some verbiage >>
same crap > different year
A new chapter of debate over the debt ceiling began in 2011, when sparring over spending between President Barack Obama and congressional Republicans resulted in a protracted deadlock. Congress eventually reached a deal to raise the ceiling just two days before the date that the Treasury estimated it would run out of money. However, the brinkmanship triggered the most volatile week for U.S. stocks since the 2008 financial crisis, and the credit rating agency S&P Global downgraded the United States’ creditworthiness for the first and only time ever. The Government Accountability Office, which serves as the federal auditor, estimated that the delay in reaching a deal increased U.S. borrowing costs by $1.3 billion [PDF] that year alone. In May 2023, ratings agency Fitch put U.S. debt on negative watch, a step that typically precedes a downgrade
If congressional negotiations over the debt ceiling are not resolved before the ceiling is reached, the Treasury can stave off a default for several months with a series of temporary actions it calls “extraordinary measures.” These include suspending payments to some government employee savings programs, underinvesting in certain government funds, and delaying auctions of securities.
While the Treasury has used these measures when previous negotiations stalled—including in 2011 and 2013—Congress has never failed to raise the ceiling before the measures have been depleted. If Congress does not act to raise the debt limit despite such emergency measures, federal spending would have to plummet or taxes would have to rise significantly (or a combination of the two). In 2023, the debt ceiling was reached without a deal on January 19; Treasury Secretary Yellen has warned that extraordinary measures could be exhausted by June 1. Experts have viewed both reducing federal spending and increasing tax revenue enough to cover the needed payments as processes that could take over a decade.
As that date neared without a deal to raise or suspend the limit, some experts proposed alternatives that would not require congressional approval. These include invoking the Fourteenth Amendment of the U.S. Constitution, which states that “the validity of the public debt of the United States… shall not be questioned,” to issue more debt; others include selling U.S. gold and minting a platinum coin worth $1 trillion. Biden has publicly called these measures untenable. The Treasury Department could also defer payments on military salaries or to Social Security and Medicare recipients. It has the option of prioritizing debt payments, although in March 2023, Yellen dismissed that idea as “default by another name.”
In 2023, the debt ceiling was reached without a deal on January 19; Treasury Secretary Yellen has warned that extraordinary measures could be exhausted by June 1. Experts have viewed both reducing federal spending and increasing tax revenue enough to cover the needed payments as processes that could take over a decade.
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