Congress is at a familiar crossroads in 2023. Since 1960, elected representatives have acted on the debt ceiling 78 times to avoid default.
As the U.S. breaches its current $31.4 trillion ceiling, the Treasury Department is taking “extraordinary measures” to avoid default. Those measures will help stave off decision-making time until June, but Congress theoretically must lift the borrowing cap by then to continue paying the bills.
But is that practically true? Will the government default on its debt if the ceiling isn’t raised? According to economist James Galbraith, a former executive director of the U.S. Joint Economic Committee, the government legally can’t default, even absent congressional action.
“This is a political show,” Galbraith said. “It’s a bit of a farce, which has been played out many, many times. It’s surprising that people aren’t tired of it or questioning the reality of what they’re saying about it.”
According to Galbraith, the current Lloyd M. Bentsen Jr. Chair in Government/Business Relations at University of Texas at Austin, the Treasury cannot stop payments on any of its legal obligations, “debt ceiling or no debt ceiling.”
“Interest payments are required, Social Security payments are allocated by law, civil service salaries are allocated by law and military expenditures are allocated by law. The laws exist. So you can say, ‘Well, there’s this other law which says they can’t exceed the debt ceiling.’ That’s a bit like saying that you’re holding up the stop sign in the middle of the interstate highway. You can hold it up. That doesn’t mean traffic is going to stop,” he said.
The current debt-ceiling showdown was easily foreseen when Republicans gained control of the House in the midterms, with a vocal minority calling for cuts to Medicare and Social Security in exchange for raising the debt ceiling. But those cuts do not have widespread support within the Republican party.
“Under no circumstances should Republicans vote to cut a single penny from Medicare or Social Security,” former President Donald Trump, who is again running for the executive office in 2024, said in a video message.
On the flip side, dozens of House Democrats have pitched legislation that would do away with the debt ceiling altogether.
Watch the full interview above for more on Republican and Democratic debt ceiling proposals, along with Galbraith’s take on minting a trillion-dollar coin to pay debts.
