The Debt Ceiling Crisis - a Political Debate

The Debt Ceiling Crisis: A Political Debate

The American government, whose bright history, inspired by ideals such as liberty, equality, and democracy, now faces a serious fiscal obstacle. The United States must increase its debt ceiling in order to avoid default, be able to pay government bills, and its investors. The only evident agreement between Democrats and Republicans is, actually, raising the debt ceiling. However, the altercation lies in the sacrifices that each party has to make regarding their political principles. The government, while facing one of the greatest fiascos of its time, has much to lose if it does not act promptly and pragmatically. Having reached its $14.3 trillion maximum debt limit at May 16th, 2011, the government has been given until August 2nd to mediate and come up with a rational solution to raise the limit of the amount of money the U.S. can legally borrow ((Hennessey).

According to an article from The New York Times, Moody's Investors Service informed the U.S. government, which has been a long-term holder of a prime grade AAA credit rating in global economics, that it might be subject for downgrade if lawmakers of the United States do not increase the country's debt ceiling in the near future (Calmes and Hulse A1). Through the superior law of the U.S., the government is required to get endorsement from Congress before borrowing any money. If a critical compromise is not reached by lawmakers of both parties, and a bill to increase the debt ceiling is not passed, the consequences will be grim. Interest rates will rise all over the country, in effect, forcing everyone to pay more in order to borrow more. Stock markets will hit a downfall, savings will lose potential value, leasing cars and apartments will become more costly, and businesses will start going bankrupt. The 9% unemployment rate of the United States will undoubtedly rise, and overall, the country will lose its credibility. Furthermore, considering that America is a huge partner in global economics, not only will these be penalties affecting those at home, but those in other countries and investors all over the world will also have to face failure and disappointment.

Preceding the actual debates and the meetings regarding the issue, one may learn from an article in The New York Times, that the Republicans refuse to negotiate, "leaving the outcome in doubt as they vowed not to give in to a Democratic push for new tax revenues as part of any compromise" (Hulse A1). The Republican representatives argued that tax increases are a terrible idea at a time of such economic downturn. They were angered that the Democrats continue pushing on the same subject. Republicans made certain implications that focused on alleged Obama's lack of involvement in the debate and his unnecessary incitement of wealthy individuals, through raising taxes for the more affluent population of the United States. Regardless of the contempt presented by Republicans, Congressional Democrats maintained that "tax revenues must be part of any agreement" (Hulse A1). On June 29th, the New York Times stated that, President Barack Obama clearly affirmed that he was willing to cut down on programs such as Social Security and Medicaid, but the Republicans had to be equally willing to raise taxes for oil and gas companies, hedge funds, and other corporate interests (Landler A1). Although Obama was adamant in his proposition, there was continual rebuttal on the Republican side, leaving the burden of making a political ideology sacrifice on the Democrats.

This incessant refusal of compromise caused by inflexible behavior of the Republican leaders makes a future, where both parties have reached the deadline with a solid solution, very unlikely. "The U.S. government's debt cannot be paid off by solely cutting down programs such as Medicare, Medicaid, and Social Security", maintained Democrats. According to the same article from The New York Times, Representative James E. Clyburn, Democrat of South Carolina, claimed that, "We cannot balance the budget solely on the backs of the middle class" (Hulse A1). This is exactly what will happen if the Democrats continue to compromise their principles, while the Republicans stubbornly oppose any sacrifices on their side. The middle class, the poor, and the elderly are the ones that will be suffering if these state of affairs are short of a decent outcome. As a result, what will happen after August 2nd is an absolute mystery.

The Washington Post asserted that, though President Obama continued meeting and discussing ideas with top congressional leaders on July 7th, both parties opposed one another, finding each others' arguments to be illogical and in vain (AP). This continues to pose a great conflict for all of America because the Republicans are not willing to raise the debt ceiling if the Democrats do not agree to $2 trillion in public expenditure cuts, while the Democrats are insisting for new tax reforms that will include increases in the taxation of the wealthy. At the July 7th meeting, there was also talk of cutting down the spending for Social Security, Medicare, and Medicaid, which truly disgruntled the Democrats (AP). This deal is highly in favor of the Republicans because they believe in a small, less powerful government. Their constituency will surly profit from such a deal. The government, reducing the spending for federal benefit programs, will lose its workers, therefore, losing a certain amount of authority. Of course, this will in turn aid the whole economic situation in general because there will be more savings. However, the Republicans are not only thinking of the debt ceiling and the government debt, but also their own priorities as a close-knit, conservative political party.

By July 10th, tensions are rising but The New York Times reports that, everyone, whether Democrat or Republican, has agreed upon raising the debt ceiling (Landler A1). The problem continues, as final negotiations have not yet been made between the Democrats and the Republicans. President Obama continues to aim for the "biggest" deal possible, encouraging the Republicans to reconsider the possible tax increase. The biggest deal consists of a spending cuts made up of both the Democratic and Republican alternatives for national debt reduction. This deal would help reduce the debt by $4 trillion over the next decade. Another deal considered mid-range and slightly more popular among the House Representatives, more heavily focuses on Republican interests, saving about $2.5 trillion over the next decade.

Some Democrats are unhappy because they feel as though Obama is giving in excessively to Republicans, while in turn, G.O.P. candidates are abruptly rejecting anything related to taxes. Unfortunately, the Republicans cannot agree to raise