Democrats could defuse the GOP's biggest fiscal threat next year by raising the debt ceiling to a ludicrously high number
- The US is currently set to hit the federal debt ceiling once again next year.
- If that happens, it could trigger an unprecedented default, financial crisis, and deep recession.
After the midterm elections, the new year is set to bring a new balance of power to Washington, and with it, a new version of an old crisis.
Under federal law, the Treasury Department can borrow money needed for the government to pay its bills, but only up to a particular limit set by Congress. According to the House Budget Committee, the debt ceiling is currently at around $31.4 trillion dollars, and the government is projected to hit that limit sometime in early-to-mid-2023.
If the limit isn't raised before then, and the government isn't able to borrow money to pay for the things Congress has already directed it to in other appropriations bills, it could lead to an economic catastrophe. It could bring sudden sharp cuts to spending on programs like Social Security and the military, or even a historically unprecedented default on the federal debt, which would likely trigger a financial crisis and deep recession.
Historically, raising the debt ceiling was a fairly uncontroversial move taken by Congress every couple years as needed. But in the last decade or so, it's become an increasingly contentious issue. Before the midterms, Republicans were already suggesting that they would use the upcoming debt ceiling fight to push for spending cuts, according to the Washington Post.
President Joe Biden said that he wouldn't give in to those negotiations and would resist moves to tie cuts to programs like Medicare and Social Security to a debt ceiling hike.
Democrats have a few options to avoid a fight and a potential default next year. They could pass a conventional debt limit raise during the last few months of the current Congress this year, moving the next fight until past the 2024 presidential election. They could repeal the debt ceiling outright, although that is unlikely given Biden and other prominent Democrats like Sen. Bernie Sanders have ruled that out. If push comes to shove and there is a debt ceiling fight next year, it's conceivable that the administration could take advantage of a possible loophole in a law governing commemorative coins to mint a $1 trillion platinum coin and use that to meet the government's obligations, temporarily bypassing the debt limit.
If the Democrats do decide to push for an increase in the debt ceiling during the lame duck Congress before the end of this year, they could move to permanently remove the threat and functionally eliminate the limit by raising it to an absurdly high number. Jason Furman, a former economic advisor to President Barack Obama, suggested on Twitter raising it to $100 quintillion — written out in numerals, that's $100,000,000,000,000,000,000.
According to the CBO, the federal deficit for FY 2022 was $1.4 trillion. At that rate, it would take about 71 million years for the federal debt to reach a $100 quintillion ceiling.
Of course, one of the great features of numbers is that there are infinitely many of them, so there's no reason to not go even higher. Congress could raise the debt limit to a googol dollars, or a one followed by 100 zeros. If one wanted to be patriotic, the new debt ceiling could be $7.41776, commemorating the date of the signing of the Declaration of Independence. Raising the debt ceiling to a limit like this would all but certainly ensure not hitting it until the heat death of the universe.
While it's more likely that any coming debt ceiling increase would be more limited, raising it to a ludicrously high number is an option to end the threat of a disastrous default once and for all.
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