Even though many of us are hearing about it for the first time, the debt ceiling is nearly 100 years old. It was created to make sure our government could borrow money without the need for a time-consuming congressional vote. The debt ceiling limits how much the United States can borrow to cover expenses, and it’s set at $14.3 trillion dollars.
Raising the debt ceiling is a routine occurrence in Washington; each time Congress votes on a spending increase or a tax decrease they also agree to raise the debt ceiling. Since its creation, the debt ceiling has been raised nearly 100 times; more than 70 times since March of 1962, ten times since 2001 and it was last raised in February of 2010.
If we don’t get our financial house in order by August 2, the results will be catastrophic. The country’s credit rating would be lowered, costing the US more to borrow money. This means interest rates on Americans’ mortgages, car loans and credit cards will increase. If the country fails to pay investors that have bought securities from the US Treasury (and defaults on its debt), this would cause an economic crisis that would be “Lehman (Brothers) times ten.” So why isn’t Congress moving quickly?
They’re deadlocked. Two competing Congressional plans exist; both will raise the debt ceiling and lower the national deficit, but they differ in how that will be achieved.
A plan from the Senate championed by Democratic Senator Harry Reid would raise the debt ceiling by $2.7 trillion and cut government spending. Official government estimates say Reid’s would cut the deficit by $2.2 trillion over the next ten years.
The House Speaker John Boehner’s competing plan would raise the debt ceiling by a smaller amount than Reid’s plan and cut government spending. Official government estimates say Boehner’s plan would cut the deficit by $1.1 trillion over the next ten years. Despite the bigger savings realized by Reid’s plan, House Republicans aren’t budging.
Why won’t House Republicans vote for Reid’s plan if it saves more in the long run? The sticking point is government revenue. Boehner’s plan is a cuts-only approach, while Reid’s plan would increase revenue by closing tax loopholes for the 2 percent of Americans that earn more than $250,000 a year.
Furthermore, it won’t be possible to achieve the spending cuts under Boehner’s plan without “massive cuts in education, Medicare, Medicaid, Social Security, and other programs that meet crucial national needs,” said Kim Anderson, Director of NEA Government Relations.
That means funding for programs that our students depend on like TANF, food stamps, WIC, federal lunch and breakfast programs, public housing and rental assistance, unemployment, and special education funding could be immediately cut by $47 billion.
Boehner’s unfair, unbalanced plan will shield millionaires and billionaires, and make our students the targets of massive budget cuts if we don’t protect them now.
Contact your member of Congress and urge them to compromise on a balanced approach that protects the most vulnerable and requires those that can to pay their fair share. Call them at (202) 224-3121 or visit NEA’s Legislative Action Center now to email your member of Congress.
By Phil Hayes, Columbus Education Association