The Debt Ceiling: What Is It and What Should We Do About It?

Nathaniel Seibert

Recently, Republicans and Democrats have been at war over the U.S debt ceiling. The U.S debt ceiling is, as the name suggests, a ceiling; a limit on the amount of money that the federal government is authorized to borrow. Because the U.S government doesn’t have enough money to fund its financial obligations, it is operating at a deficit, and therefore is constantly borrowing money from various creditors. As this action continues, the government is dangerously close to reaching the debt ceiling. 

What Does This Mean? 

If the estimates are correct, the debt ceiling will be reached on October 18, 2021. Once this happens, the government will temporarily default many of its financial obligations, including paying federal employees, providing veteran benefits, and making Social Security payments. A default would rile the global economy, as it is dependent on the stability of the United States. The demand for Treasury Securities would decrease, as investors would fear lending money to the government due to the insecure nature of the investment. There would then be a subsequent rise in Treasury Security interest rates, which would ripple across the economy and affect investments, home mortgages, credit card payments, and car loans. 

What Can We Do About It?

Preventing this crisis is as simple as Congress passing a bill to increase the debt ceiling. However, many in the GOP are against the ceiling raise,thus presenting a troubling issue for many Democrats. To pass this particular piece of legislation, it needs 60 votes in order to be filibuster proof, and the Democrats have 51 with Vice President Harris. 

Why Are Republicans Against Raising the Ceiling?

Recently Congressional Democrats have gone on a spending spree, having already spent several trillion dollars over the course of 2021. Democrats have also recently proposed a 3.5 trillion dollar bill, including many social programs like universal child care, extended medicare, paid family and medical leave, and 150 billion dollars to combat climate change. Many Republican congressmen are opposed to this bill, but this bill could pass without any GOP support through the reconciliation process. The debt ceiling raise, on the other hand, requires at least 60 votes, which the Democrats need to find. The GOP has presented three options for Senate Democrats: consult Republicans on their 3.5 trillion dollar reconciliation bill, force democrats to use one of their three permissible yearly reconciliation bills, or do neither and face mass criticism. 

All three of these options are a win for Republicans. With respect to the first, the GOP will have an opportunity to decrease the cost of the 3.5 trillion dollar reconciliation bill. With respect to the second, the Democrats will be forced to use another one of their three reconciliation bills, resulting in Democrats abandoning a bill for which they plan to use the reconciliation process. As to the third option, the Democrats would face significant political fallout.

A government shutdown could force the globe into an economic catastrophe. The consequences of reaching the debt ceiling must be avoided as the suffering will be felt universally.