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As the deadline to raise the United States’ debt ceiling approaches, lawmakers continue to debate over ways to avoid a potential government default. Political turmoil aside, it’s important to understand the potential impact of a debt ceiling deal on federal spending. A recent analysis done by the Committee for a Responsible Federal Budget reveals that, despite the hype surrounding a possible agreement, the deal wouldn’t drastically change the federal spending path.
The debt ceiling is a legal limit on how much debt the federal government can accumulate. Once the limit is hit, the government is unable to borrow any additional funds unless the debt limit is raised. The United States’ current debt ceiling stands at $22 trillion, but the government is quickly approaching this limit.
If the debt ceiling isn’t raised, the government would be unable to pay its obligations, which would significantly harm the economy. A government default would send shockwaves through financial markets, and it could lead to a recession. Therefore, raising the debt ceiling is a critical issue that requires a bipartisan solution.
While lawmakers have been discussing a potential deal, it’s important to analyze the impact of the deal on federal spending. The latest report from the Committee for a Responsible Federal Budget reveals that the debt ceiling deal wouldn’t drastically change the federal spending path.
The report notes that the proposed deal would increase government spending by approximately $322 billion over the course of the next two years. Additionally, the deal would suspend the debt ceiling until the end of July 2021, allowing the government to borrow unlimited funds until that date.
While the increase in spending might sound astronomical, it’s essential to put it in perspective. The federal government is estimated to spend over $12 trillion over the next decade, which means that the proposed deal would only account for a 2.6% increase in spending over the next two years.
The Committee for a Responsible Federal Budget report also found that the deal wouldn’t affect any existing government spending programs. The report reads, “the deal does not contain any meaningful changes to Social Security, Medicare, or other health programs, despite warnings from some progressive lawmakers that a deal without such changes would be unacceptable.”
Overall, the potential debt ceiling deal would slightly increase government spending, but it would not significantly alter the federal spending path. However, it’s important to note that the deal only addresses short-term spending, and it doesn’t address the government’s long-term budget deficit.
The report states, “Policymakers should continue to work on longer-term efforts to address out-of-control spending and unsustainable debt growth. Despite the small size of this latest deal, the stakes have never been higher for addressing our fiscal challenges.”
In conclusion, the potential debt ceiling deal would slightly increase government spending, but it wouldn’t significantly alter the federal spending path. While the deal is necessary to avoid a government default, lawmakers must continue to address the long-term budget deficit. It’s crucial to understand the impact of the debt ceiling deal on federal spending to have informed discussions on the issue.