Why the Debt Ceiling Matters

AS FIGHTS ABOUT the budget and other economic issues are again riveting the nation’s capital, the rest of the country yawns. Possible government shutdowns, threats to default on our nation’s debt, and proposals to decimate food assistance for struggling Americans seem to be business as usual in Washington, D.C. These budget battles have become so frequent that it is tempting to dismiss it all as political posturing. But that would be a mistake.

The biggest challenge facing Congress should be a non-issue. The debt ceiling is simply the amount of debt the U.S. is legally allowed to hold. It is about paying off the bills that Congress has already incurred from past appropriations—not about giving permission for new government spending, as many people falsely assume. Congress has raised it nearly 100 times since the end of World War II, but it only recently became a political football. Because the consequences of not raising the debt ceiling and defaulting on our nation’s obligations could be catastrophic, some leaders have tried to leverage it for political gain. After the country came close enough to a default in 2011 to receive a credit downgrade, President Obama has responsibly refused to negotiate over raising it. His assumption is that GOP leaders in Congress wouldn’t throw the economy off the cliff for their own political gain. The American people are left watching this game of chicken and hoping somebody blinks.

While this is clearly a partisan game, the stakes couldn’t be higher. The U.S. has always honored its debts. Should the country default, the market turmoil and long-term effects could be catastrophic for the global economy. Domestically, it could throw the U.S. back into recession.

The costs are also significant. According to the Government Accountability Office, the credit downgrade caused by the 2011 fiscal showdown resulted in $1.3 billion in increased borrowing costs for that fiscal year. The Bipartisan Policy Center has estimated that interest payments could be nearly $19 billion higher over the next decade. These political showdowns have made the U.S. a more risky investment, which means creditors demand higher interest rates when buying our debt. While many Republicans claim these fights are about fiscal responsibility, these manufactured crises have actually added to our fiscal challenges.

Washington has to find a way to keep the lights on. The fiscal year began Oct. 1, but at this writing Congress has not passed the legislation required to fund the new year. Many leaders are trying to replace the automatic “sequestration” cutbacks with alternative reductions and new revenue that would be more targeted and less detrimental to the economy. However, there is disagreement between Republicans and Democrats on what this might look like. Further complicating the budget picture, some GOP senators, most notably Ted Cruz, Mike Lee, Rand Paul, and Marco Rubio, are refusing to vote for a continuing resolution that keeps the government open unless the Affordable Care Act is defunded in the process. Obviously, that’s not something Democrats are willing to entertain.

The push to slash spending on the Supplemental Nutrition Assistance Program (SNAP) has received less attention, but it could have devastating consequences. Republicans are expected to push for $40 billion in cuts, which would reduce essential food for 4 million to 6 million vulnerable people.

All of these issues raise an important question: What are our leaders doing? Clearly, they are more focused on their political self-interest than the common good. The political dynamics in Washington have not changed, so it is naïve to think that this dysfunction will end in the near future.

But every crisis is also an opportunity. Our politics could use a dose of moral sanity, and the faith community is uniquely equipped to provide it. Somebody needs to remind Washington that we elect leaders to solve problems, not create them.

Beau Underwood is director of campaigns and advocacy at Sojourners.

Image: Debt ceiling sign, Jim Vallee / Shutterstock.com

Have Something to Say?

Add or Read Comments on
"Why the Debt Ceiling Matters"
Launch Comments
By commenting here, I agree to abide by the Sojourners Comment Community Covenant guidelines

Subscribe