Potential Financial Disaster For The Nation

A photograph of the U.S. Capitol on September 28th, 2021 Kent Nishimura/Getty Images/Los Angeles Times

After passing with enough votes in the Senate, the House of Representatives was divided on how and why the debt ceiling should have been raised by October 18th. As Treasury Secretary Janet Yellen stated, if the debt ceiling is not raised or suspended, a financial crisis could occur.

Yellen had additionally claimed that if there is late action or inaction, then the United States could lose credit and “erode investor confidence” within a letter to leaders in Congress. Future spending and the inability to pay obligations would result from a failure to raise the debt ceiling, a limit for government spending because of constraints from U.S. debt. What could arise from this as well is harm to the global economy, the first U.S. default, and a loss of jobs throughout the nation.

Attempts by Democrats to suspend the debt ceiling had been impeded by Republicans. They argued that to raise or suspend the debt ceiling should be solely done by the Democrats, as preparation is needed to approve a massive bill concerning climate change and social safety net programs. Senator McConnell contributed to this position by saying that Democrats should use similar budgetary tools to raise the debt limit to avoid induced obligations. This stance Republicans have taken seems to be unwavering and may continue as the deadline impends.

A piece of legislation made to avoid a temporary federal shutdown and maintain funding for the government through December 3rd was passed by the Senate and the House, which was then signed by President Biden. Before this date, Congress will need to concur on an appropriations bill. Whether a funding plan will be completed according to the schedule is unknown.

Several government shutdowns have happened in the history of the United States. The most recent was between December 18th, 2018, and January 25th, 2019. It had raised concern among federal workers whose payment had been postponed and raised criticism towards former president Trump. Many were placed in a position of need and demanded the shutdown to end. Workers were heard, and a conclusion came about with the signing of a short-term spending bill that would reopen the government through February 15th. This was the longest government shutdown in U.S. history, lasting 35 days. 

As the situation remained at this standstill between Republicans and Democrats, many could be severely affected by the consequences of an unchanged debt ceiling.