The United States likes to be unique in the way our government is run: we don’t have a universal health care system. Our president isn’t elected by popular vote.  People have the ability to purchase guns without either a permit or license. And our debt ceiling — the amount of debt that can be taken out by the Treasury — needs to be manually changed every single year. 

Normally that is not a problem. However, every now and then, Congress has a lot of trouble agreeing on a reasonable budget, and we’re looking at one of the moments right now. With America more polarized than ever, both parties threaten to hit the debt ceiling, with major repercussions for the U.S. and global economy.

Making matters even worse, technically, the debt ceiling has already been breached: the Treasury started taking “extraordinary measures” at the start of the year, taking out $800 billion in loans after the government hit the current debt limit of $31.4 trillion. However, time is passing by quickly and by early June, those funds are going to run out. If no new budget is created by then, the country will go into default for the first time in history, with destructive potential for America and the world’s economy. 

First off, there are the clear and immediate effects: breaching the debt ceiling could halt ten percent of economic activity, and a potential loss of three million jobs. On top of that, it would delay social security payments that 66 million retirees depend on; cut pay for over 3 million federal employees and veterans; increase costs on borrowing for things like credit cards and mortgages; send the stock market into freefall; and lead to general economic downturn. None of that is worth the relentless dispute happening in Congress.

But even without breaching the debt ceiling, stalling budget talks are hurting the economy. In 2011, the United States government saw its own credit rating downgraded for the first time in history, with the S&P decreasing the government’s credit rating from AAA to AA+. This time around, whether the threat is real or not, messing with the debt ceiling can cause a major scare across global markets–  everyone is dependent on the health of the U.S. economy; the U.S. dollar is used as a global standard because, traditionally, it’s a very stable currency. Defaulting on our debt would completely destroy that reputation.

So what does it take to prevent further catastrophe?At some point, one of the political parties may have to cave into the policies of the other. McCarthy and the Republicans have a lot of conditions in their own plans – the current version of the “Limit, Save, Grow Act”  would cut national spending increases to just 1% a year (far below the rate of inflation) – with overall cuts amounting to $4.5 trillion. That takes money out of integral programs and policies, such as student debt forgiveness, which would be eliminated entirely under the McCarthy plan.

Medicaid would also be severely impacted by McCarthy’s plan. The 600,000 individuals who are currently covered by the federal government would otherwise become uninsured. The other 900,000 individuals will have to be covered on the state level.  Other conditions in McCarthy’s plan put as many as 900,000 people at risk of losing access to food stamps as well.

On top of that, the bill House Republicans just passed includes intensified support for oil and gas drilling, which, if actually written into law, would completely reverse Biden’s landmark policy to fight climate change during his administration. Republicans don’t have any expectations of that bill making it past President Biden’s desk. But, in McCarthy’s words, that is “the only way to strengthen their argument against the Democrats’ inaction so far.” 

As expected, Biden refuses to tolerate any conditions from Republicans in a new budget. Some democrats find it pointless to speak on this matter. For instance, Alexandria Ocasio-Cortez (AOC), a United States representative, referred to negotiations with Republicans as “trying to nail Jello to a tree.” 

Republicans are essentially holding the global economy for ransom right now, and if they don’t get their way, they seem to be willing to take everyone else down with them.

At the end of the day, it’s all (probably) just for show — it would be pretty surprising to see Congress actually let America go into default. But they’re playing with the wellbeing of the global economy. And if they’re not careful, the American people will be left with too many problems to bear. 

Raising the debt ceiling is not something that should be conditional, and there’s very little reason for it to exist at all. Regardless, Biden and the Democrats can only go without negotiating for so long, as the U.S. is expected to hit the debt ceiling as early as June 1st. While neither side can really afford the damage that comes with defaulting on the nation’s debt, a default would be far more damaging for Democrats than Republicans – regardless of which side is to blame, any catastrophe that occurs is at the fault of the party who is in charge – the Democrats.

Letting Republicans get their way would be destructive for Biden and the Democratic Party. But, as the June deadline is right around the corner, it might be the only way they can avoid a far worse fate. 

BREAKING NEWS: As of May 29th, 2o23, Congress has reached a deal to suspend the debt ceiling. Here’s what was included in the deal:

• The debt ceiling will be suspended until 2025
• Changes will be made in work requirements to qualify for food stamps and the Temporary Aid for Needy Families program (TANF)
• Cuts to “nondefense discretionary,” including cuts for domestic law enforcement, forest management, and scientific research
• 2 years of spending caps — far lower than the 10 years Republicans had originally demanded, including a limit to a 1% increase in spending through 2025
• Energy permit reforms, including the approval of a gas pipeline between Virginia and West Virginia
• Ending Biden’s student loan repayment freeze by the end of August

Overall, the bill is a compromise between Republican and Democrat interests, with Biden meeting some (but not all) of the GOP’s demands.

The United States likes to be unique in the way our government is run: we don’t have a universal health care system. Our president isn’t elected by popular vote.  People have the ability to purchase guns without either a permit or license. And our debt ceiling — the amount of debt that can be taken out by the Treasury — needs to be manually changed every single year.