Democrats unveiled their new plan for budget reconciliation Monday, and it did not include raising the debt ceiling. Republicans had been saying this is something Democrats need to do on their own, pushing them to pass a ceiling increase though reconciliation, which needs just 50 votes.
For months, Treasury Secretary Janet Yellen has been begging Congress to address the debt ceiling issue, but so far it hasn’t. The United States is now in a period of “extraordinary measures” and the Treasury Department is using on-hand money to pay for current obligations including Social Security and Medicare payments. The non-partisan Congressional Budget Office says Treasury will run out of money to do that around October.
Monday, Yellen released a statement reminding people the debt has nothing to do with future spending, pointing out it is only paying for things the country is already obligated to pay for.
“Failure to meet those obligations would cause irreparable harm to the U.S. economy and the livelihoods of all Americans,” Yellen said.
Yellen also stressed, “In recent years Congress has addressed the debt limit through regular order, with broad bipartisan support. In fact, during the last administration, Democrats and Republicans came together to do their duty three times.”
What will happen is still unknown, but there are a few options.
Congress could pass a bill addressing the debt ceiling. However, this option would need at least ten Republican votes to pass the Senate.
There is also a chance President Biden could use the 14th Amendment to deal with the issue. The Public Debt Clause within Section 4 of the 14th Amendment says, in part, “The validity of the public debt of the United States, authorized by law, including debts incurred for payment of pensions and bounties for services in suppressing insurrection or rebellion, shall not be questioned.”
How that might be used in relation to the debt ceiling has some constitutionality concerns.
There is also a possibility of using a platinum coin to address the situation. The Treasury can mint platinum coins in any value. That means, theoretically, the Treasury can mint a trillion dollar coin and use that money to continue paying its obligations if the debt ceiling isn’t addressed.
What is more likely is a continuing resolution to keep things going and give Congress more time to decide what it wants to do.
If nothing is done, there could be a government shutdown, and the country would default on its loans for the first time ever.
Getty Images
Getty Images
AP Images
Getty Images
