Debt ceiling: How is the US government running out of money and what happens next?

Debt ceiling: How is the US government running out of money and what happens next?
Congress is approaching a major deadline, with no signs of bipartisan solution

The US government will run out of money in a a matter of days, leaving it potentially unable to pay its outstanding obligations unless Congress can work together and pass a piece of legislation sparing the federal government from a costly shutdown.

A statement from the US Treasury secretary, Janet Yellen, stated that the federal government will run out of money it has already borrowed on or around 10 October; should the US Congress miss that deadline and fail to pass an extension of the debt ceiling, the government will be forced to furlough thousands of federal workers, suspend programs and various initiatives, and enter a period of reduced operations until the shutdown ends.

The new fiscal year begins on 1 October, meaning that Congress needs to pass a law funding the government at current levels while also debating the Democrats’ $3.5 trillion infrastructure package, which party leaders are hoping to pass simultaneously.

Republican leaders say no GOP votes to keep the government working

Past shutdowns have ended up being politically costly for the party seen as responsible; in this case, the GOP has remained unified on falsely claiming that the debt limit is part of a Democratic plan to borrow more money in order to fund President Joe Biden’s $3.5 trillion infrastructure plan, when in reality many agencies of government will not function after 10 October regardless of whether or not the infrastructure bills pass.

“We will not provide Republican votes for raising the debt limit,” Senate Minority Leader Mitch McConnell said this week during a floor speech. “Bipartisanship is not a light switch … that Democrats get to flip on when they need to borrow money and switch off when they want to spend money.” Democrats voted with Republicans on several occasions to raise the debt limit when Donald Trump was president.

Democrats demand bipartisanship

Extensions of the debt ceiling have been largely bipartisan in years past; the longest government shutdown in history occurred over the winter of 2018-2019, when for just over 30 days the federal government was paralysed by former President Donald Trump’s demand that any bill to fund the government include billions of dollars meant for the construction of a wall along the US-Mexico border.

The election of a Democratic-led Congress led to the end of that shutdown, with the House and Senate passing bills to fund the government that did not include border wall funding and the president opting instead to declare a national emergency and reallocate funding himself.

Democrats currently control both houses of Congress but only have a 51-vote majority in the Senate with the vote of Vice President Kamala Harris; they have opted so far to push for Republican defections on the issue in the hopes of reaching a filibuster-proof 60-vote majority to pass a funding bill, while stating that they will not use the 50-vote reconciliation process to fund the government.

“Going through reconciliation is risky to the country and is a non-starter,” Senate Majority Leader Chuck Schumer said on Tuesday at a news conference.

“Going through the long, convoluted, difficult reconciliation process with debt limit is very, very risky,” Mr Schumer continued, adding: “We’re not pursuing that.”

As the two parties play chicken, the deadline for funding the government and preventing thousands (if not more) federal workers from going without a paycheck looms less than two weeks away. There are roughly 2.1 million federal workers in the country, though essential workers would be retained during a shutdown, while temporarily forgoing paychecks.

Government facilities would close during a crisis

Public parks and other federal buildings would close, and many civilian staffers across the government would be prevented from working, a prospect that could have dire consequences as the US battles the Delta variant of Covid-19. An administration official told the Washington Post that the Biden team would take “every step it legally can to mitigate the impacts” of a potential shutdown on the US Covid-19 response.

One official with the Centers for Disease Control (CDC) expressed exasperation over Congress’s inability to reach a deal (so far) in the midst of a major public health crisis in a statement to The Washington Post.

“Come on, government leaders, can you guys work just as hard [as] we’re working so the government can keep functioning?” they said. “We’re trying to get our shit together, couldn’t you get your [shit] together, too?”


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