Debt Ceilings and Grand Bargains and Continuing Resolutions, Oh My!

Close-up photo of U.S. coins

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October 10, 2013

As I was sitting down to write about the fight over the debt ceiling, I got a powerful sense of déjà vu. That’s because I’d written about this before, back in 2011. The government wasn’t shut down then, but Washington had worked itself into a tizzy fighting over the debt limit and possible government default. Congress did eventually lift the ceiling but not until agreeing to the process that eventually brought us sequestration (mandatory, across-the-board cuts to federal programs).

So why do we have to have this fight again? It’s not like there aren’t other things Congress could be doing, like reauthorizing the Elementary and Secondary Education Act or reforming our immigration system. Yet here we are. So let’s make sure we all understand what’s going on. What does it mean to be shut down, to default, or to strike a grand bargain?

To get out of the mess, Congress needs to pass either a continuing resolution (which would fund the government for the short term) or a full-year appropriations package. Although some members of the House are pushing to fund individual programs one at a time, this isn’t a responsible way to go about things. It’s like letting a child decide what foods they’re going to eat: They’ll go for the Pop-Tarts and stay far away from the broccoli. Congress needs to pass a budget that serves the needs of women and their families. Cherry-picking programs isn’t the way to do that.

A chart comparing a government shutdown with a debt default

The difference between a government shutdown and a default. Courtesy of the National Journal

Debt ceiling/debt limit: When Congress sets higher rates of spending than the government takes in from taxes, the U.S. Treasury Department has to borrow the difference. However, Congress has always limited how much the Treasury can borrow from outsiders and other government accounts. That’s the “debt ceiling,” and it’s currently limited at $16.699 trillion. Under this ceiling, the Treasury projects that it will run out of money to pay bills sometime after October 17. If the debt ceiling isn’t lifted by then, the U.S. will officially default, essentially meaning that it’ll write checks that will bounce. (The Washington Post has a great FAQ about this issue.)

So what happens if we “breach” the ceiling? I don’t know, and anyone who says they actually know what will happen isn’t being honest. The issue is so worrying because we don’t know what will happen if we default. It could tip us back into a recession, but then again, maybe it won’t. We do know that Americans are expected to pay their debts. Our government should not be exempt. Our financial stability is envied by the rest of the world, and there is no excuse for us to default on obligations we have already incurred.

Grand bargain: This phrase is usually floated by political journalists and people who’ve watched a little too much West Wing. A grand bargain is the idea (hope, really) that a small group of people will get together in a back room and make a deal that will fix everything. But who is in the room? Who knows? Women and minority legislators have been underrepresented in these talks in the past. And will the discussion be televised so we can see which elected officials are arguing to cut Social Security, Medicare, or health care? Probably not. The “super committee” didn’t work last time — it led to nonsensical sequestration.

AAUW has spent the last two weeks calling on Congress to end the shutdown and raise the debt ceiling, and we’re going to keep on doing that. We need your help. Tell your representatives to do their jobs and stop messing with the economy and people’s lives.

By:   |   October 10, 2013

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