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Republicans won’t vote to raise the debt ceiling because democrat spending is out of control
Democrats have total control of congress, and can just raise it themselves. But.....Pelosi says they refuse to raise the debt ceiling on their own and are only wiling to do it with republican votes.
Why? This doesn’t make any sense to me?
If they want to spend all this money and can raise the debt ceiling themselves, why not just do it?
God I hope they let us default, but they won't.... they're smarter then that. Pop all the bubbles.. I mean we just got a vaccine mandate and the markets are up. Crazy world, presented by the top one percenters.
The House passed a bill Tuesday that would both prevent a government shutdown and suspend the debt limit in a step toward preventing possible economic calamity.
The chamber approved the plan in a 220-211 vote. All Democrats voted for it and all Republicans opposed it.
It is unclear how Democrats would proceed if the legislation fails in the Senate.
Because some of the democrats actually understand math and economics. They will run on platforms of increase social programs but they know the real repercussions of what will happen if they do.
Preface: How many times has the debt limit been raised?
Since 1960, Congress has acted 78 separate times to permanently raise, temporarily extend, or revise the definition of the debt limit – 49 times under Republican presidents and 29 times under Democratic presidents. Congressional leaders in both parties have recognized that this is necessary.
McConnell has declared that Senate Republicans will not vote to increase the Treasury’s authority to continue borrowing, which is the same as voting to allow a default. Says it’s the Democrats’ responsibility to avoid a debt default that could harm the economy.
Pretty ballsy of McConnell considering:
** Senate Democrats worked with Republicans under the Trump administration to raise the debt limit on multiple occasions,including twice in 2017 to pay for a $1.5 trillion tax cut we didn’t need and that blew a giant hole in the budget. And they said it's a bipartisan responsibility.
**And Trump's historic rise in the national debt of almost $7.8 trillion during his time in the White House — approaching World War II levels, relative to the size of the economy.The growth in the annual deficit under Trump ranks as the third-biggest increase, relative to the size of the economy, of any U.S. presidential administration, according to a calculation by Eugene Steuerle, co-founder of the Urban-Brookings Tax Policy Center. And unlike George W. Bush and Abraham Lincoln, who oversaw the larger relative increases in deficits, Trump did not launch two foreign conflicts or have to pay for a civil war. (Nov 7, 2019 — Trump tax cuts hiked the deficit, now $1 trillion)
Senate Majority Leader Charles Schumer (D-N.Y.) is stepping up pressure on his Republican colleagues to help raise the debt ceiling, while pointing to debt incurred under the prior administration to underline the need for bipartisan action.
In remarks from the Senate floor on Monday, Schumer pointed to a recent memo released by the Congressional Research Service (CRS) that showed the [b]Trump administration had racked up more than $5 trillion in new debt since the debt limit was last suspended in August 2019 through January.[/B
“So, all of the new $5 trillion in debt, bottom line, was caused under the Trump administration,” he said, as Democrats seek to increase pressure on Republicans to agree to raise the spending limit.
[i]Government funding is set to expire at the end of September and administration officials are projecting that the United States could default on its credit in the coming weeks.The White House has warned an unprecedented default could send shockwaves through the economy and trigger a recession.
Democratic Whip Dick Durbin accused Republicans of being politically motivated in their opposition and said they are failing to take responsibility for their actions.
"I certainly hope Sen. McConnell is not going to do damage to America and its economy out of an act of political spite," Durbin said. "If he won't stand up and take responsibility for things which he and his members supported in the Trump administration it shows this is a totally political effort."
The bill passed with only Democratic votes in the closely divided House, 220 to 211.
And the prospects for passage in the 50-50 Senate appeared dim, as Republicans vowed they would neither vote for the legislation nor allow it to advance in the chamber, where 60 votes are needed to move forward. At least one Republican, Sen. John Kennedy of Louisiana, said he would vote with Democrats on the measure because it would include hurricane relief for his home state. However he predicted that the bill would still fall short of 60 votes.
'Financial Armageddon.' What's at stake if the debt limit isn't raised.
New York (CNN Business)The easiest way to spark a financial crisis and wreck the US economy would be to allow the federal government to default on its debt. It would be an epic, unforced error — and millions of Americans would pay the price.
And yet that unlikely situation is once again being contemplated. If Congress doesn't raise the limit on federal borrowing the federal government will most likely run out of cash and extraordinary measures next month, Treasury Secretary Janet Yellen warned lawmakers on Wednesday.
In short, a default would be an economic cataclysm. Interest rates would spike, the stock market would crater, retirement accounts would take a beating, the value of the US dollar would erode and the financial reputation of the world's only superpower would be tarnished.
"It would be financial Armageddon," Mark Zandi, chief economist at Moody's Analytics, told CNN. "It's complete craziness to even contemplate the idea of not paying our debt on time."
But it's a crazy world.
Lawmakers in Washington are again playing chicken with America's creditworthiness. And the path to raising the debt ceiling is not clear.
Even though Congress has in the past raised the debt ceiling with a bipartisan vote, Senate Minority Leader Mitch McConnell vowed in July that Republicans will not vote to raise the debt ceiling.
JPMorgan Chase (JPM) CEO Jamie Dimon urged lawmakers not to even think about going down this path again. During a hearing in May, Dimon said an actual default "could cause an immediate, literally cascading catastrophe of unbelievable proportions and damage America for 100 years."
