Q: The U.S. will hit the debt ceiling by June 5

June 5 is the drop-dead date , Treasury Secretary Janet L. Yellen said in increasingly panicked language to lawmakers. Her agency has been taking “extraordinary measures” — prioritizing which debts to pay while borrowing as little as possible to pay them — since January. But the government is running out of options quickly.

Question 1

The national debt ceiling is a limit Congress has placed on the government’s borrowing

Accepted Answer

It’s a restriction Congress puts on how much money the federal government can borrow to pay its bills. Congress instituted the limit in 1917 to rein in federal agencies that were basically spending whatever they wanted and ignoring the constitutional power of lawmakers to set those rules, said David Super, a law professor and budgetary analyst at Georgetown University. Most years, the federal government spends more than it takes in, so it has to borrow money to cover the shortfall. That means it reaches the debt limit to borrow fairly often. (Sort of like a credit card limit.) Raising the cap has become an inherently political issue, and it usually grabs the most attention when power in Washington is divided between parties — such as now. The debt ceiling is one of the few must-pass bills, and it comes up almost every year. But when a Democrat is in the White House, Republicans have seen the vote as an opportunity to make a political stand and exact concessions. (Congress rather easily approved the debt ceiling when Republicans controlled Congress and Donald Trump was president.)

Question 2

Raising the debt ceiling allows the government to keep paying its bills

Accepted Answer

Raising the debt ceiling allows the federal government to continue to issue Treasury bonds that bring in revenue and help it pay its bills. Investors around the world buy the bonds, because they’re seen as a safe and reliable investment. In turn, the government has money for many projects, from the military to social programs. They also are a bedrock of global finance and help the Federal Reserve control the money supply. Anything that shakes investors’ faith in these bonds is scary not just for the U.S. economy, but for the global one as well, economists say. One bill the government has to pay is interest on older bonds. If it failed to make those payments, that would be a default, and it’s never happened on Treasury bonds (though there have been defaults on other obligations a few times in the United States’ past). Until recently, it was a routine chore for Congress to raise the national debt ceiling. Since 1960, Congress has intervened 78 times to change the debt limit in some way, according to the Treasury Department. That’s under Democratic and Republican administrations, which have both played a role in ballooning the national debt. As the debt ceiling fight has become more politicized, Congress has suspended it for longer and longer periods to avoid having to come back to it so regularly.

Question 3

If the government defaults, it would not be pretty

Accepted Answer

The government would probably run out of money to pay most of its bills. It would not be able to borrow money to pay for Social Security, issue tax refunds or pay the salaries of federal workers and members of the military. It might have to choose between paying investors in China or funding the military. The stock market would probably plummet. The United States would be seen across the globe as an unreliable business partner. Cars and homes would get even more expensive. The country could tip into a recession. People would lose their jobs and home values could plummet. Here are seven doomsday scenarios. The United States has gotten close to a default in the recent past. In 2011, House Republicans voted down a bill to raise the debt limit unless the government slashed its annual spending. President Barack Obama agreed to sharp spending limits that only recently expired. The political brinkmanship caused a credit-rating agency to downgrade the country’s reliability to pay its debt for the first time and cost taxpayers $1 billion by increasing interest rates. Today’s debt ceiling standoff felt similarly heated, said Julia Coronado, an economist at the University of Texas. House Republicans have a sizable far-right faction that doesn’t seem to feel much of an obligation to raising the debt ceiling.

Question 4

The U.S. will hit the debt ceiling by June 5

Accepted Answer

June 5 is the drop-dead date, Treasury Secretary Janet L. Yellen said in increasingly panicked language to lawmakers. Her agency has been taking “extraordinary measures” — prioritizing which debts to pay while borrowing as little as possible to pay them — since January. But the government is running out of options quickly.

Question 5

Biden and Republicans reached a deal just in time. But ...

Accepted Answer

For months, President Biden maintained that he wouldn’t negotiate on spending levels tied to the debt ceiling. But as the default neared, he begun meeting with House Speaker Kevin McCarthy (R-Calif.) to hear Republicans’ demands. With just week before the expected default, they reached a deal to hold most federal funding stable rather than raise it, institute modest work requirements for some Americans on welfare and develop a major gas pipeline in West Virginia. In exchange, the debt ceiling would be raised until 2025 so Biden doesn’t have to deal with this again during his current term. But first the deal will have to get through both chambers of Congress, where it may not have enough conservative House Republicans’ votes, or potentially liberal votes, to pass. The deal is nowhere near the conservative wish list of spending cuts that House Republicans passed in April. After it passes the House, it will need to pass the Senate, where any one senator can stop things up and bring the nation closer to a default.

Question 6

Biden could get around the debt ceiling with the 14th Amendment

Accepted Answer

It’s a possible escape hatch in the event a deal falls through in Congress — or to avoid the next debt ceiling fight. Biden could invoke a Civil War-era section of the 14th Amendment in such a way that voids the debt ceiling law. The Constitution states that the validity of U.S. debt “shall not be questioned.” So he could direct the Treasury Department to just keep paying its bills and ignore the fact that Congress never raised the debt ceiling. Bill Clinton said of the last debt ceiling standoff in 2011 that if he were still president, he would have used this “without hesitation.” Biden said that he thinks he has the authority to do this but that it might come too late to avoid a default. He’s toyed with the idea of voiding the debt ceiling for the next time it comes up, but his aides are also concerned that it could get tied up in court and further risk the U.S.'s reputation as a safe place to do business.

Question 7

House Democrats tried to force a vote to raise the debt ceiling, too

Accepted Answer

Congressional Democrats were also trying to persuade at least five House Republicans to sign a petition with them to force a vote on raising the debt ceiling. The method is called a discharge petition, and it’s a way for a majority of House lawmakers to get around McCarthy. But to succeed, it would require a handful of Republicans to join Democrats and go over his head. Lawmakers have tried and failed in the recent past to use a discharge petition on issues such as immigration and the minimum wage. This has been updated with the latest news.

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