What is the debt ceiling? Why do we have a national debt?
Congress legislates spending and levies tax revenues to pay for it. When the numbers don’t match, the U.S. Treasury issues bonds to cover the shortfall. The shortfall is referred to as the national debt. There’s been a national debt almost continuously since the Revolutionary War.
The term debt ceiling simply refers to the legal cap on how much the government can borrow, in the form of issuing bonds, to cover its existing bills. Congress raises the debt ceiling periodically to cover expenses (and revenue cuts) that Congress itself has already approved.The debt ceiling has nothing to do with budgets or spending going forward.
Why must the debt ceiling be raised every few years? What happens if it isn’t?
The debt ceiling doesn’t automatically increase to keep pace with inflation or to accommodate a growing economy.
We have to keep raising the debt ceiling so the U.S. government can keep issuing bonds, which investors around the world buy because they’re seen as a safe and reliable investment. U.S. government bonds, in turn, allow us to fund the government programs and services we all depend on.
Only once before has Congress threatened to default – in 2011, when Tea Party obstructionists tried the same game MAGA obstructionists are trying now. That time, President Obama signed into law a compromise with Tea Party Republicans that adjusted the debt ceiling on the very day of the debt ceiling deadline. But it was already too late. Congress had already carried us to the brink of default. For the first time in history, America’s credit rating was downgraded. And that generated the U.S. and global stock market crash known as Black Monday.
Congress has ALWAYS approved raising the debt ceiling, and has usually done so on a bipartisan basis.
“Since 1960, Congress has acted 78 separate times to permanently raise, temporarily extend, or revise the definition of the debt limit – 49 times under Republican presidents and 29 times under Democratic presidents. Congressional leaders in both parties have recognized that this is necessary.” (U.S. Department of the Treasury)
If, for the first time in history, Congress refuses to adjust the debt ceiling, the Treasury Department would be forced to default on its legal obligations. And if the country goes into default, economists agree it would throw us into a severe recession and send the global economy into a financial crisis. Black Monday would be a blink in comparison.
Wait — you said “crisis.” I thought you said the crisis was made up. This sounds pretty real. Is it real, or made up?
MAGA Republicans in Congress have made it a crisis.
In exchange for raising the debt ceiling, they’re demanding deep cuts to critical government programs and services. For example, under the MAGA cuts, the FAA would have to close 125 air traffic control towers; food assistance for 1.2 million poor Americans with young children would be eliminated; two million families would lose access to medical care; cuts to Head Start would cut out 200,000 children; Social Security claims processing would slow down by months; the FBI would have to cut 11,000 employees; and that’s just for starters.
The MAGA default threat, in short, is a made-up crisis with drastic real-world consequences.
We must do everything in our power to stop it.
- “US debt crisis: Tea Party intransigence takes America to the brink,” July 30, 2011, at https://www.theguardian.com/world/2011/jul/31/us-debt-congress-tea-party
- “Nine questions about the debt ceiling, answered,” May 6, 2023, at https://www.vox.com/policy/2023/5/6/23707949/debt-ceiling-crisis-budget-deal-questions
- “STATE FACT SHEETS: MAGA Republicans’ Default on America Act Would Have Devastating Impacts Across America,” White House Briefing Room, May 2, 2023, at https://www.whitehouse.gov/briefing-room/statements-releases/2023/05/02/state-fact-sheets-maga-house-republicans-default-on-america-act-would-have-devastating-impacts-across-america
- “Responses to DeLauro Letters on Potential Impacts of Proposed House Republican Cuts,” links to responses from heads of 21 federal agencies to the House Appropriations Committee, at https://democrats-appropriations.house.gov/responses-to-delauro-letters-on-potential-impacts-of-proposed-house-republican-cuts
- “What Would the G.O.P. Plan Actually Do To the Budget?”, May 8, 2023, at https://www.nytimes.com/
interactive/2023/05/08/upshot/ federal-budget-republicans. html
- “Debt Limit,” U.S. Department of the Treasury, at https://home.treasury.gov/policy-issues/financial-markets-financial-institutions-and-fiscal-service/debt-limit