Comment:
October 4, 2013: Congress Must Soon Vote On Debt Ceiling
Article: How a Debt Ceiling Crisis Could Do More Harm Than the Shutdown- From New York Times, By NATHANIEL POPPER, October 3, 2013
http://www.nytimes.com/2013/10/04/us/politics/how-debt-ceiling-could-do-more-harm-than-the-impasse-in-congress.html?ref=us&_r=0
Reporter: Elahd H.
BACKGROUND: Currently everybody is in a panic or is really unhappy with the work that congress has been doing, since we have reached a point where the government actually had to shutdown, and put 800,000 or more people out of work, while they struggle to work together. People see the government shutdown as both something that has and will hurt the economy the longer it goes on, and just a bunch of foolishness that the people they elected into congress can’t even do their jobs and pass a bill. The timing for a government shutdown also couldn’t be any worse since the debt ceiling must be voted upon by October 17th and congress is in more gridlock then almost ever before. Right now the government shutdown is highly publicized and talked about as being bad, but what many economists are saying is that if the debt ceiling showdown is carried out with the same gridlock then we will have a lot of trouble on our hands, because it would be the first time that we would ever fully default on our loans which they consider to be even worse in economic terms.
SUMMARY: The article talks about how that many people in the US are currently not happy with the situation in Washington and with the fact that Congress got to the point where they didn’t pass a Continuing Resolution to keep the government open, but the problem is that this problem is overshadowing an even bigger upcoming problem which is the Debt Ceiling. The Debt Ceiling is a term to represent the cap that congress has put on the government’s debt spending, and if this cap isn’t raised that would mean that the government would not be able to pay back its bills that it has already incurred. The huge problem with the government defaulting on its loans is that it could cause a downgrade Fitch (a rating agency for how reliable an investment is) has threatened to lower its rating to a AA-plus, which would make it the second rating agency to do so. What happens when two out of the three rating agencies lowers there ratings is that it means that the government has to pay a higher interest rate on future debt, and when the government pays a higher interest rate, then so does the rest of the US. What economists are also saying is that if the debt ceiling is not raised, then this could also mean freezes in the credit market (since banks hold onto many bonds), and the rethinking of the dollar as the most worldwide used currency. What this article is also trying to tell people is that with the current situation in congress, the current situation is starting to look grim, and that both Obama and the treasury said that because of the constitution they would have to wait for congress to come to a decision. All we can hope is that this government shutdown gridlock will go away so congress can finally come to an agreement before it is too late, and this really bad situation will be upon us.
Why It Matters:
1. First of all Congress(the legislative branch) altogether is the branch in government which has power over how much the government can spend and in most cases where to spend it, while the executive branch is the one who must actually spend it. So since Congress has the power over how much money can be spent, they are allowed to set debt limits that put a cap on how much debt The Federal government can incur (which are called debt ceilings). What is different about this current upcoming Debt Ceiling is that with the current government shutdown that is currently happening and is so close to the debt ceiling, people are worried that the gridlock in congress that was created over the government shutdown will continue to affect the federal government up until the point that they can’t make a decision on the debt ceiling.
2. Right now Obama is trying to find a way to make sure that we do not reach the point where we have to worry about not being able to raise the debt ceiling because of gridlock in congress, so that we don’t have to face all the harsh consequences that come with not raising the debt ceiling, but since all the power of deciding to spend money goes to congress, he is worried that the constitution would not be on his side.
3. With the current clashing of political parties, and with each of them blaming the other side for the government shutting down which is only creating more and more gridlock, it is seeming less likely that they will be able to come together over even bigger things like raising the debt ceiling so that we don’t face unprecedented consequences.
