Featured Photo by Kailee Shores
Story by Jenene Grover
On Jan 19, the United States hit its debt limit of $31.4 trillion, meaning that come summertime, the government may become unable to perform tasks.
Debt is accumulated by the U.S. when it borrows money by selling bonds to pay bills such as funding for programs and salaries for military members.
“Everything that the United States government does increases its debt unless there’s revenues coming in that equal it,” MTSU political science professor Steven Livingston said. “So for the United States government, the problem is they can project how much revenues are coming in, they can project how much they have to spend, and so they can see they’re going to hit the ceiling.”
The debt has been accumulating for many years with legal permission from Congress.
“What it originally started out as, when Congress would borrow money, which means putting out a bond. . .they came up with a scheme where if you set out a bond worth $1 million, let’s say, you also had to pass some kind of requirement that it was legally authorized to have $1 million of debt,” Livingston said. “Now we have more than one bond. . .so all of that is aggregated into one number. It’s the total amount of debt that the United States can legally carry.”
Much of the prolonged situation this time has to do with deals being made between politicians.
“If the debt ceiling is raised, it’s not going to bother anybody,” Livingston said. “The claim is that Republicans in the House want guarantees on reducing spending in certain areas.”
Right now, the stalemate in Congress is being used by Republicans to make Democrats reduce spending. In order to get the votes they need, Democrats will have to reach an agreement on decreased spending with Republicans.
Depending on how the government responds to this issue, it can cause various things to happen.
“The third possibility, of course, is that the debt ceiling, they don’t raise it and the U.S. hits it,” Livingston said. “The government can take certain measures to stay under the ceiling, but by around June, they’re going to run out of most of those ways. At that point, the government just can’t finance any more debt. Any programs that rely on outlays are going to be in danger of not being funded.”
While this problem has occurred many times before, most recently in 2011, the only solution has been to raise the debt ceiling.
“The question then is when you hit the ceiling and Congress doesn’t act, what do you do about it as the United States government?” Livingston said. “One thing you can do is not spend on things, and one example would be paying people that work for the government.”
U.S. bonds are being bought by people all over the world, increasing the U.S. debt.
“Somewhere in the world, there are people that hold that $31 trillion, and the United States government promises to pay these people because they bought a bond,” Livingston said.
Not only could issues occur within the U.S. government, but international issues could arise.
“If that happens, no one is going to want to invest money in United States bonds and Treasury bills,” Livingston said. “If that happens, the government can’t finance itself. . .We would turn into one of these countries that had to have really high interest rates and all these other problems because nobody trusts us.”
Many citizens worry that if this issue is not rectified, it will cause issues in the future.
“If our debt becomes something that we can’t handle, then it will affect drastically trade between us and the rest of the world,” International Relations and Economy junior Jaia Peterson said. “If they can’t trust the U.S. dollar then they won’t want to use it.”The government is working to resolve the issue with many deals being brokered to prevent any problems from arising in the summer.
Jenene Grover is a government reporter for MTSU Sidelines.
To contact News Editor Kailee Shores and Assistant News Editor Alyssa Williams, email [email protected].
For more news, visit www.mtsusidelines.com, or follow us on Facebook at MTSU Sidelines or on Twitter and Instagram at @mtsusidelines.
