US Debt Ceiling: Shutdown, Default, or Extraordinary Measures

Commentary

House Democrats refuse spending cuts to keep the United States out of default.

Treasury Secretary Janet Yellen confirmed on Jan. 19 that the United States has reached its debt ceiling of $31.4 trillion and that the government would have to take extraordinary measures to avoid slipping into default. House Democrats blame the Republicans for not raising the debt ceiling, which Republicans agreed to do if Democrats would cut spending.

The debt ceiling is the legislative limit set by Congress on the amount that the U.S. government can borrow by issuing bonds. It does not directly limit government spending as the debt ceiling allows the government to cover expenses already approved by Congress. On the other hand, by refusing to raise the debt ceiling, Republicans hope to convince the government to spend within its means. If the debt ceiling is reached, the Treasury Department must find other means—called extraordinary measures—to cover the government’s expenses. This includes making interest payments to bondholders.

Yellen said the extraordinary measures will probably keep the government operational until June. This may entail withholding contributions to a federal employee retirement fund. After that, the options become more painful, such as a partial government shutdown or delayed government transfer payments, such as Social Security checks.

If no solution is found, the United States will be in danger of defaulting on its debts. The U.S. government has always enjoyed low-interest rates on its borrowing, but this is because of the country’s excellent credit rating. Going into default would force the United States to pay higher interest rates in the future and make borrowing more costly.

The White House, however, has defiantly refused to negotiate spending cuts. White House press secretary Karine Jean-Pierre told reporters on Jan. 18, “There will not be any negotiations over the debt ceiling—we will not do that; it is their constitutional duty.” The White House statement misses the point that the constitutional duty of House Republicans is not to go along with every single initiative of the Democrats or to agree to every spending bill or program. The constitutional duty of Congress is to represent the interests of the Americans who voted for them and to oppose or negotiate policies they disagree with.

The debt ceiling was established in 1917 to increase the fiscal responsibility of the federal government. Historically, each time the debt ceiling has been reached, Congress agreed to raise it or suspend it. Given the polarized nature of U.S. politics, debates over the debt ceiling have sometimes led to government shutdowns.

The government is about to hit the debt ceiling now because of the large gap between the Biden administration’s spending and its revenue. Republicans are willing to increase the debt ceiling to avoid defaults if the Democrats would agree to spending cuts. But Biden and House Democrats have refused.

The Republicans have pointed out that in addition to adding to the deficit and, ultimately, the debt, the Biden administration’s extensive spending has contributed to inflation levels not seen in decades. When the Federal Reserve raises interest rates to bring down prices, the government must also practice fiscal restraint. If not, the country could face stagflation.

Some Democrats want to have the debt ceiling permanently eliminated, saying that the periodic battles over raising it prevent the government from doing its work. The Obama administration considered declaring the debt ceiling a violation of the 14th Amendment, which prohibits questioning the validity of public debt.

But Republicans want the debt ceiling to remain. They see it as a way of bargaining to bring down government spending.

Many Democrats want to eliminate the checks and balances that prevent the country from falling to majority rule. These include the Electoral College, certification of the vote, the filibuster, the Second Amendment, and threats to the independence of the judiciary by packing the Supreme Court. But these checks and balances are the unique aspects of the American political system that have prevented tyranny.

Under the U.S. Constitution, only Congress can make laws subject to a majority vote. Since assuming office in 2020, President Joe Biden has signed 106 executive orders, 117 presidential memoranda, 375 proclamations, and 71 notices. These types of presidential edicts bypass the legislative branch and the checks and balances laid out in the Constitution. Biden’s presidential edicts include mask and vaccine mandates, overriding immigration laws, shutting down the Keystone Pipeline, and the federal push for abortion, as well as various climate edicts.

On Jan. 11, Biden renewed the COVID-19 public health emergency, further exacerbating the national deficit and restricting personal freedoms. With his signature alone, he can continue COVID spending and enhance food stamps and Medicaid. He has done this every 90 days since taking office.

Negotiating the increase to the debt ceiling is one way that Republicans can stand up against spending they disagree with for programs they oppose. Any time the Republicans refuse to go along with a policy favored by democrats, the liberal media calls Republicans a threat to democracy. They even said this when the Supreme Court knocked down the mask mandate on airplanes or when they overturned Roe v. Wade.

But they are missing the point. Democracy means having checks and balances. This includes an independent judiciary and limits on making laws in the legislative branch. American democracy, as outlined by the Founding Fathers, was meant to give representation to the minority and the majority. The filibuster, the debt ceiling, and all of these other features of our system that Democrats see as inconveniences are the very constructs that prevent mob rule and ensure our freedoms.

Views expressed in this article are the opinions of the author and do not necessarily reflect the views of The Epoch Times.