Back in August, the controversy in Washington over the debt ceiling made international news. In layman’s terms, the dilemma revolved around the United States having used up all of its credit available by its own limitations. This means that the government had set a debt limit, commonly referred to as the debt ceiling, which was the maximum amount of money the nation can borrow at any one time. The ceiling was set, of course, with the general concept that it would never be reached. Essentially, it’s like a credit card limit for a normal person. You have a certain amount of credit that you can use. At all times it is available to you, but hopefully, you don’t set out with the purpose of using every last cent of it in mind. Through a myriad of interesting policy choices, the United States did just that; the national debt rose steadily until it became in danger of hitting the ceiling.
For the average person out there, running into your debt ceiling means you have to stop spending money you don’t have. However, when you’re talking about the national debt, this is not an option. For starters, the money was being borrowed to operate the government, so if they stopped borrowing, the government would face a complete shutdown. More sobering though is the fact that even if the government did completely shut down, it still wouldn’t solve the problem. When you are talking about trillions of dollars in debt, you are talking about unimaginable amounts of interest as well. To give a real-world example, the government literally had to continue to borrow money so it could afford to make the minimum payment on the debt. Cutting off the faucet would not just mean not adding any more to the debt, but defaulting on it altogether.
So, in August, the big “debate” was between Republicans and Democrats to try to get an agreement in place so that the debt ceiling could be raised. This would mean they could continue to borrow money and operate normally. The Republicans protested it based on the idea that raising the ceiling was not fixing the problem, because the problem was spending too much to begin with. A noble cause, but they missed the point. Raising the ceiling was an emergency measure. It has nothing to do with fixing the overall government problem of overspending and not reconciling what it is spending versus what it is taking in. The Democrats argued that the ceiling had to be raised to keep everything okay for the moment and preserve the nation’s credit rating. The result was a two-month long back-and-forth struggle of trying to reach an agreement that made a mockery of the United States all over the world. After all, Congress was on television day after day vigorously debating whether they were going to continue to pay their bills or not. It would be the equivalent of you showing up at your bank with your significant other and arguing in front of them over whether you were going to continue to make payments on your home mortgage. Imagine what the bank would be thinking if they could see that you were actually having a debate over whether to keep paying your bills. Yet, Congress was more than happy to do this on an international stage.
Many people outside of the Washington circle (or in it, seemingly, as well) do not understand all the terms that get thrown around regarding the amount of money the United States owes the world. There is also a lot of confusion regarding who the money is owed to. In a series of articles here on Common Sense Conspiracy, we will start to break down exactly what the terms national debt, balancing the budget, national deficit, national debt, and debt ceiling mean. We will also examine the amount of money that the United States actually owes, which, if you take a look at the debt clock in the right sidebar, is spiraling out of control at a dizzying rate. In the next article, we will take the national debt and actually try to understand just how much money we’re really talking about. Stay tuned and hopefully Congress will not put us through this ridiculous embarrassment again. The bottom line is that they have to raise the debt ceiling, because we are in so far that there’s little other choice. Figuring out what to do about it long term is another debate, albeit critically necessary.