downgraded in 2011, in part due to Washington’s supporter of the debt ceiling. Economists fear that the current shooting could take another step.
The kind of agreement reached in 2011 is not possible today. White House press secretary Karine Jean-Pierre told reporters last week: “We’re not going to make any deal.”
In a joint statement, Senate Majority Leader Chuck Schumer and House Democratic Leader Hakeem Weary said: “The Republican Party has been forced into bankruptcy. [alude a la facción seguidora del expresidente Donald Trump] It could plunge the country into a deep recession and result in even higher costs for America’s working families to borrow on everything from mortgages and credit cards to consumer credit.
What Republicans do you want in Congress?
Republicans argue that raising the debt ceiling is fiscally irresponsible and that the US should instead cut unnecessary spending to reduce the debt.
“We have our house in order,” House Speaker Kevin McCarthy told reporters last week. “Republicans, we will always protect Medicare and Social Security. that we will defend ourselves to posterity. But scrutinize every dollar spent. It is the right of the working tax payer.
In a weekly conference call, House Republican leaders reportedly told members that they would not agree to lift the ceiling without tax reforms, including capping funding from fiscal 2024 to 2022 levels and balancing the US budget within the next 10 years.
However, a bipartisan deal is necessary because any legislation passed in the Republican-majority House of Representatives must also pass the Democratic-majority Senate and be signed into law by President Joe Biden.
The United States tripled its debt while Republican President Donald Trump was in office. Republicans controlled the Senate throughout the administration and the House of Representatives during his first two years in office.
Join the Voice of America! Subscribe to our YouTube channel and activate notifications, or follow us on social networks: Facebook, Twitter and Instagram.
