On Friday, January 13th, 2023, Treasury Secretary Janet Yellen informed the U.S. Congress that the country will reach its statutory debt ceiling on Thursday, January 19th, 2023 if no actions are taken by Congress and the White House. In the letter, she reminded Congress that the debt limit was the total amount of money the federal government was authorized to borrow to meet outstanding legal obligations including mandatory outlays like Social Security payments and Medicare benefits payments. She also highlighted that the Treasury will be “taking certain extraordinary measures” to avoid defaulting but could only hold off up to early June this year. She urged Congress to either increase the debt limit or suspend it. Otherwise, a default on the federal debt “would cause irreparable harm to the U.S. economy, the livelihoods of all Americans, and global financial stability.”
In the past, Congress would raise the debt limit, but for the newly elected Republican majority Congress, this provides an opportunity to negotiate for spending limits in exchange for temporarily increasing the debt ceiling, which the White House is not open to. The standoff between the two is similar to the last debt-ceiling showdown of 2011. Secretary Yellen, in her letter, has warned that “even threats that the U.S. government might fail to meet its obligation have caused real harms, including the only credit rating downgrade in the history of our nation in 2011.” And the debate continues.
Discussion Questions:
- Check the current public debt level using the US Debt Clock.
Indicate the date/time and the numbers you saw for the following items:
a) U.S. National Debt
b) U.S. Federal Debt-to-GDP ratio for all 4 years: 1960, 1080, 2000 and Now
c) Largest Budget Items: Medicare/Medicaid, Social Security, Defense/War, Interest on Debt
d) U.S. Debt held by Foreign Countries
e) Discuss what do YOU think about the current public debt from these numbers.
- Read the article, “Our debt ceiling crisis could hit as early as June. Here’s how Bidan can sidestep it”, and discuss
a) Two takeaways you have from the choices available to the U.S. President to address the debt ceiling.
b) Share two of the impact of the 2011 debt-ceiling government showdown and predict if a similar reoccurrence is imminent.
c) Relook at the diagram, “Non-Defense Discretionary Funding Down for Most Categories since 2010” and comment which categories you think should get more funding and which categories should have further cuts, OR keep the numbers as is.
- Self-reflection: Now that you are aware of the National Debt, what advice do YOU – the voter/citizen – have for the Whitehouse and the Congress to ensure a similar situation is avoided in the future? Do explain.
Sources| U.S. Treasury: https://home.treasury.gov/system/files/136/Debt-Limit-Letter-to-Congress-McCarthy-20230113.pdf; NPR: https://www.npr.org/sections/money/2011/05/17/136363196/the-history-of-the-debt-ceiling; MSNBC: https://www.msnbc.com/rachel-maddow-show/maddowblog/democrats-respond-gop-calls-debt-ceiling-negotiations-no-rcna65944; USDebtClock.org: https://www.usdebtclock.org/; Vox: https://www.vox.com/policy-and-politics/2023/1/10/23542845/joe-biden-debt-ceiling-kevin-mccarthy; Unsplash: https://www. unsplash.com/photos/E94nZORR5qc