As the United States’ debt ceiling deadline looms ever closer, President Joe Biden and Speaker of the House Kevin McCarthy have begun discussing the potential for a default. However, the White House is already resorting to desperate measures, as Treasury Secretary Janet Yellen is personally calling CEOs to urge them to put pressure on Republicans to cave on the debt ceiling. This level of intervention from the administration has raised eyebrows, with many wondering if this kind of action is necessary or even allowed under US law.
What is the US Debt Ceiling?
The debt ceiling is a restriction on the total amount of federal debt the US government can legally accumulate by borrowing money. It is designed to prevent the government from overspending and adding an excessive amount of debt to the country. The US government’s total debt is currently over $28 trillion, and the current debt ceiling is $31.4 trillion. The deadline for raising the debt limit is rapidly approaching, with the US Treasury Department warning that the government will run out of money to pay its bills by the end of October if the current limit is not increased. An unprecedented default would follow, causing significant damage to the economy and the country’s global standing.
What Happens If the Debt Ceiling Is Not Raised?
If the debt ceiling is not raised, the US government will be unable to borrow funds to pay its bills, leading to the Treasury Department defaulting on interest payments to creditors and other obligations. The result of this would be catastrophic, with a potential credit downgrade, stock market crash, and severe damage to the global economy. Being unable to pay out social security, Medicare, Medicaid, and other essential programs would also create widespread harm for millions of Americans.
What Is the Situation Now?
Currently, the US Congress is deeply divided over the debt ceiling debate. While Democrats argue that the ceiling must be raised to avoid an economic catastrophe, Republicans are refusing to do so without significant concessions from the Democrats. Senate Minority Leader Mitch McConnell said that “Republicans won’t participate in lifting the debt limit unless Democrats get their act together.” The back-and-forth between the two parties has been ongoing for months, with no resolution in sight.
What Is the White House’s Current Role?
With Congress making little progress, the Biden administration has started to take matters into their own hands. Treasury Secretary Janet Yellen has been making personal calls to CEOs urging them to put pressure on Republicans to cave on the debt ceiling. Biden’s White House has been begging CEOs to apply as much pressure as possible on Republicans to make concessions. They hope that by doing so, it will force Republicans to relent and allow the Democrats to pass the debt ceiling increase without any strings attached. This kind of intervention is unprecedented, leading many to question whether it is legal or ethical.
Is the White House’s Intervention Legal and Ethical?
While there is no clear answer to this question, the Biden administration views the move as legal and necessary. The White House has been citing the 14th Amendment to the US Constitution, particularly the section that states, “the validity of the public debt of the United States…shall not be questioned.” This argument suggests that Congress is obligated to ensure that the government’s public debts are paid on time without question, regardless of any restrictions that would prevent them from doing so. This kind of interpretation has never been tested and could lead to significant constitutional challenges.
Additionally, the ethics of the White House intervention are debatable. While it is not necessarily illegal for the administration to seek the involvement of CEOs to put pressure on politicians, it can create a perception of undue influence. If CEOs are perceived to be swayed by the White House to use their power and influence to push for a specific political outcome, it could raise concerns about corruption, undue influence, and the relationship between the private sector and public entities.
What Are the Consequences of This Intervention?
The current White House intervention has raised eyebrows and stirred controversy. While it is uncertain whether the intervention is legal or ethical, it has undoubtedly escalated the already tense situation over the debt ceiling. The involvement of CEOs in this political issue will invite scrutiny and criticism, and it could have unintended negative consequences for the private sector. A perception that CEOs are involved in what could be viewed as partisanship may create public backlash and lead to boycotts of their companies.
In conclusion, the US government’s debt ceiling dilemma is a serious issue requiring urgent attention. However, the intervention of the White House in enlisting the support of CEOs in this contentious political issue is a departure from the norm and may raise concerns about the proper limitations and roles of private entities in public policy. Despite the weight of the situation, it is essential to ensure that any actions taken are legal, ethical, and ultimately serve the best interests of the country.