An Overview of the United States Debt Ceiling
The United States debt ceiling or the debt ceiling refers to the amount of money the U.S government can legally borrow to meet its obligations. The Senate and House of Representatives debate and agree on a figure that helps to tame the government expenditure. However, debt ceiling does not prevent the Federal Government against running into debts. Instead, it ensures that the government is able to pay for what it has already spent, according to a report by the Government Accounting Office (GAO) to Congress in February 2011. Thus, a debt ceiling restricts the government from borrowing to spend on programs, which Congress has approved. In recent years, the debt has been unable to function effectively as a deficit-control tool, with some economists and politicians considering abandoning it.
Brief history of the United States Debt Ceiling
The United States debt ceiling has a rich history. It has not started with the Obama administration. In 1953, President Dwight Eisenhower asked Congress to raise the ceiling from $275 billion to $290 billion. However, fiscal conservatives from both sides shot down the request. Consequently, conservatives’ refusal to increase the debt limit has become an annual exercise as a way of taming the government expenditure. Since 1976, the U.S has witnessed 18 government shutdowns stemming from disagreement on the budget, passing motions to continue running the government and review of the debt ceiling.
Throughout history, most of the 18 government showdowns have lasted less than five days, except in 1995, when a standoff between President Bill Clinton and House Speaker Newt Gingrich over spending lasted 21 days. This was however against Gingrich’s promise to never shutdown the government. As a result, Clinton was reelected, with Republicans losing slots in the House of Representatives.
Possible effects of the U.S Debt Ceiling
While the President wants to do away with the debt limit increases and the possibility of shutting down the government, Republicans consider the crisis as important tool to push for a downsized government. According to the National Journal article, Republicans have a list of proposals to the President and their Democratic counterparts, even though none of these would eliminate the debt ceiling limits.
Firstly, in the long term, Republicans want the Treasury to get borrowing permission for three and a half years if the Obama administration agrees to privatize Medicare. In the mid-term, they want the debt limit to go up until 2015 because of an agreement to implement tax reform, reduce the SNAP food-stamp program or obstruct-grant Medicaid. However, Democrats hold that the debt ceiling proposals are a political stunt, anchored on Paul Ryan’s previous suggestions.
To address the United States debt ceiling, Democrats want wealthiest Americans to dig deeper into their pockets in terms of paying taxes. They point out that the gap between America’s wealthiest 1% and the rest of the population continues to widen, having reached its widest level since the Great Depression. They also want a continuous implementation of the Affordable Care Act. They opine that the current healthcare system is unfair and unsustainable.
Reasons to remove United States debt ceiling Votes
Today, Congress always debates and decides the U.S debt limit. However, some economists and politicians believe that this vote has no meaning and that Treasury should be allowed to borrow money to finance the government’s legal obligations.
Firstly, voting on debt ceiling is a redundant process since over the years, spending and cost of covered have always been supported by majority votes in the two houses. Additionally, voting on the U.S debt ceiling has not yielded fiscal discipline to warrant its stay. Congressional representatives who determine the ceiling cap equally approve regular programs that need funding.
However, those who support the vote argue that it puts focus on taming the national debt and taking urgent steps to prevent budget deficits. By the year 2012, the U.S national debt was 72.6% as compared to 42.4 in 1963, representing an exponential increase in debt. Thus, the United States Debt Ceiling remains a controversial and sensitive issue in America. It may have far-reaching effects, going beyond the U.S.
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Works cited:
http://pgpf.org/Issues/Fiscal-Outlook/2012/06/062112-Balanced-Budget-Explainerhttp://www.gobankingrates.com/personal-finance/debt-ceiling-congress-game/
http://blogcritics.org/pros-and-cons-of-raising-the/
http://www.moneycrashers.com/raising-national-federal-debt-ceiling-definition/
http://www.investopedia.com/financial-edge/0611/should-congress-raise-the-debt-ceiling.aspx