The battle over the national debt ceiling It’s been brewing in Congress for months and is now gaining momentum. On Sunday, several Democratic lawmakers called on Republicans to stop using the cap as a bargaining chip for a broader effort by Republicans to cut social safety net spending.
Last week, House Speaker Kevin McCarthy (R-California) introduced a bill that would raise the debt ceiling in exchange for slashing federal spending. This has forced government agencies to maintain spending levels for 2022 despite record inflation. McCarthy’s bill also blocks Biden’s plans to cancel up to $20,000 in student loans to low- and middle-income borrowers, eliminates the clean energy tax credit, and grants the IRS $80 billion to uncover tax fraud. Tighten spending by canceling dollar funding. It also adds labor requirements to Medicaid and Food Stamps, which can make it harder for people to get this help regardless of eligibility.
In contrast, Republicans agreed to raise the debt ceiling three times during the Trump administration, but it was largely undiscussed.
On Sunday morning, Senators Dick Durbin (D-Illinois) and Amy Klobuchar (D-Minnesota) told Republicans during the annual budget process later this year rather than delay raising the debt ceiling. He urged them to wait and pursue spending cuts. There is a risk of great damage to the US economy.
“Don’t default, let’s act responsibly. meet the press.[W]We can have a good argument about the budget, and while we understand the spending levels, we will not jeopardize US jobs and economic growth. “
“What if McCarthy does what he wants?” Senator Klobuchar said on CNN. “We’ll literally see mortgage and loan rates go up. We’ll see the stock market plummet again. Things we can’t afford.”
“Negotiate a budget,” she added. “That’s where the negotiations are. And they should start those negotiations now. [a] hostage. ”
The “debt ceiling” refers to the maximum amount the U.S. government can borrow to pay the bills, from sending Social Security checks to seniors to issuing food aid. In January, the U.S. reached this ceiling, forcing the Treasury Department to implement “special measures” to help the government continue to meet its obligations. If no action is taken, it will likely end in early June. As I explained in 2021, when Republicans also tried to block a debt ceiling hike:
If Congress doesn’t raise the debt ceiling, the US will default. This means that the U.S. government will not be able to continue paying its debts, especially Treasury bonds. They are the foundation of the global financial system and are considered the safest assets for the obvious reason that the United States has never defaulted in its history.
If the U.S. defaulted, the economy would lose more than 7 million jobs, stocks would crate, $10 trillion in household wealth would be lost, and the unemployment rate would rise to over 8%, according to a Moody’s Analytics report. Soar. Referring to the 2008 global economic meltdown, the report says: “The subsequent recession will be comparable to that seen during the global financial crisis.”