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Debt Ceiling Crisis

We’ve all heard about the country’s debt ceiling, and how we’re coming up to a potential breaking point in a few weeks if Congress can’t figure out a solution.  But what exactly is the debt ceiling, what are the potential consequences, and how should we as Christians view all of this?

What is the debt ceiling?

For starters, a debt ceiling is just a pre-approved borrowing limit that the government has to keep under – currently a cool $31 trillion.  That’s enough to stack dollar bills and wrap them around the Earth over 84 times!  Currently, the government is spending 29% more this year than it will earn in revenue, and the measured share of the economy – spending, revenue and the deficit – are larger now than they’ve been on average for the last 50 years.  Washington has made financial promises that it has no way of keeping other than going further in to debt.  If they were a family, I’d have them cut up all their credit cards and go through bankruptcy counseling and a spending freeze.  Unfortunately, they’re like that bad family member that you’re stuck with and have to learn to deal with best you can.

Government deficits have been a continuous issue for virtually every country as long as money has been printed.  Governments want to print more to carry out their agendas, so they can get reelected and remain in power.  It’s pretty simple really – they promise us more money, and in exchange they get to keep power.  Two very powerful forces at work.

Few countries in the world have debt ceiling laws (I suppose we can be thankful that at least we’re one of them!), and Congress’ periodic increase of the borrowing limit merely allows it to pay for spending the House has already authorized.  Of course, whenever there’s money involved, both Republicans and Democrats take the opportunity to fight for their agenda, prove to their constituents what a great job they’re doing, and put on a bit of political theater in the process.  Solutions to the debt limit usually include compromise and negotiations from each side.  This go round, it seems that Republicans want to cut spending while Biden wants to spend more. Biden’s plan involves raising taxes to make up for increased spending, which you can guess is particularly aimed at the wealthy.

Politicians also have a few tricks up their sleeve if they can’t reach a compromise. There’s been mention of Biden potentially invoking the 14th amendment (which he said is unlikely), which says the validity of the public debt of the United States “shall not be questioned.” Another possibility is for the Fed to mint a $1 trillion platinum coin, because, why not!?  In the end, a compromise will likely be reach, and most likely at the 11th hour.

What are the consequences?

If the government fails to reach a solution and can’t its debt obligations, people will lose faith in the government’s capacity to repay its debt, thereby leading to greater borrowing costs, higher interest rates, and a negative impact on the economy.

Specifically, it could send the dollar spiraling downward, government employees to be temporarily unemployed, and could cause Treasuries to lose some of their value.  A default of interest payments is pretty unlikely, but plausible if it goes on long enough.

It seems like we go through this every couple of years, and we end up at the same place – just keep on raising the debt limit so we can keep printing money like it’s going out of style.  The only other solutions to this basic math problem are to reduce spending which no politician wants to do, or to raise taxes which is what every politician campaigns against.  So we just kick the can down the road and hope that we don’t inflate our grandkids’ futures away.

What are we to do in light of this?

As believers, we – unlike the government – are called to not presume upon the future.  We’re told that money and wealth are uncertain at best. Debt isn’t evil or outlawed in scripture, but we shouldn’t use it like a blank check, with no practical plan of repayment.

Suppose one of you wants to build a tower. Won’t you first sit down and estimate the cost to see if you have enough money to complete it? For if you lay the foundation and are not able to finish it, everyone who sees it will ridicule you, saying, ‘This person began to build and wasn’t able to finish.’ – Luke 14:26-28

Now listen, you who say, “Today or tomorrow we will go to this or that city, spend a year there, carry on business and make money.” Why, you do not even know what will happen tomorrow. What is your life? You are a mist that appears for a little while and then vanishes. – James 4:13-14

It’s important to count the cost before committing to any endeavor. Just as a builder would not begin constructing a tower without first estimating the necessary resources and cost, we too should exercise prudence in our financial decisions. By doing so, we can avoid the embarrassment of starting something we cannot finish.

As we consider the ongoing debate surrounding the debt ceiling, it is important to remember that as believers, we are called to approach financial matters with wisdom and discernment. While debt is not inherently evil or outlawed in scripture, it is important to avoid using it recklessly and without a practical plan for repayment. We’re also called to not worry about anything, especially the things we can’t control.

Therefore I tell you, do not worry about your life, what you will eat or drink; or about your body, what you will wear. Is not life more than food, and the body more than clothes? Look at the birds of the air; they do not sow or reap or store away in barns, and yet your heavenly Father feeds them. Are you not much more valuable than they? Can any one of you by worrying add a single hour to your life? – Matthew 6:25-27

In fact, that’s not just a suggestion or feel-good promise, it’s a command!

As we navigate the current economic climate, let’s be intentional about placing our trust in God’s provision rather than becoming consumed by worry or fear. So while it’s good to be informed as a citizen about the decisions that our government is making and the crisis they’re facing, let’s not let it cause our own crisis.

Instead, we should remain calm, trusting in God’s provision and exercising wisdom in our financial decisions. As we continue to seek His guidance and direction, we can navigate these uncertain times with grace and confidence.