'Irreparable damage'
In her letter to Congress, Yellen said history shows that waiting "until the last minute" to suspend or increase the debt limit "can cause serious harm" to business and consumer confidence, raise borrowing costs for taxpayers and hurt America's credit rating.
"A delay that calls into question the federal government's ability to meet all its obligations would likely cause irreparable damage to the U.S. economy and global financial markets," Yellen wrote.
A US default would undermine the bedrock of the modern global financial system.
Goldman Sachs says 750,000 households could be evicted this year unless Congress acts.
"We pay our debt. That's what distinguishes the United States from almost every other country on the planet," Zandi of Moody's said.
Because of America's long track record of paying its debt, it's very cheap for Washington to borrow. But a default would force ratings companies to downgrade US debt and shatter that borrowing advantage. Markets plunged in 2011 when that debt ceiling standoff caused Standard & Poor's to downgrade America's credit rating.
Higher borrowing costs would make it much harder for Washington to borrow to pay for infrastructure, the climate crisis or to fight future recessions. And refinancing America's nearly $29 trillion mountain of existing debt would become that much more expensive. Interest expenses, which totaled $345 billion in fiscal 2020, would quickly rival what Washington spends on defense.
Market chaos
Soaring Treasury rates would set off a chain reaction in financial markets. That's because Treasuries, viewed as risk-free investments backed by the full faith and credit of the federal government, serve as the benchmark by which virtually all other securities are measured.
Everything from stocks and bonds to exotic securities take their cues from Treasuries. A spike in Treasury rates sparked by a default would cause booming stock markets to become unglued.
"Stock prices would crater," Zandi said. "We'd all be less wealthy, instantaneously."
Not only would millions of Americans lose money in the stock market, but it would suddenly become more expensive for families and companies to borrow. That's because Treasuries serve as the benchmark for mortgages, car loans, credit cards and corporate debt. A spike in borrowing costs is a huge problem for an economy that relies on access to credit.
If the debt ceiling is not lifted, then the federal government will technically default on some of its obligations. It would be forced to prioritize payments, deciding who will get paid and who won't.
Ultimately, someone will lose out, whether it's federal employees, veterans, Social Security recipients or defense contractors.
For all these reasons, investors are not freaking out about the debt ceiling. Wall Street expects Washington will eventually raise borrowing limit, like it always does. Failure to do so would simply be too dangerous.
'Uniquely childish'
The precise timing of when the debt ceiling must be lifted is a bit unclear.
In late July, the nonpartisan Congressional Budget Office projected that if the debt limit is not raised, Treasury would probably "run out of cash" and be unable to make payments sometime during the final three months of the year, most likely in October or November. But that so-called "X date" could shift based on how much tax revenue the federal government takes in.
For now, Treasury is taking extraordinary measures to avoid a default. Those moves are not a permanent fix, however, and eventually the debt limit will need to get lifted to avoid a financial disaster.
"Once all available measures and cash on hand are fully exhausted, the United States of America would be unable to meet its obligations for the first time in our history," Yellen wrote.
Yellen put a finer point on it later in Wednesday's letter, saying "based on our best and most recent information, the most likely outcome is that cash and extraordinary measures will be exhausted during the month of October." Of course, this debate isn't taking place in a vacuum. It comes as the Delta variant is slowing the US recovery, which hit a soft patch in August marked by an unexpectedly sharp deceleration in job growth. At the same time, inflation remains elevated as companies grapple with supply chain bottlenecks and a shortage of workers as the economy reopens.
"Playing politics with the debt ceiling is always a bad idea," said Isaac Boltansky, director of policy research at Compass Point Research & Trading, "but it is a uniquely childish notion given where we are with the virus and the economic recovery."
In other words, a debt ceiling crisis, let alone an actual default, is the last thing the recovering economy needs right now.
The debt ceiling is the total amount of money the U.S. is allowed to borrow at any given time, and covers all types of federal government debt, including spending on Social Security and Medicare benefits, military salaries, interest on the national debt, tax refunds and other expenditures.
The Biden administration's fact sheet makes the case that the pain would be spread among the states because many programs rely on federal dollars. The government's ability to respond to natural disasters such as hurricanes, earthquakes or wildfires would be curtailed.
States would face severe Medicaid shortfalls because the federal government covers two-thirds of the costs. About 20% of Americans get their health insurance through Medicaid and the Children's Health Insurance Program.
Roughly $100 billion in infrastructure grants for highways, airports and public transit would be jeopardized. The more than $50 billion for special education, school districts serving poorer students and other programs would also be threatened, as would $30 billion in food assistance and $10 billion for public health.
Republicans won’t vote to raise the debt ceiling because democrat spending is out of control
Democrats have total control of congress, and can just raise it themselves. But.....Pelosi says they refuse to raise the debt ceiling on their own and are only wiling to do it with republican votes.
Why? This doesn’t make any sense to me?
If they want to spend all this money and can raise the debt ceiling themselves, why not just do it?
Nothing makes sense if you view the world through the prism of this or that ideology and think there is a difference between so-called "democrats" and so-called "republicans".
As others have mentioned, the powers that be will continue to issue credits to the payments system ("raise the debt ceiling"), all the easier in the Information Age when money grows on electrons.
How they talk about doing it is a matter of cheap political theater, but in the event they will all pay themselves first.
Why after all the damage from Covid, the constant never ending pissing contest in DC between parties and within parties, mask or no mask fighting, kids out of school, yadayada, the Republicans want to add economic upheavals the encompass the whole world is a mystery to me.
It is not as if they played no part in the bills that are coming due.
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