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2023 United States debt-ceiling crisis: Difference between revisions
2023 United States debt-ceiling crisis (view source)
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* Premium Bonds: the government would renew old, expiring bonds at higher coupon rates. Doing so would not technically add to the nation’s debt. But even some proponents of premium bonds acknowledge that it could face legal challenges or damage the United States’ reputation in the eyes of investors. <ref>https://www.nytimes.com/2023/05/09/us/politics/debt-limit-coins-bonds-workarounds.html</ref> | * Premium Bonds: the government would renew old, expiring bonds at higher coupon rates. Doing so would not technically add to the nation’s debt. But even some proponents of premium bonds acknowledge that it could face legal challenges or damage the United States’ reputation in the eyes of investors. <ref>https://www.nytimes.com/2023/05/09/us/politics/debt-limit-coins-bonds-workarounds.html</ref> | ||
* The 14 Amendment: would leverage a clause in the Constitution that says that the validity of public debt should not be questioned. The move would draw an immediate court challenge and could sow uncertainty in the bond market<ref>https://www.nytimes.com/2023/05/09/us/politics/debt-limit-coins-bonds-workarounds.html</ref> | * The 14 Amendment: would leverage a clause in the Constitution that says that the validity of public debt should not be questioned. The move would draw an immediate court challenge and could sow uncertainty in the bond market<ref>https://www.nytimes.com/2023/05/09/us/politics/debt-limit-coins-bonds-workarounds.html</ref> | ||
== Republicans Bill == | == Republicans Bill == | ||
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* Uncertainty will push interest rates higher even after the debt ceiling is resolved, due to the fall in confidence in the US risks-free status. In 2011, the Treasury debt even lost its AAA rating from the credit rating agency Standard & Poor’s due to governance concerns raised by the political dysfunction. | * Uncertainty will push interest rates higher even after the debt ceiling is resolved, due to the fall in confidence in the US risks-free status. In 2011, the Treasury debt even lost its AAA rating from the credit rating agency Standard & Poor’s due to governance concerns raised by the political dysfunction. | ||
* They are taking into account the economy is already slowing and probably going into recession, so the timing is already very bad for this to happen. If we add these additional factors to an already slowing economy, the economic risks become greater | * They are taking into account the economy is already slowing and probably going into recession, so the timing is already very bad for this to happen. If we add these additional factors to an already slowing economy, the economic risks become greater | ||
== Debt Ceiling Deal 2023 == | |||
On Wednesday May 31 2023, 165 Democrats joined 149 Republicans in approving the 99-page bill to raise the debt ceiling, allowing it to pass the House by the required simple majority. | |||
=== What is in the deal? === | |||
The agreement would suspend the nation’s $31.4 trillion debt limit through January 1, 2025, meaning debt can grow beyond the ceiling. This removes it as a potential issue in the 2024 presidential election. <ref>https://edition.cnn.com/2023/05/30/politics/whats-in-the-debt-ceiling-deal/index.html</ref> | |||
==== Caps non-defense spending ==== | |||
Under the deal, non-defense spending would remain relatively flat in fiscal 2024 and increase by 1% in fiscal 2025. After fiscal 2025, there would be no budget caps. The White House estimates government spending would be reduced by at least $1tn. | |||
* The cap for 2024 would be about $704 billion, of which $121 billion would be for veterans’ medical care and $583 billion would be for other areas. | |||
* Adjustments would bring the resources available for spending outside of veterans’ medical care to $637 billion for the coming fiscal year, compared to $638 billion for the current one. | |||
* Defence spending would increase to $886bn, which amounts to a 3% rise on this year. | |||
==== Protects veterans’ medical care ==== | |||
The deal would maintain full funding for veterans’ health care and would increase support for the PACT Act’s toxic exposure fund by nearly $15 billion for fiscal year 2024 | |||
==== Expands work requirements ==== | |||
The agreement calls for temporarily broadening of work requirements for certain adults receiving food stamps. | |||
* The agreement would increase the upper limit of the mandate to age 55 in phases, from age 49. | |||
* The deal would also expand exemptions for veterans, people who are homeless and former foster youth in the Supplemental Nutrition Assistance Program | |||
* All the changes would end in 2030. | |||
* The agreement would also tighten the current work requirements in the Temporary Assistance for Needy Families program | |||
==== Claws back some Covid-19 relief funds ==== | |||
The deal would rescind roughly $28 billion in unobligated funds from the Covid-19 relief packages that Congress passed to respond to the pandemic | |||
==== Cuts Internal Revenue Service funding ==== | |||
House Republicans have been determined to jettison the roughly $80 billion in IRS funding over 10 years contained in the Inflation Reduction Act that Democrats passed last year. | |||
* The deal would repurpose $10 billion from fiscal 2024 and another $10 billion from fiscal 2025 appropriations to be used in non-defense areas | |||
==== Restarts student loan repayments ==== | |||
Under the deal, borrowers would have to begin paying back their student loans at the end of the summer | |||
==== Maintains climate and clean energy measures ==== | |||
The agreement would not make any changes to the Inflation Reduction Act’s climate and clean energy provisions | |||
==== Expedites pipeline in West Virginia ==== | |||
The agreement would also speed the creation of the Mountain Valley Pipeline, a natural gas pipeline in West Virginia. | |||
== 2011 Debt Ceiling Episode == | == 2011 Debt Ceiling Episode == | ||