• The U.S. has a law stipulating a maximum amount of debt that the federal government can issue, currently set at about $31.4 trillion.
• In 2011, the Republican-controlled Congress (Tea Party Congress) refused to raise the debt ceiling in order to force the President to agree to spending cuts.
• This was a dangerous move, as it put the U.S. in danger of a sovereign default, which could have caused economic chaos, disruption of trade, and widespread recessions.
• Despite the 2011 debt ceiling crisis being resolved, debt ceiling brinksmanship has become a regular part of the GOP’s political toolkit.
• Currently, Congressional Republicans are holding the process hostage and demanding spending cuts.
• Spending cuts would be beneficial right now, but the correct way to do it is to pass spending cuts in Congress and iron out a budget deal with Biden.
• Debt ceiling brinksmanship is an absolute clown show, making the U.S. look like a banana republic and increasing the risk of recession.
• It is possible that the whole thing is just Congressional Republicans trying to signal toughness and partisanship to their voter base, but this is a boneheaded way of creating political cover.
• Debt ceiling brinksmanship also encourages worse fiscal arsonists who are lurking out there in the margins of the political-economic discourse.
Published January 22, 2023
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