Yesterday The Hill reported that the legal limit on how much debt the U.S. government can owe was reimposed Sunday.
The article reports:
A two-year deal to suspend the debt ceiling lapsed at midnight following inaction from Congress and President Biden to give the U.S. more borrowing authority. The Treasury Department will now begin taking what it refers to as “extraordinary measures” to prevent the U.S. from defaulting on its debt.
Those steps are likely to avert a default until October or even November before Biden will need to sign a bill to raise or suspend the limit again.
Think about this in terms of your personal finances. You have reached the top of your borrowing authority and have to cut back on expenses for the moment. However, you plan on expanding the amount of money you can borrow in the fall (or suspending any limit on your borrowing for some length of time). Meanwhile you are considering trillion dollar spending bills. In what universe does this make any sense?
The article continues:
The expiration of the debt limit has triggered numerous partisan standoffs over the past decade, most recently in 2019. Each time, Congress has raised or suspended the debt limit. But the weeks before a potential default have often been the most tense, both for financial markets and administration officials.
“I respectfully urge Congress to protect the full faith and credit of the United States by acting as soon as possible,” Treasury Secretary Janet Yellen wrote in a letter to congressional leaders last week, warning that they risked “irreparable harm to the U.S. economy and the livelihoods of all Americans” by delaying action.
There is no clear path to a bipartisan agreement as Republicans hold out for spending cuts that Democrats refuse to consider.
While Democrats have slim majorities in both the House and Senate, they will still need the support of 10 GOP senators to avoid a filibuster on legislation to raise or suspend the debt ceiling.
Republican leaders have told Democrats that there can be no bipartisan debt ceiling agreement without a slate of debt reduction measures targeting the roughly $28 trillion national debt. Several GOP lawmakers have floated a deal similar to the 2011 Budget Control Act, which ended a debt ceiling standoff shortly before the U.S. suffered its first ever credit downgrade.
We simply cannot continue our current rate of government spending. At some point the dollar will collapse. It is interesting that none of the news shows I watched this morning mentioned the debt ceiling.