On Jan. 19, the U.S. officially hit its debt ceiling, having spent all of the $31.4 trillion available for expenditures as allocated by the Treasury. In intervening days, heated discussions and public debates have emerged concerning how the country will move forward to avoid a total spending freeze and a financial catastrophe.
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More recently, on Feb. 7, Sen. Joe Manchin (D-W.Va.) penned an op-ed for The Washington Post in which he expressed his frustration over the two parties refusing to make concessions thus far.
“From a once-in-a-century pandemic and inflation not seen in decades to a global energy crisis, it is fair to say the American people are ‘crisis-ed out.’ Given all that anxiety, one would presume that leaders of both parties would seek out compromise to avert an unnecessary, entirely avoidable financial crisis and act soon to raise the debt ceiling. Instead, we are again witnessing a dangerous game of unnecessary brinkmanship that puts our global credit rating at risk and could cost American families and businesses much more if our leaders fail.”
One week later, on Feb. 14, both President Joe Biden and Treasury Secretary Janet Yellen expressed their concern over continued sparring regarding the debt ceiling crisis. According to PBS, Biden pointed the finger at the GOP in his speech, saying: “Some in Congress are putting that progress at risk by threatening to have America default on its debt, which would be catastrophic for counties and the country. Even coming close to default would raise borrowing costs, making it harder to finance key projects in your communities.”
For her part, Yellen signaled toward potential economic consequences, saying, “In the longer term, a default would raise the cost of borrowing into perpetuity. Future investments, including public investments, would become substantially more costly.” She added that Social Security, among other programs, could be put at risk.
House Speaker Kevin McCarthy remained brief in his remarks over the current state of affairs, having met with the president earlier in February and remarking, “No agreement, no promises except we will continue this conversation,” of the discussion when asked afterwards. Senate Republican leader Mitch McConnell has stated that there will be no GOP-advanced cuts to either Social Security or Medicare during these negotiations, per PBS.
On the other hand, Manchin wants to change the way in which Social Security is funded, notably raising the cap on payroll taxes in order to make the highest earners contribute more to the program’s reserves.