The manufactured debt ceiling crisis created by some in Congress is back.
This seemingly annual tradition of man-made, high-profile deadlock left many Americans scratching their heads and wondering why we’re doing this year after year when members of Congress are simply taking a separate vote on whether to pay for projects they have already approved.
Tell Congress to Raise the Debt LimitThat’s right. When Members of Congress voted last year on a new budget, they knew they would have to issue Treasury bonds, notes, and bills to pay for the spending they authorized. But now, after bipartisan agreement on spending levels, a handful of extremists in Congress are hoping to avoid paying their bills.
So why does this issue come up so often?
Congress is always fully aware of the need for issuing new securities whenever they approve spending. They know if they are approving spending that exceeds revenue. But, through a historical quirk in the U.S. budget process, it is after approving spending bills that Congress has to approve new debt ceilings.
The debt ceiling does not authorize new or old spending. It merely authorizes the Treasury to issue bonds to finance spending that Congress has already approved.
That’s right. Congress has already racked up the bills with the appropriations they passed in 2022. The fight over raising the debt ceiling, which was reached earlier this month on Jan. 19, is about whether we issue Treasury bonds to pay the credit card bill for the money Congress already spent.
By the way, these Treasury bonds, notes, and bills are sought-after among investors as the risk is extremely low with some experts even declaring them risk-free, indicating high confidence in the U.S. government that backs these securities.
But, in order to force a crisis in government operations and hold the worldwide economy as a hostage, extreme members of Congress are threatening to refuse to raise the debt ceiling unless their demands are met.
They have announced that they will not support an increase in the debt ceiling without reductions in spending, possibly in the form of cuts to Social Security, Medicare, Medicaid, and other important programs.
What are these members of Congress putting at risk with their shenanigans?
Actual default on debt payments and other obligations is likely to have enormous adverse impacts on the world economy. Everything from paying federal employees, Social Security and Veterans’ beneficiaries to issuing tax refunds would be at risk if Congress failed to let the Treasury issue these securities.
Failure to raise the ceiling would not cut any spending on any program for which appropriations have already been approved. It would simply lead to chaos in the timing of payments as federal revenues are insufficient to meet already approved spending.
One idea that has been floated is to make certain payments but not others, but it is important to understand that there is no legal authority for ”prioritizing” payments by the Treasury. The Treasury properly regards all authorized spending to be on an equal footing. Even if some authority could be devised for this scheme, it would require cutting at least a trillion dollars from approved agency budgets, which is simply impossible without causing massive disruptions in the national economy and the operation of government.
AFGE is urging the White House and Congress to protect our economy and responsibly manage the government’s finances. They have until around June 5 to act, when the Treasury expects that the extraordinary measures keeping the U.S. from breaching the debt ceiling will fail.
“Congress should handle fiscal issues such as controlling the federal deficit through normal legislative processes, and the White House should not give in to any efforts to use the debt ceiling as a means of extracting concessions,” said AFGE President Everett Kelley.
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