Nathaniel Rakich: In real estate, it’s usually a good thing for houses to have high ceilings. But one House doesn’t seem to want one.
Republicans in the U.S. House of Representatives are refusing to raise the nation’s debt ceiling unless President Biden agrees to their demands. The standoff has consumed political news coverage and ground work in Congress to a halt — but why is it so important? What’s the deal with the debt ceiling?
The debt ceiling is the statutory limit on how much money the federal government can borrow in order to pay its existing financial obligations. There’s a common misconception that raising the debt limit is the same as authorizing new spending, but that’s not true: It just allows the government to pay debts it has already incurred. Think of it as paying off your credit card, not using it to buy a new fighter jet.
Currently, the debt limit is $31.4 trillion — and we’re dangerously close to hitting it. Actually, we already technically hit it back in January, but the Treasury Department has been taking so-called “extraordinary measures” — essentially, creative accounting maneuvers — to avoid defaulting on our debt. But those measures are expected to run out soon. No one knows exactly when that “X-date” is, but the Congressional Budget Office has calculated it will be in the first two weeks of June.
If the debt ceiling isn’t raised by then, the U.S. won’t have the legal authority to pay for spending it has already committed to, like Medicare and Social Security payments. In other words, the U.S. would be forced to default on its debt — which would have a catastrophic impact on the economy. The stock market could crash, and millions of people could lose their jobs.
The only thing that needs to happen to prevent this is for Biden and congressional Republicans to enact a bill raising the debt limit — but of course, that’s easier said than done. Republicans have insisted that any bill that raises the debt limit also include dramatic spending cuts and work requirements for recipients of government assistance. Meanwhile, Biden favors a “clean” bill to raise the debt ceiling with no conditions. The two sides have been furiously negotiating for weeks, but they seem to have made little progress toward a deal. Essentially, they’re playing a game of chicken with the national economy — each side is betting that the other one would rather cave than cause an economic disaster.
If worse comes to worse, though, the U.S. has options. Some progressives want to invoke the 14th Amendment, which states that “the validity of the public debt of the United States … shall not be questioned.” Essentially, they think Biden could just quote “Mean Girls” and declare, “The [debt] limit does not exist.” But Republicans would certainly challenge this in court, making it a risky strategy.
So the fate of the national economy boils down to a staring contest between Biden and Republicans. The only question is who blinks first. [stares at camera for uncomfortably long period of time, then blinks] Dammit.