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Life and Debt: Unpacking the federal debt ceiling

U.S. Senate Minority Leader Mitch McConnell (R-KY), Speaker of the House Kevin McCarthy (R-CA) and U.S.11 President Joe Biden, meet with other lawmakers in the Oval Office of the White House in Washington, DC.
U.S. Senate Minority Leader Mitch McConnell (R-KY), Speaker of the House Kevin McCarthy (R-CA) and U.S.11 President Joe Biden, meet with other lawmakers in the Oval Office of the White House in Washington, DC.

Congressional leaders will meet with President Joe Biden next week to discuss the federal debt ceiling as they face a looming deadline to avoid a default on U.S. debt obligations. Talks stalled after a meeting on Tuesday with House Speaker Kevin McCarthy, Senate Minority Leader Mitch McConnell, Senate Majority Leader Charles E. Schumer, and House Minority Leader Hakeem Jeffries.

The Treasury Department has warned that if an agreement isn’t reached prior to June 1, there could be severe implications for global markets and the U.S. economy. Treasury Secretary Janet Yellen spoke with reporters ahead of a summit with G7 finance ministers and central bank governors.

“There is no good reason to generate a good crisis of our own making. The U.S. Congress has raised or suspended the debt limit almost 80 times since 1960. I urge it to act quickly to do so once again,” Yellen said.

The federal debt ceiling has been in place formore than a hundred years. But it’s been the subject of consistent conflicts internally between congressional leaders and the White House for more than a decade now. Stony Brook University economist Stephanie Kelton, a champion of Modern Monetary Theory, argues the federal debt limit is a self-imposed and unnecessary measure.

“Everyone is back to asking ‘How will you pay for it?’ It’s the wrong question,” Kelton explained.

We’ll have a panel conversation about the debt ceiling and potential solutions to avoid a government default. It’s the first installment of our ongoing series with Bloomberg: Life and Debt.

Copyright 2023 WAMU 88.5

Chris Remington