In August, the United States faces the very real possibility that it won’t be able to pay back its debts, and while both Republicans are claiming that out-of-control spending is ruining the economy they are conveniently ignoring that their own posturing has real, damaging effects on both the economy and the American people.
To explain: The United States has something called a “debt ceiling” or the maximum amount that it can borrow to pay back debts that it owes. We will hit that amount on August 2, and then we won’t be able to pay our debts anymore. We’re not just talking about paying back interest on loans to foreign countries here – hitting the ceiling means the government won’t be able to pay military salaries and benefits, Social Security, Medicare or for any other social services. This obviously will have a serious impact on many Americans who rely on these programs, and both the domestic and global markets are freaking out.
But Republicans want to use the debt ceiling as another tool to force spending cuts, and on June 1st they pulled an interesting political move. Republicans in the House of Representatives introduced a bill to raise the debt ceiling by $2.4 trillion – enough to keep the federal government financially solvent until 2012 – WITHOUT any spending cuts attached. Then, Republicans used their majority in the House to unanimously voted AGAINST the bill, forcing it to fail – the goal being to tell Democrats that spending cuts have to be a part of the conversation. The vote caused chaos in the stock market: The day it was held, the New York Stock Exchange plunged to its lowest point since the beginning of 2011.
Investors remain worried, because the government shut down battle from early spring demonstrated that Congress is more than comfortable driving this country to the brink to make a political point. But the debt ceiling debate is especially ridiculous considering that the ceiling has been raised 78 times since 1960, under both Republican and Democratic administrations, without any fanfare, debate or catastrophic predictions of doom.
So if raising the debt ceiling hasn’t ruined the economy the past 78 times, and NOT raising it now will harm Americans and ruin the economy, then why is there even a debate? Like I said earlier, the ceiling is being used as a tool. Republicans are insisting that every dollar added to the ceiling needs to come with a dollar in spending cuts to the national budget.
The biggest sticking point is Republican Representative Paul Ryan’s Medicare plan, which Republicans support and Democrats universally oppose. Right now, Medicare pays doctors directly. The new plan would change that to a voucher system: Seniors would get a certain amount of money from the federal government, but they would have to purchase private insurance. Republicans say this will save the government money, and a recent report from the Congressional Budget Office supports this claim. Of course, the same report also says that seniors will personally pay about $6,000 per year more if the plan is enacted. But hey, as long as the federal balance sheets look good, right?
The point that the Republicans have missed again and again is that while ideals are important, actions have consequences. Cutting spending is an ideal, and one that can be met in many ways. But cutting spending by increasing medical costs for seniors causes actual harm to actual people – not a good way to go about it. Forcing everyone to accept a spending plan by playing political chicken with the debt ceiling freaks out investors and stock markets, which has a ripple effect on the rest of the economy. These are all negative consequences to poorly thought out policies, to the point where even people who agree with Republican ideals can’t justify the party’s actions. Ideals can be upheld, but that needs to happen in a way that actually benefits society, not damages it.
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