Dancing On The Debt Ceiling

The periodic requirement for Congress to vote on raising the debt ceiling has become a reliable piece of political theater. The vote usually follows the passage of a budget by the Congress, and a hike in the debt ceiling rarely gets a green light without some drama.

It’s a little like a person who orders up a five course dinner and drinks and then threatens not to pay when the bill arrives. But, this political theater invariably ends the same way: Congress raises the debt ceiling. Treasury pays the bills. Everyone moves on.

But what would happen if Congress said no? What if it didn’t raise the debt ceiling and the US suddenly didn’t have access to the money it needed to pay its bills? As Federal Reserve Chair Jerome Powell put it, “It’s beyond even considering.”