House Democrats to attempt to suspend debt ceiling as Yellen warns of ‘catastrophe’
House Democrats will take action this week to suspend the $ 28.5 trillion debt ceiling as the October deadline approaches.
Without suspending the debt ceiling, the United States wouldn’t be able to borrow money to pay its bills – and things would get ugly if that happened. The federal government would have to cut spending on programs like Medicaid, local governments would have a harder time borrowing, and financial markets could go haywire. In short, failure to act “would produce widespread economic catastrophe,” Treasury Secretary Janet Yellen wrote in the Wall Street Journal.
This one is going to be about the Democrats. Senate Republicans, led by Mitch McConnell, have said they will not vote to suspend the debt ceiling, in order to make a statement on the level of spending proposed by Democrats. “Republicans will not facilitate another reckless, partisan tax and spending spree,” McConnell tweeted last week.
What is the debt ceiling?
A cap on the amount the US government can borrow to finance its operations.
- It was introduced during World War I so Congress didn’t have to approve every Treasury Department bond issue like it had before, freeing up more time for name calling.
- The debt ceiling has been suspended dozens of times over the years, including 3 times under the Trump administration.
Importantly, the debt ceiling does not take into account new spending, like the $ 3.5 trillion proposal Democrats have on the table. Instead, these are expenses that Congress has already authorized, such as paying Social Security.
Over the years, the debt ceiling has become a “political weapon,” according to the PA, as each side tries to blame the other for their spending habits and for taking on more debt on the United States.
At the end of the line : Business leaders don’t care who’s in charge, they just want someone to take care of the problem. The Business Roundtable, an influential group of senior leaders, wrote that not suspending the debt ceiling could “produce an otherwise avoidable crisis and pose unacceptable risk” to the country’s economy and markets.