Editorial: The federal debt limit drama isn't a fight over spending (via latimesopinion)
Senate Minority Leader Mitch McConnell has said that Republicans won’t vote to increase the debt limit, raising the specter of a filibuster that could lead to default. McConnellthat Democrats raise the limit through a budget reconciliation bill, which can’t be filibustered, but Democrats balk at the idea of being the only ones to vote for something that unpopular.
In other words, raising the debt limit isn’t like upping the credit limit on your Visa card. Congress has already committed to spending the money, and the Treasury has already borrowed much of it. And unless Congress raises the debt limit, Washington won’t be able to keep those commitments or pay back some of the people it owes.
According to CBO’s estimate, the federal government’s obligations are currently about twice as great as the revenue it expects to take in. Besides the aforementioned tax cuts and spending hikes, the deficit is fueled by the enormous amount of money spent on COVID-19 relief bills by the Trump and Biden administrations. Then there’s the ongoing issue of the rising healthcare costs plaguing Medicare, Medicaid and other federal health programs. Add to that the interest payments on roughly $28.
It would be up to the Biden administration to decide which bills to pay if the debt limit isn’t raised on time, but someone’s ox will be gored, potentially including people on disability, Medicare providers, military personnel and federal bondholders. And here’s the worst part: The financial markets would notice that the full faith and credit of the United States wasn’t what it used to be, and they would react. Badly.
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