If you weren’t aware, the United States has not been doing very well financially for some time. And no, I’m not just talking about the stock market and how it’s been in the dumps since COVID-19 and its subsequent pandemic. Instead, I’m talking about the nation’s national debt problem.
As anyone with debt knows, the U.S. is in this situation because we have lived above our means for too long. Basically, we spend far more than we make.
But unlike most of us, when the U.S. isn’t able to pay off its debts, it doesn’t simply go through a period of being very lean fiscally. Instead, as history has proven time and time again, it merely gets its leaders to sign off on a higher debt limit.
You likely remember that the latest of these instances happened just last year, adding some $4 trillion to the national debt ceiling and allowing the U.S. government to be in debt up to $31.4 trillion.
To be sure, it’s a whopping amount and one that most of us couldn’t even imagine. Hell, we couldn’t even imagine spending the measly $4 trillion in comparison.
But in less than a year, that is exactly what the Democrats in charge and Joe Biden’s administration has done. And so, unsurprisingly, Biden’s staff is asking for that debt ceiling to be raised again.
On Thursday, Republican Speaker of the House of Representatives Kevin McCarthy received a letter from the Secretary of the Treasury Janet Yellen reminding Congress of its so-called obligations to ensure that America can pay off its debts.
According to Yellen, she’s done everything within her power to ensure that this nation does not default on our loans and debts in the time she’s been in office. Due to our outstanding obligations, her hands are tied, and she can no longer see any way forward besides raising the debt ceiling again.
Yellen wrote an initial letter to McCarthy in early January, letting him know that the nation was once again at risk of reaching “the statutory limit” and so needs some help. In the meantime, or until the debt ceiling is raised, Yellen has been forced to take on a few “extraordinary measures.”
These measures include selling existing investments and suspending stuff like the Civil Service Retirement & Disability Fund, as well as the Postal Service Retiree Health Benefits Fund. Per Yellen’s letter and current federal funding, these measures are expected to continue through early June.
Now, to be sure, it’s not all that unexpected.
As I mentioned before, when anyone in debt needs to save more, there is a time to cut back. For you and me, that usually means spending less on entertainment and eating out to put more towards those debts.
Unfortunately, when the government cuts back, it’s far too often the American people who don’t get paid.
As Yellen told McCarthy, “Failure to meet the government’s obligations (raise the debt ceiling) would cause irreparable harm to the U.S. economy, the livelihoods of all Americans, and global financial stability.”
In other words, if the situation doesn’t soon see a resolution, it will most likely be those receiving Social Security, Medicaid, Medicare, and veterans benefits who pay the price.
But that’s not what has to happen. This is what Yellen expects to happen, or what she and her comrades would cut off payments to first.
Thankfully, it’s not fully up to her.
With a new GOP-led House, it is much more likely that unneeded national spending habits could be cut instead.
As McCarthy told Fox News on Wednesday, “If you have a child and you gave them a credit card, and they keep hitting the limit, you wouldn’t just keep increasing it. You’d first see what are you spending your money? How can we cut items out?”
And so that’s what McCarthy and his party plan on doing.
At the very least, there is talk that if the debt ceiling is raised, it will only do so following an agreement to certain conditions being met.
Hopefully, Congress can find a solution to this problem soon – and one that doesn’t involve us raising our credit limit or cutting off essential funds to our most needy.