Averting a Debt-Ceiling Disaster
Sometime this summer, federal borrowing will bump up against its legal limit unless Congress can agree to raise or suspend the “debt ceiling.” With Republican fanatics already planning to use the issue as blackmail, it is incumbent on the rest of Congress to get to work on a deal to sideline them.
WASHINGTON, DC – Republican members of the US House of Representatives took more than four days and 15 rounds of voting to decide who would be the next Speaker of the House. Though the press coverage of this process was largely overblown – it was not a “crisis” or anything close to one – that does not mean there won’t be crises in the coming months.
Later this year, federal borrowing will bump up against its legal limit unless Congress can agree to raise or suspend the “debt ceiling.” If Congress doesn’t act, the federal government will not be able to issue new debt with which to honor all its financial obligations, such as interest payments to bondholders, salaries to soldiers, and benefits to Social Security recipients.
Raising the debt ceiling should be – and often has been – a routine matter. It does not authorize any new spending. Rather, it gives the executive branch the borrowing capacity it needs to honor existing spending commitments. It is Congress that decides on spending levels and tax rates, and when it sets federal spending higher than federal revenue, it implicitly determines the size of the budget deficit. Raising the debt ceiling merely allows for the borrowing that is needed to meet the obligations that Congress itself has created.
To continue reading, register now.
Already have an account? Log in