By Elli Ramlow
The
debt ceiling is one of the many economic reasons the government shut down a few
weeks ago. While the government is now reopened and the debt ceiling has been
raised it is still a pertinent and significant issue. The government’s debt
ceiling is the amount the government is allowed to be in debt—the total amount
of money they owe other countries. Because the government is very close to
reaching the ceiling price, a solution must be derived. As of now the solution
has been to raise the debt ceiling, allowing the government to continue
spending money they don’t have, however this is a short run solution and does
virtually no benefit in the long run economy. A common misconception is that if
the price ceiling is not raised, our government will be forced to declare
bankruptcy. However, “the U.S. Constitution forbids defaulting on the debt” (2)
per the 14th amendment section 4. This means that once the
government reaches the debt ceiling price they will have to budget their money,
or find funds elsewhere to continue spending at the rate they are. However we
now that the solution has already been decided and that it is to raise the
price ceiling.
While
both sides are at blame for this issue, the Republican Party has been the recipient
of the majority of blame by the American people as “an NBC/Wall Street Journal poll
found a 22-point difference between those inclined to blame Republicans in
Congress for their handling of budget negotiations and those blaming the
president” (2). The blame, however, should be placed on the entire government
system and their coherent inability to properly budget. Each year the
government spends ridiculous amounts of money frivolously, that they simply do
not have. The fact that they are raising a debt ceiling that is already in the
trillions of dollars is preposterous. Furthermore, they are blind to the fact
that this will not solve the problem in the long run. It is a short run
economics solution that is not sustainable. It is not reasonable to continuously
raise a ceiling because that obliterates the purpose of the original ceiling
and its function. Instead of spiraling
further into debt the government should look to “reform entitlements because
that is where about three-quarters of the spending goes; principally to social
security, Medicare, and Medicaid” (1).
This would be a long run solution because it increases the income of the
government indirectly by reducing spending therefore allotting more funds to be
spent elsewhere. It is a sustainable and realistic long run solution unlike
raising the price ceiling.
To put things into perspective let
us take a look at the amount of money the government is currently spending;
“before the debt ceiling was raised this month, it stood at $16.69
trillion” (3). A
country that is over $16 trillion in debt should be looking to alleviate this
debt through budgeting, not increase it. Another key issue is the fact that
“the current US debt to GDP ratio is roughly 106.8 percent, meaning that the amount the federal government
owes to its creditors exceeds its GDP” (3). This is extremely concerning
because it means that although we have a thriving economy, our debt still
outweighs it.
In turn, our debt hurts the global
economy because the money we owe is mostly owed to other countries. Therefore
allowing our debt to grow has negative consequences on not only the American
economy but also the global economy. Therefore it is the government’s duty to
lessen their current debt instead of raising the debt ceiling because of its
overall effect. While raising the ceiling is an effective solution in the short
run it proves to become a negative consequence to the long run. The government
must reevaluate their spending and create a realistic budget that can provide
relief from this immense debt.
Works
Cited:
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