Essay On Debt Ceiling

I read in articles from The New York Times, The New York Post and The Washington Post about a deal made on September 6th between President Trump, Senator Chuck Schumer and Minority Leader of the House Nancy Pelosi to extend the debt ceiling for three months until December 15th. This was to--among other things--provide more disaster relief funds for the areas affected by Hurricane Harvey. Trump has also proposed the idea of getting rid of the debt ceiling altogether, although what the replacement of the debt ceiling to keep money borrowing in check could be isn’t clear.

Trump’s decision to choose the Democratic three-month plan over the Republican 18-month plan has surprised many, including Speaker of the House Paul Ryan, who called the plan “ridiculous” and “unworkable,” as the debt ceiling is normally extended for periods much longer than three months. Other recent complications of the debt ceiling include the 2011 Debt Ceiling crisis when the debt ceiling was raised by $400 billion to prevent defaulting.

The debt ceiling--defined as “The maximum amount of monies the United States can borrow” by Investopedia--was created in the Second Liberty Bond Act of 1917 to hold the government responsible for their spending.

Before 1917, Congress was constitutionally required to approve any money borrowing. Since 1960, the debt ceiling has been raised, extended or had its definition revised a total of 78 times.
The current national debt is estimated to be $20.4 trillion, or to put it in perspective, the earnings of an average worker over 450 million years. If the U.S. ever hits the debt ceiling, it would have to default--in other words, pay back-- its debt. According to The Balance, this would cause interest rates to increase, the value of the U.S. dollar would drop, and the U.S. would be unable to pay Social Security, Medicaid, student loans, and tax

refunds.

Now, an important decision to be made concerning the debt ceiling is whether to keep it. Most democratic countries don’t have one, and the U.S. can go on raising it higher and higher, always avoiding default and pushing away any responsibility. The opportunity benefit of getting rid of the debt ceiling is that it would allow for a new system which would effectively keep borrowing responsible. However, the opportunity cost is that there is no replacement for the debt ceiling, and without a way to keep government spending and borrowing responsible, it would be chaos. A third alternative of trying to pay the U.S. debt off is unrealistic, and will likely never be fully achieved.

Because of how unpredictable Trump’s presidency has been so far, I think it’s possible that the debt ceiling will be replaced in the next four years, but very unlikely because figuring out a new way of limiting debt while the U.S. wastes millions upon millions of dollars and amasses about one trillion in debt a year will be very difficult, especially with the current political rift between the parties. I believe that finding a new system of keeping government spending responsible, trying to cut down on unnecessary spending, and paying off as much debt as we can conveniently is the best course of action.