Sen. Joe Manchin prides himself on his bipartisanship, but when it comes to negotiations over the debt ceiling, he should not support House Republicans’ ransom demands.
Manchin views himself as a deficit hawk, and he’s made it clear he’s displeased with President Biden’s rollout of the Inflation Reduction Act — even going so far as to suggest he would vote to repeal the bill he helped pass. But in this instance, Manchin needs to stand firm and condemn House Republicans for holding debt ceiling negotiations hostage in return for budget cuts.
Reducing government spending is all well and good, but this is not the time for those discussions. The budget and the debt ceiling, while related, are two separate issues and must be addressed separately. The budget is a plan for future spending; the debt ceiling is authorizing payment on money already spent.
The debt ceiling is an artificial limit that was created during World War I to make it easier to issue bonds to help pay for the war. The national debt, or deficit, is like a credit card bill: America has already spent the money, and it must pay back its creditors. When Congress sets a debt ceiling, it authorizes the Treasury to spend a specified amount toward paying off that debt and interest. The Treasury can’t spend more money than Congress allows, so once the debt limit is reached, the Treasury can no longer make payments on the debt. In short: If Congress refuses to raise the debt ceiling, it’s like saying America won’t pay its credit card bill.
At the moment, the Treasury is shuffling money around to make sure the most important debts are getting paid, but it may run out of cash as early as June 1.
The last time the nation had a prolonged fight over the debt limit was 2011. While a deal was reached in the 11th hour to prevent default, Congress brought us so close to catastrophe that Standard & Poor (S&P) downgraded the U.S.’s credit rating, leading to the nation paying higher interest rates.
Unlike for a personal credit card user, there is much more at stake if America can’t pay its bills. The U.S. dollar is the world’s reserve currency — so stable that the global economy rests on it. This has granted the U.S. relatively low interest rates, especially on foreign debt. If America defaults, it will not only make our creditors raise interest rates, it could crash the world’s economy.
And it’s not just foreign creditors watching the current debt ceiling standoff — the stock market is, too. During the last showdown, the stock market took a nosedive. So far, investors are holding steady, but economist and former Treasury Secretary Larry Summers warns if this situation isn’t resolved soon, the stock market could see a $6 trillion loss.
Did we mention that if the debt ceiling isn’t raised, the government can’t pay for anything? It can’t pay the employees who are still expected to work, nor can it send out payments for programs like Social Security and Medicare, which means the people who rely on those payments won’t receive a check until the debt limit is increased.
At the time of this writing, Biden seems to be willing to capitulate to some of House Republicans’ least extreme demands. However, it should have never come to this point, because the stakes are too high and the consequences too devastating if Congress fails to raise the debt ceiling.
Shame on Manchin for even hinting his support for Republicans’ ransom demand. If he wanted to flash his conservative bona fides for a possible senatorial or presidential campaign, he should have said he would help Republicans craft a narrower budget and tackle permitting reforms only after Congress agreed to pay the U.S.’s current debts. What he’s done may be politically expedient, but it is also selfish and irresponsible.