Nearly every year, there is talk about a government shutdown or the government running out of money. And every time this happens, eventually the funds are raised, but not after throwing millions of working people’s lives into further chaos and instability. And now politicians are threatening to do it again.
What is the debt ceiling?
Congress passes limits on how much money the government can borrow, and once the limit is reached, lawmakers must raise the ceiling before the Treasury Department can issue more debt to cover the spending. Otherwise, the government will run out of money and will not be able to pay for what it has already budgeted.
Raising the debt ceiling is not to cover new unexpected costs — it is simply to cover the costs of spending already passed in the federal budget, which Congress already agreed on.
In June of 2019, due to the pandemic, Congress agreed to suspend the debt ceiling — to essentially have no limits on spending — until August 2021, when the debt limit was reinstated at $28.5 trillion. But now if the debt ceiling isn’t raised soon, the government will likely run out of money to pay for the budget it passed at the beginning of the year.
The Democrats have proposed to suspend the debt ceiling again until 2022. And the Republicans have promised that they will not agree to suspend it or to increase it.
What if the debt ceiling isn’t raised?
If the debt ceiling isn’t suspended or raised, then sometime in early October, the government will likely run out of money to pay for what it has budgeted, leaving an estimated $1.2 trillion shortfall for the remainder of the next fiscal year. This would mean the government would default for the first time in its history, which could not only further destabilize the economy, but would mean many government programs and agencies that support ordinary people would lose funding.
If this were to happen, it could mean massive funding cuts affecting millions of people.
Programs like Head Start and SNAP, which provide vital services to low-income families and children, including food and rent assistance, would lose funding and could shut down, even as families are already struggling to put food on the table.
Veterans receiving compensation or pensions could see their benefits stopped, and current military members could see their pay delayed — possibly for weeks or months, not just a few days.
Federal funding could stop for state and local government programs ranging from Medicaid to education and transportation. This could have an enormous ripple effect on state budgets and programs since states have faced large spending increases ever since the pandemic began.
Some analysts suggest that even Social Security payments could be disrupted if funds aren’t increased.
Others claim it could lead to a loss of six million jobs.
The Democrats are using this debt ceiling debate in Congress to try to demonize the Republicans, who are much to blame in this situation. Republicans are threatening not to raise or suspend the debt ceiling and trigger a default, which would throw millions of working people’s lives into immediate chaos.
But the Democrats shouldn’t be let off the hook. They passed the federal budget this year knowing full well that the debt ceiling would be reinstated in August, and of course they knew the government would likely run out of money soon after that. They didn’t have to wait this long to request more funds. That was a choice they made so they could try to blame the Republicans for disrupting millions of people’s lives.
The truth is, none of these games are necessary. Congress could have easily agreed to keep funding all the essential programs while they fight over future budgets for next year. They could suspend tax cuts to corporations or freeze useless military spending, along with many more options. Certainly, the funds exist to borrow more money. All of this could still be avoided.
But it is clear — the government doesn’t serve our interests. We are not the banks and we are not the corporations. The lives of the politicians and the billionaires they represent won’t be disrupted one bit by any delay in federal funding.
Politicians couldn’t care less if workers can’t afford rent or groceries or medical care or other needs. To the politicians, workers’ lives already don’t matter, so it makes no difference to them if they make our lives even worse. Neither party cares about the lives of working people.