The U.S. government is nearing the debt ceiling once again. A default is when the government reaches the debt ceiling, which is the amount of money the government is allowed to spend to pay its bills.The bills include everything relating to government funding from pensions to national parks, this also includes the payroll of federal employees, the military, and tax refunds. 

For decades Congress has always come to an agreement to raise or lower the debt ceiling in order to save money, only this time Congress cannot seem to come to a definitive decision. 

“In my memory Congress has never broken the debt ceiling, but they have shut down the government to save money when they were unable to come to a conclusion.” BHS AP government teacher Melissa Davis said.

The last time the government shutdown was in December of 2018 and it lasted for 35 days and into the next year.

“For the average American, this is mostly an inconvenience because parks and government buildings will be closed. Unfortunately for anyone working for the government in a ‘non-essential’ capacity this means they will not get paid.” Davis said. 

While the debt ceiling has never been breached before, the ramifications of such an event would be colossal, stated by US Treasury Secretary Janet Yellen. A default would “Risk undermining US economic leadership and raise questions about our ability to defend our national security interests.” 

With the U.S. dollar already decreasing slowly and steadily in global market value, a default would set in motion yet another stock market crash and cause more than eight million people to lose their jobs. 

“People will lose faith in the system and pull their money out, which will further destabilize the economy,” said Davis.

The entire national market place would be out of tune, with credit availability being even lower and cascading into the price of loans, mortgages, interest rates and rendering 401k plans utterly worthless. 

As of the second week of May, Congress has still not made a decision. With the Biden administration and the Republican party at an impasse, the risk of economic fallout nears closer and closer to the due date. The political standoff between the Republicans and the Biden administration over the 31.4 trillion debt ceiling is not a new occurrence. The same thing happened over a decade ago in 2011 with the Republican party and the Obama administration, and while the due date was narrowly avoided in a matter of hours there was still a fallout from the possible default. The stock market crashed by nearly 20 percent and the overall US credit rating dropped by 0.3 percent.

The inaction of the government leads to many questions being raised about the system itself with both parties using the nation’s economy to push their own goals. 

“Congress will blame the President, the President will blame congress,” Davis said. “Both will be responsible but the American people will pay the price.”