MY ANALYSIS by Elahd H.:
I feel like the Debt Ceiling is being overshadowed by the government shutdown (and I’m not saying the government shutdown isn’t bad, because it is), but from what I understand from this article is that if the government suffers the consequences from not paying its bills on time which would mean a downgrade in the US’s rating, a freeze in the credit market, and higher interest rates for everyone in the US, would greatly affect everyone in the United States and not just the 800000 people that were furloughed. What this would mean for all of us is that we would have tremendous trouble being able to get loans and if we did get loans for say things like a house it would also mean much higher interest rates which is not fun when paying off your debt. The debt ceiling could wreak total havoc across our entire financial system and could mean a lot more than 800000 people just being furloughed, and with an economy that many consider to still be recovering this is the worst thing that could happen across the entire economy. Also with the Debt Ceiling coming up in just two weeks I am worried that so little attention might have been paid to that and so much time might have been paid to the government shutdown that they won’t have enough time to come to a decision on the debt ceiling.
One thing many people might have noticed is that it took many months of gridlock just to come even as close as we did to even passing a continuing resolution, and no congress must do even more compromising so that they can actually come to a decision this time in only two short weeks so that we don’t feel the effects of the debt ceiling. That is why the treasury and Obama are strongly searching for a way to stop the effects of the debt ceiling so that it can be put off until congress starts functioning again, but this is looking less and less likely as the days come forward, because the constitution gives all the power over deciding how much money to spend to congress, so it is looking very unlikely that any of this would happen. So unless Congress comes to a decision or finishes its gridlock almost nothing may happen and the only way to fix this may be to bug your congressman to make a compromise and fix the government before it is too late.
Also finally for the many people who think this won’t affect their lives in any one bit, this will most likely affect everybody’s lives whether they like it or not since most people take loans within their lifetimes and when they do, they usually depend on low interest loans to pay off the debt, but when the interest rates go up for the US it will also go up for you. Also even for the elders who don’t pay for loans anymore, it will even effect them to, because social security which receives money for the money that was borrowed for it over the year will not receive that money back if the US can’t pay off its debts which could mean big problems for social security and could end up with some people not even t getting their checks. No matter whom you are and what your status is a failure to raise the debt ceiling will most likely affect you.
Question: Do you think Congress will be able to come to a decision by October 17th on raising the Debt Ceiling?
hamiltonbla 
I truly agree with Elahd on his view for the failure to compromise on raising the Debt Ceiling. Tensions between the Democrats and Republicans have roared so much over the past week that nothing seems to be agreeable between the two parties. Average citizens are also more concerned with the shutdown and are overlooking the crisis behind the curtain. Many citizens don’t pay attention to the Debt Ceiling Crisis because they are simply uninformed of its importance and relevancy to our society. As average citizens, we don’t know much about these things to pay attention to it because we have the tendency to rely on these well-educated, informed officials to do their jobs. Unfortunately, these officials are now more concerned with achieving the victory over Obamacare and the Shutdown, than the impending crisis that could damage the nation’s economy. I HOPE that a compromise can be made by the 17th but it would not be surprising if the crisis will be left untreated.
I was scared of the government shutdown to begin with, and after reading about the debt ceiling – I have become extremely concerned about not only the financial situation in the U.S, but also across the world. The government shutdown has ultimately become a situation where Democrats and Republicans in Congress have resorted to pointing fingers at each other about whose fault it is for the crisis. Nonetheless, I strongly believe that Republicans, aside from being the ones to blame for the government shutdown, will be the ones responsible for the U.S. not being able to raise its debt ceiling. After learning how difficult it is for a bill to become a law in the U.S., I strongly believe that Republican’s will not give up on obtaining what they want –amendments or even the destruction of the Obamacare if at all possible- and as result by October 17th discussions of interest rates will be extremely common across America. Being a senior in high school also raises a lot of concern for me as I begin to think about attending college and the impact it can have on me if the interest rates on student loans also begin to rise, should I chose to take some. What also has to be taken into consideration is that “the U.S. now can really hurt several nations across the world as the U.S. dollar is one of supremacy.” My home country for instance, El Salvador, not too long ago removed its “colon” currency system and adopted the U.S. dollar as it’s national currency. As a result, if the value of the U.S. dollar begins to drop it can really bring a global financial crisis as other countries begin to think about the value of the American dollar. As much as numerous foreign countries hate American influence on their government, the reality is that the U.S. dollar in simple words plays a huge role in the global market. Let’s hope that Republican’s man up to their mistake and begin to focus on the big picture of the American and global economy as a whole. Henry C.
