Current Events > 5 things people get wrong about the debt ceiling saga

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https://www.npr.org/2023/05/25/1177675684/debt-ceiling-limit-explained

Did runaway spending by President Biden and Congressional Democrats leave the U.S. on the brink of default?

In a word, no.

The U.S. can currently borrow up to $31.4 trillion, and political leaders need to urgently raise or suspend that debt ceiling or risk leaving the country unable to pay its bills.

But the current national debt has been building up for years, and carries plenty of fingerprints from both Democrats and Republicans. The reality is that the U.S. needs to borrow money to pay its bills given that the government hasn't balanced its budget since the Clinton administration.

What about the war in Ukraine? Did that contribute to the national debt?

It was neglibible at best.

Since Russia's invasion of Ukraine last year, the U.S. has devoted more than $76 billion dollars to the country, including humanitarian aid, financial assistance and weapons.

While that dwarfs the amount of aid the U.S. sends to other countries, it's a smaller fraction of GDP than some allies have contributed to Ukraine.

It represents less than 5% of this year's projected deficit and just 2/10ths of 1% of the government's accumulated debt.

Is the U.S. going to run out of cash on June 1?

When the U.S. will actually be unable to pay its bills is difficult to predict with precision. After all, billions of dollars flow in and out of government coffers daily.

Treasury Secretary Janet Yellen has said repeatedly that forecasting a precise moment when money runs short is impossible.

However, since the government knows generally when bills are coming due, Yellen says it's "highly likely" that the government will run short of cash in early June, and possibly "as early as June 1."

Is the debt default the same as a government shutdown?

This one sparks confusion all the time, even among seasoned journalists at NPR.

It's easy to see why. The threat of a debt default and a government shutdown are both symptoms of political gridlock, and because they sometimes occur at the same time, they can easily get mixed up.

But they're not the same.

Government shutdowns happen with some regularity when Congress fails to agree on additional spending to fund the government. They're costly and inconvenient. But essential government services continue, and the lasting damage is limited.

By contrast, the threat of a default arises when Congress fails to agree on additional borrowing so the country can continue paying its bills.

While the government has occasionally flirted with default most recently in 2011 and 2013 it has never actually failed to pay its bills. Doing so would likely do lasting damage to the government's reputation as a dependable debtor, and could result in permanently higher borrowing costs.

Why doesn't the U.S. get rid of the debt ceiling altogether?

The U.S. could do that, but it's harder in practice.

The debt ceiling was created by Congress during World War I, as a way to simplify government borrowing without the need for lawmakers to approve each individual bond issue.

It could just as easily be removed if lawmakers choose to do so. However, it can be politically challenging because it could be seen as a gateway to additional deficit spending.

The Dems had the oppertunity to end this crap once and for all and didn't take it, just like they had the oppertunity to codeify rights that are currently under attack by the right and a MAGA supreme court who think themselves untouchable gods. If we default while it it's not 100 percent the fault of the Democrats their incompetence and underestimation of the sheer greed, corruption and spite from the Republicans is definitely a contributing factor to the current state of the country, especially when even now Biden recently called Mccarthy an honorable man

I wonder if GOP can get a government shutdown in time for election.
Trump had it twice and it's not a good look for them if Biden didn't even get one. Even Obama got one.

The Republicans raised the debt ceiling 3X under Trump without asking for concessions. The first time it happens under Biden it's a problem.

https://www.youtube.com/watch?v=8RReVCn5WEg

Heineken14 posted...

https://www.youtube.com/watch?v=8RReVCn5WEg

That's a good analogy. I've heard some politicians try to say that raising the debt ceiling is like raising the limit on a credit card but it's not. It's not about authorizing new spending. It's about the government paying its bills for spending that Congress already authorized when they passed the budget for the current year.

If Congress wants to reduce the deficit, that's great. They can do that by making cuts when they pass the next budget and/or by raising taxes.

UnsteadyOwl posted...

That's a good analogy. I've heard some politicians try to say that raising the debt ceiling is like raising the limit on a credit card but it's not. It's not about authorizing new spending. It's about the government paying its bills for spending that Congress already authorized when they passed the budget for the current year.

If Congress wants to reduce the deficit, that's great. They can do that by making cuts when they pass the next budget and/or by raising taxes.

Yep. She was using that analogy because McCarthy was on the shows doing what you said. The whole "If I give my kid a credit card, I don't just raise the limit on it!!11"

Heineken14 posted...

https://www.youtube.com/watch?v=8RReVCn5WEg

Everything I've seen from Katie Porter leads me to believe she's one of the few actually good people in politics

Heineken14 posted...

https://www.youtube.com/watch?v=8RReVCn5WEg

It's a scandal that Katie Porter is not your president for life.

tremain07 posted...

The Dems had the oppertunity to end this crap once

Add this to another one of the misconceptions or grossly misleading things people claim.

Just in the Seante alone there was a solid 50 Republicans and two Democrat against it.

So this narrative of, "ThE dEmOcRaTs HaD tHe OpPoRtUnItY tO" do xyz is always either a intentionally disingenuous argument trying to be be misleading....
or at best grossly ignorant to how government actually works while ignoring the numbers who supported what.

This opportunity being spoke of, Democrats did not have a solid majority to do whatever they wanted. Republicans most definitely had the numbers to obstruct any progress as Democrats did not have a super majority to allow them to pass whatever. All it took was one Dem to be against them and all 50 Republicans to obstruct the Dems "opportunity."

NatsuSama posted...

Add this to another one of the misconceptions or grossly misleading things people claim.

Just in the Seante alone there was a solid 50 Republicans and two Democrat against it.

So this narrative of, "ThE dEmOcRaTs HaD tHe OpPoRtUnItY tO" do xyz is always either a intentionally disingenuous argument trying to be be misleading....
or at best grossly ignorant to how government actually works while ignoring the numbers who supported what.

This opportunity being spoke of, Democrats did not have a solid majority to do whatever they wanted. Republicans most definitely had the numbers to obstruct any progress as Democrats did not have a super majority to allow them to pass whatever. All it took was one Dem to be against them and all 50 Republicans to obstruct the Dems "opportunity."

Yeah, a lot of people did that when Roe got overturned saying that democrats should have done more. There was plenty of evidence of bills democrats tried passing just in that year alone showing they were trying to protect women's reproductive rights. It's definitely one of those things that, whether they're doing it on purpose or not, that just gives cover for the shitty things republicans do because now it's not republicans fault for doing it, but it's democrats fault for "not doing enough to stop it."

ai123 posted...

It's a scandal that Katie Porter is not your president for life.

her skills are way better utilized where she is.

Medussa posted...

her skills are way better utilized where she is.

Yeah if she leaves that district it likely goes red. A rare purple district here in SoCal.

tremain07 posted...

The Dems had the oppertunity to end this crap once and for all and didn't take it, just like they had the oppertunity to codeify rights that are currently under attack by the right and a MAGA supreme court who think themselves untouchable gods. If we default while it it's not 100 percent the fault of the Democrats their incompetence and underestimation of the sheer greed, corruption and spite from the Republicans is definitely a contributing factor to the current state of the country, especially when even now Biden recently called Mccarthy an honorable man

Sinema and Manchin say, "Hello". Dems have been locked for ages now because of those 2.

tag