On Friday, September 10th, a Washington-based think tank group, the BPC, issued a statement warning that the U.S. has nearly reached its spending capacity and is running on fumes. After a two-year suspension of the federal borrowing limit, the limit was reinstituted on August 1st. Since then, the United States Treasury has been utilizing ‘extraordinary measures’ to avoid missing payments required by the U.S. government. The secretary of the U.S. Treasury, Janet Yellen, issued a warning imploring the consequences of not raising the debt ceiling.
As some of us may remember, similar events occurred in 2011 and 2013 in which showdowns of approving government spending legislation came to a halt. In Ms. Yellen’s letter to Congress, she stated that waiting too long can “Cause serious harm to businesses and consumer confidence, raise short-term borrowing costs for taxpayers, and negatively impact the credit rating of the United States.” Disagreements between republican and democrat parties in Congress could lead to another government shutdown, similar to the 35-day government shutdown in 2018-2019.
If the debt ceiling is reached, the U.S. government will be unable to pay numerous handout programs and other lawful obligations it is required to provide. These include but are not limited to social security, welfare programs, active-duty service members’ salaries, disability payments for veterans, tax refunds, and many others.
This is a very interesting post to me. While I had always been aware that the United States was spending significant amounts of money in order to prop of government handout programs and other required programs, I had no idea that this Washington think tank was projecting that the U.S. was running out of room in this way. I am very concerned about the implications of this milestone and how government officials will react to it on the federal level. Will officials attempt to alleviate the situation by pumping more money into the economy as they have through this pandemic? Sadly, it seems that this will be the course of action so that people who have a dependency on these government programs can continue to get the benefits that they want from the government. As the national debt continues to rise from this, I am afraid that it will be a never ending cycle of inflation and strain until even more serious long term damage is done to the US economy.