The United States government is on course to smash into the debt ceiling on Thursday, January 19, triggering a possible government shut down if members of Congress are not able to agree upon a solution.
In a letter to House Speaker Kevin McCarthy, Treasury Secretary Janet Yellen declared that “failure to meet the government’s obligations would cause irreparable harm to the U.S. economy, the livelihoods of all Americans, and global financial stability.”
The debt ceiling is the total amount of money Washington is authorized to borrow to meet its existing obligations. When the government hits the ceiling, it can no longer borrow money to pay its bills. Such obligations include Medicare and Social Security benefits, not to mention military salaries and interest on the national debt.
According to the site GO Banking Rates, a government shutdown would mean that the Federal Housing Administration will be forced to no longer approve home loan applications, while veterans may not be able to access Veterans Administration call centers.
The current debt ceiling, set at $31.4 trillion by President Biden in December of 2021, has been raised three times in the last decade: 2014, 2015, and 2017. In 2019, President Trump put his signature to the Bipartisan Budget Act, which was designed to lift spending caps on a variety of federal agencies, eliminating the risk of default for another two years.
Economists have said that the concept of a debt ceiling is good because it theoretically puts controls on federal government spending. But critics of the ceiling have questioned its constitutionality, while arguing that it can easily be raised via a majority vote in Congress and the approval of the President.
Speaker McCarthy has pointed to the 2019 agreement between President Trump and Congress which simply suspended the debt limit entirely for two years in order to keep the government running as a possible model to follow in this time around.
Speaking with reporters, McCarthy said he has spoken with President Biden on the matter. “I told him I’d like to sit down with them early and work through these challenges,” McCarthy said of the President and White House staff.
By Garry Boulard
