January 18, 2023
Let’s address your five most common questions and comments about the debt ceiling and the possibility of the us defaulting on its debt.
Who are we in debt to?
It’s Biden’s fault! It’s Trump’s fault.
Maybe if we didn’t send money to Ukraine.
They threaten this every year. Why is it a big deal now?
Good default. We need to stop all this spending!
Let’s go.
Who are we in debt to?
About 70% of the us public debt is owned by the US government, investors like state and private pension funds and the federal reserve. Basically, we own it. Just under 30% is owned by foreign entities and governments – like China, Japan, Brazil, the UK and many more.
Blaming one specific president.
This problem started long before both President Biden or President Trump. How far back? I’ll put it to you this way — in modern history the us government has *always* outspent what it brings in. That’s why congress established the debt ceiling in 1917. They said let’s give ourselves a spending cap and if we want to keep spending, we have to all agree to raise the cap.
Stop sending money to Ukraine.
It’s true – in the 2022, our Congress allocated about $68 billion to Ukraine. But not all that money actually went to Ukraine. Between 1/3 and ½ (depending on how you categorize the aid) of it went to our Defense Department to help Ukraine with training, equipment and weapons. So let’s just do the math. Aid to Ukraine made up a little more than 1%. So if we’re not spending it on Ukraine — where did all our money go? On things like Medicare, Medicaid, Social Security, national defense, education, agriculture, treasury, transportation. Those kinds of things. Americans are expensive.
We go through this every year
No we don’t. You’re confusing the debt ceiling issue with a regular government shutdown. These are two separate and very different things. The threat of a government shutdown, yes that happens –these days — at least once year because congress has to agree on some sort of annual spending plan. But the debate about raising the debt ceiling – does *not* happen every year. The last time it happened was in 2021. Congress can either agree to raise or suspend the debt ceiling. Rather than raise the debt ceiling by a specific amount, sometimes lawmakers suspend the debt ceiling for a period of time to allow the treasury department to borrow what it needs.
We need to stop all this spending
Depending on your politics that may be true. But” stopping the spending” won’t solve the problem we’re facing right this now. Raising the debt ceiling today pays for yesterday’s bills. And that bill is due – technically – tomorrow. But the Treasury Secretary says she can float the government and keep us from defaulting until June. Also — it’s important for you to understand by raising the debt ceiling, that does *not* authorize new spending. Raising the debt ceiling just allows the us government to pay the bills we already owe!
