The United States hit its debt ceiling on Thursday. The Treasury Department responded by taking measures intended to buy more time before the country risks defaulting on its debt. Treasury Secretary Janet Yellen predicted that the measures would be sufficient for roughly five months, though she also cautioned that there is “considerable uncertainty” regarding that time frame.
But this is hardly the first time Congress has come to such an impasse, and few believe the government will actually fail to raise the debt ceiling when the time comes. So why all the furor over the present debate?
Given that the markets have largely shrugged off the development, it seems like those who follow the financials most closely see the Republican refusal as political grandstanding rather than seeking genuine reform. In fact, the primary reason the debt ceiling is even an issue is that House Speaker Kevin McCarthy promised to attach spending cuts to any conversation about raising the debt ceiling in order to garner the necessary support to win his position.
Productive negotiations seem unlikely, however, with the White House publicly saying that they will not negotiate over raising the debt ceiling. White House press secretary Karine Jean-Pierre stated Thursday that it is Congress’ “constitutional duty” to come to a resolution that prevents the government from going into default. Democrats in Congress appear to agree.
While that stance also seems more political than practical, it speaks to an impasse that could have dire consequences were it to continue indefinitely.
So what is the debt ceiling? And why is this annual tradition of fighting over it before ultimately agreeing that it needs to be raised such a big deal?
What is the debt ceiling?
The debt ceiling is, essentially, the legal limit for how much borrowing the American government can do in order to finance the legislation it has already passed.
The last part of that definition is important for understanding the current debate. Any spending cuts negotiated into the eventual settlement will not apply to the current debt. Rather, the debt ceiling is about making sure the government has enough money to cover the legislation currently on the books.
The debt ceiling became a law in 1917 in order to allow Congress to more easily sell bonds to fund its involvement in the first World War. It has been raised seventy-eight times since 1960—forty-nine times under Republican presidents and twenty-nine under Democrats—and twenty times since 2001 alone.
In all that time, only once has America defaulted on its debt, and that was due to an administrative error rather than the failure of Congress. Still, even though the mistake was quickly rectified and pertained only to a small collection of Treasury securities, it raised US borrowing costs by the modern equivalent of $40 billion.
The threat of a similar escalation in how much it costs to borrow money is another key factor in this debate.
Why does America keep raising the debt ceiling?
Currently, our government is able to raise the debt ceiling whenever they want because “American Treasury securities have been viewed as one of the safest, most stable investments in the modern world.” And while $31 trillion in debt is a staggering number, the US still has a better debt-to-GDP ratio than countries like Britain, Germany, Australia, and Greece.
However, should America fail to make the interest payments on our debt, those privileges would quickly go away.
That reality is why neither party has, historically, been willing to risk not raising the debt ceiling. If Republicans were required to let the country default on our debt in order to garner concessions and reduce spending, the higher interest rates would, in all likelihood, wipe out any gains made by spending less or raising taxes.
And though the present debate may seem like a partisan topic, any hesitancy to raise the limits is a relatively recent development.
Many of the same Republicans working against raising the debt ceiling now, for example, showed little hesitancy in doing so during three of the four years that Donald Trump was in office. In 2006, then-senator Barack Obama voted against raising the debt ceiling because of what he termed President Bush’s “reckless fiscal policies.”
Ultimately, it is more politically expedient for both parties to pass legislation that we can’t afford and then fight over the means of paying for it at a later date than it is to fail to pass the legislation in the first place. As such, this is likely to continue to be an issue regardless of which party is in power.
And while there is relatively little we can do to curb such patterns nationally, we can and should learn from their mistakes in order to avoid repeating them in our own lives. And those lessons apply to far more than just money.
We can’t borrow time
While fiscal responsibility is important, an issue that receives far less attention in Christian circles pertains to being responsible with our time.
This side of heaven, there will always be more work we can do to serve the Lord than we have time to do it. As such, it can be tempting to say yes to more things than we should. However, eventually that debt will come due and we cannot borrow time to account for it. That’s why it is so important to allow God to be the one who determines when we say yes and when we decline.
Others may not always understand. They may see their work as the most important way a person could advance the kingdom and, for them, they may be right. But another person’s need does not define your calling. Only God gets to do that.
So the next time you’re presented with the opportunity to give your time to a particular ministry or opportunity, take a moment to pray and ask for the Lord’s guidance before responding.
After all, it’s far better to say no initially than to default on your obligations when the time comes to pay that cost.
Publication date: January 20, 2023
Photo courtesy: Unsplash/Thomas Bormans
The views expressed in this commentary do not necessarily reflect those of Christian Headlines.
For more from the Denison Forum, please visit www.denisonforum.org.
The Daily Article Podcast is Here!