EC:
http://www.huffingtonpost.com/2013/10/02/ceos-government-shutdown_n_4031521.html
http://www.bbc.co.uk/news/business-24384759
I want to believe that they will come to an agreement and end this madness, but looking at everything that’s happening, it’s all just wishful thinking. Congress is literally acting like spoiled children in this matter, not even paying mind about the expense at which their tantrum is bringing forth. As long as their pride is there, there probably will be no hope for us and we’ll be back to enduring economic difficulty. We’ll be in danger too, us as students. Thanks to college and all, we’re probably going to take out loans to make ends meet. With high interest rates, paying those off along with college and other bills will make life pretty difficult. Hopefully Congress steps out of their tunnel vision and sees how foolish they’re acting. The only way Congress will come to an agreement is if they can possibly separate why they shut down the government versus solving the debt ceiling, we could see some amends. However, I wouldn’t bet on it, because I usually lose.
I believe that congress would try to keep the shutdown as long as they can before the actual damage continues, for the governments own good. It is like taking the credit card of a young teenage girl with a shopping addiction. Yes, we will suffer from this as a whole, and it is an extreme measure to take, but if they find a way to stop the excessive spending. With all the controversy on this subject, I do not believe that in a week there will be a solution, along with agreements to the subject. The congress doesnt sound very open minded about the subject, and some bills may have to be passes. We know that process, and i dont believe that by October 17th they will come to a solution.
I think Elahd is totally right. Its like in video games, the government shutdown is just the mini boss but the debt ceiling is the Big boss at the very end. Some people (like my radical democratic sociology majored bachelor degree obtained co worker) believed the government shut down wasn’t a big deal and resolve itself within twenty four hours. Then theres middle aged “i-havent-taken-an-english-or-history-class-since-1980” women and men who like to put their ill experience msnbc loving propaganda brains to add a stupid opinion. Less people think the Government shutdown is the end but the debt ceiling is possibly the bigger problem. Now the question is “how do we get middle upper class men with white collar, white hair with black hearts born with a silver spoon in their mouths to finally cooperate because they didn’t get what they want?”.What we need to realize is that these people haven’t attained the skill of working with other people who aren’t like them so they only advocate for their peers, not for the good of the country because its not the “World” they live in. Financially, I believe we are all screwed. Typical Americans will be too scared to take out loans, will not be able to get loans or die of suicide or natural causes brought by stress of the potential economic downfall. My conclusion: These people need to get kicked the hell out of their positions. I would like to go to college and get some help from the government. I could have found the cure to cancer but thanks to them, that’s not gonna happen.
I agree with Elahd that the federal government shutdown situation is definitely overpowering the situation of Debt Ceiling. It is a bigger situation that i feel like we need to consider more. Although I fear that the parties will not stop blaming the other side for the government shutdown, I am hopeful that two weeks will be enough time for them to make a decision on debt ceiling. But that is all you can be in this situation is hopeful that the government doesn’t get worse because in the long run it is us who will have to pay. Like Aileen said it would be on us student to our back our loans and it wouldn’t be good if the interest rates are high. I believe that they aren’t going to focus on it until they have just a little time left. Even with that who is to say that everything is going to go right? what if they end up in another debate and they don’t do a debt ceiling? that would effect like Elahd mentioned more than what is unemployed now and we do not want that to happen.
I believe that they probably will come to a decision because the Republicans and Democrats would not want to be hated by the people if they do not come to a decision. This would put their re-election hopes in jeopardy in a sense. The whole point of this is to pay for the debt that we already created, it’s not as if we are trying to implement new programs or re-allocating the government’s budget. Big corporations would also want to see the debt ceiling raised, and they are a big influence in decision making.