This archive report was first published on 7 October 2021.
US Debt Ceiling Standoff: A Threat to the Economy ¶
As the US Senate nears an agreement to lift the debt ceiling until December, the country teeters on the edge of a catastrophic economic crisis. Treasury Secretary Janet Yellen has warned of "catastrophic" consequences if the debt limit isn't raised before a default, which the Treasury estimates would happen on October 18, 2021.
Senator Roy Blunt of Missouri, the No. 4 Republican, has expressed concerns that changing the filibuster rule would "permanently change the Senate, permanently change the relationships that still matter in the Senate, and institute the idea that 50 of you plus a vice president of your party can always do whatever you want to do." He added, "I don't think that's healthy for the country. It certainly wouldn't be healthy for the Senate."
According to the Constitution, Congress must authorize borrowing. The debt limit was instituted in the early 20th century so the Treasury did not need to ask for permission each time it needed to issue bonds to pay bills. However, as the political environment has become more polarized, Congress has been playing an increasingly dangerous political game over the debt ceiling.
Denmark also has a debt limit, but it is set so high that raising it is generally not an issue. Most other countries do not have a debt limit. In Poland, public debt cannot exceed 60 percent of gross domestic product.
Top Democrats have since dropped their insistence that Republicans join them in bipartisan support for raising the statutory cap on the government's ability to borrow to meet its financial obligations. They, in turn, want Senator Mitch McConnell to honor his demand that Democrats lift the ceiling alone.
