The Ongoing Debate on Raising the Debt Ceiling: Proposals, Demands, and the Need for Compromise
House Speaker Kevin McCarthy has unveiled a bill aimed at raising the debt ceiling by $1.5 trillion or until March 31, 2024, whichever comes first. The bill also includes $4.5 trillion in spending cuts, which include strengthened work requirements on welfare programs, rescinding unspent pandemic funds, and banning student-loan forgiveness.[0] The bill, called the Limit, Save, Grow Act, aims to limit federal spending, save taxpayers trillions of dollars, grow the economy, and lift the debt limit into next year.[1] However, Democrats and President Joe Biden are unlikely to support the proposal.[2]
The debt ceiling is a numerical limit, set by law, on total U.S. government borrowing.[3] The Treasury was required to obtain congressional approval for any new debt issuance before a 1917 act of Congress.[3] Due to the complications caused by World War I, Congress decided to implement a cap on total borrowing, which has been increased on multiple occasions since then.[3] The national debt ceiling is a manufactured crisis.[4] For decades, there was little controversy surrounding the fact that it has been raised 78 times since 1960.[4] Only in recent years has the right wing decided to use it as a point of leverage to try to force through spending cuts.[4]
If Congress does not increase the debt ceiling by June, the federal government runs the risk of defaulting on its debt obligations, which would be catastrophic for the economy and put millions of jobs in jeopardy.[5] While all of this is happening, the country is also quickly approaching a potential economic crisis, and right now, there is no sign of any solution that the House, Senate, and president could all get behind.[6]
The House Problem Solvers Caucus has released a separate proposal for avoiding a default on U.S. debt if the White House and congressional leadership fail to reach an agreement.[7] The plan would suspend the debt ceiling for six months and establish an independent fiscal commission to determine ways to reduce the debt.[7]
Republicans, in control of the House, are seeking to use the threat of a default on federal debt to enact spending cuts.[8] The White House and its Democratic allies are demanding a “clean” debt ceiling increase.[9] A number of House Republicans have voiced their opposition to raising the debt limit under all circumstances, and McCarthy can only afford to lose four votes.[7]
The bill proposed by McCarthy aims to raise the debt limit for less than a year, at which point he would presumably demand even more cuts. Like most Republicans, McCarthy will likely be forced to jump aboard legislation that raises the debt ceiling, but not without issuing some demands.[10] McCarthy's goal is to reduce spending to match the level of 2022 and limit future expenditures to an annual growth rate of 1% over the upcoming decade.[10]
House Republicans have a chance to fulfill some of their Commitment to America pledges during this discussion, including reducing expenses and restraining an excessively dominant executive branch.[11] There is no option to default on the national debt.[11] What sort of agreement can be reached?[11] House Republicans should consider raising the debt ceiling in exchange for the approval of the REINS Act.[11] A sensible bargain that would satisfy both political factions is exchanging the debt ceiling for the REINS Act, and Democrats should weigh the benefits of this suggestion.[11]
In conclusion, the debt ceiling debate is ongoing, and both sides are making proposals and demands. While the country is approaching a potential economic crisis, it is essential to find a solution that all parties can agree on to avoid catastrophic consequences for the economy and millions of jobs.
0. “McCarthy denying student-debt relief to his own constituents: Cardona” Business Insider, 21 Apr. 2023, https://www.businessinsider.com/student-loan-forgiveness-banned-debt-ceiling-bill-mccarthy-denying-constituents-2023-4
1. “Debt-ceiling standoff: Here's what's next as Democrats and Republicans warn about U.S. default” Morningstar, 19 Apr. 2023, https://www.morningstar.com/news/marketwatch/20230419670/debt-ceiling-standoff-heres-whats-next-as-democrats-and-republicans-warn-about-us-default
2. “Debt Ceiling Impasse and CRE: Should You Worry Yet?” | Florida Realtors, 19 Apr. 2023, https://www.floridarealtors.org/news-media/news-articles/2023/04/debt-ceiling-impasse-and-cre-should-you-worry-yet
3. “Opinion | Biden Doesn't Need Congress to Avoid a Debt-Ceiling Crisis” The Wall Street Journal, 19 Apr. 2023, https://www.wsj.com/articles/another-debt-ceiling-crisis-can-we-avoid-catastrophe-again-budget-legislative-fix-denmark-faith-credit-deficit-spending-constitution-e679cae9
4. “PSL Editorial: Right wing prepares “debt ceiling” attack – Will Biden capitulate? – Liberation News” Liberation, 20 Apr. 2023, https://www.liberationnews.org/psl-editorial-right-wing-prepares-debt-ceiling-attack-will-biden-capitulate/
5. “Markets are starting to get worried about the debt ceiling” KDRV, 20 Apr. 2023, https://www.kdrv.com/news/national/markets-are-starting-to-get-worried-about-the-debt-ceiling/article_b1962bc7-bc4b-5ba4-92f7-f89151d6a6b2.html
6. “Kevin McCarthy's debt ceiling plan is a hot mess” MSNBC, 21 Apr. 2023, https://www.msnbc.com/the-reidout/reidout-blog/kevin-mcarthy-debt-ceiling-plan-rcna80877
7. “How the Debt Ceiling Fight Could End According to History” TIME, 19 Apr. 2023, https://time.com/6273081/how-debt-ceiling-fight-could-end-congress-history/
8. “Opinion: If Kevin McCarthy’s tightrope act works, Democrats would face an agonizing choice” CNN, 21 Apr. 2023, https://www.cnn.com/2023/04/21/opinions/kevin-mccarthy-democrats-debt-ceiling-brown/index.html
9. “Debt Ceiling Legislation – AAF” American Action Forum, 21 Apr. 2023, https://www.americanactionforum.org/daily-dish/debt-ceiling-legislation/
10. “Stock Market Crash Alert: Mark Your Calendars for a Possible August Crash” InvestorPlace, 18 Apr. 2023, https://investorplace.com/2023/04/stock-market-crash-alert-mark-your-calendars-for-a-possible-august-crash/
11. “House GOP should trade the debt ceiling for REINS Act” The Hill, 18 Apr. 2023, https://thehill.com/opinion/congress-blog/3957723-house-gop-should-trade-the-debt-ceiling-for-reins-act/
