Speaker John Boehner/ photograph under Creative Commons
Good news came at the end of last week, and it's something that will affect you and your neighborhood. Speaker of the House John Boehner said the House would vote on a three-month increase to the debt ceiling in order to give lawmakers time to pass a more comprehensive budget deal. A vote could come as early as today.
The debt ceiling is the legal limit Congress places on its own borrowing. If the federal debt reaches the debt ceiling, the government is unable to borrow additional funds to support continued operations, triggering a government shutdown and default on existing loans. Raising the debt ceiling doesn't grant the government permission to spend money on new things – instead, it lets the government borrow additional funds to support spending that's already been authorized. Congress has the authority to raise the debt ceiling as needed.
Treasury Secretary Timothy Geithner has said that a government shutdown and debt default could take place as early as mid-February if Congress fails to raise the debt ceiling, and the fallout from such an event would reach your neighborhood and every corner of the nation. Social Security checks and veterans' benefits, among other things, would not be issued. Critical government functions – like law enforcement – could come to a halt. Interest rates would rise and the global economy would falter from the delinquency of what was considered the safest investment out there: U.S. government bonds.
Even if you want the federal government to reduce deficit spending, an increase in the debt ceiling is a good thing. Failure to raise the debt ceiling would cost the government many billions of dollars in higher borrowing costs and it wouldn't change the fact that Congress still needs to do the hard work of passing an actual budget for our country. So whatever your priorities are for the federal budget, you should cheer an increase in the debt ceiling while demanding that your representatives in Washington improve their management of our nation's finances.
UPDATE Jan. 23 at 2pm: The House passed a bill to suspend the debt ceiling until May 18. The bill also requires both the House and Senate to pass a budget resolution by April 15.