By Richard Thompson
Recently, the United States Congress showed just how partisan and dysfunctional they are when they manufactured a debt ceiling crisis over the course of 3 months that could have thrown the entire world’s economy into chaos.
The reason? Members of the Tea Party wing of the Republican Party decided to add spending cuts to an otherwise ordinary process of raising the debt ceiling, something that had never been done before in American history. In doing so, the Tea Party Republicans basically held the United States and world economies hostage in order to impose their economic ideology on the process.
You may wonder what raising the debt ceiling entails and why it is necessary for the federal government to do so. And most importantly, how does all of this affect us as college students?
Under our constitution, all spending bills originate in the House of Representatives. When a bill passes the House, it travels to the Senate to be voted on. Once it passes the Senate, and if there are no changes to the original bill, the bill is then sent to the President to sign or veto.
When the House wants to raise the debt ceiling, all it takes is a one-page bill, where one sentence is changed along with the dollar amount — that’s it.
The debt ceiling is a self-imposed economic limit that the federal government enacted and has done since the early 1900’s, something that other developed nations do not have. By raising the amount of money the federal government can borrow each year (the government borrows money by selling US Treasury Bonds through the US Treasury), expenses already allocated by Congress the previous year and investments in other projects deemed necessary by Congress are covered.
According to George Zornick of the Nation Magazine, “In short, it’s a rout of the lower and middle classes by the wealthiest Americans. Since the deal relies entirely on spending cuts with no revenues—don’t believe the White House spin that revenues are possible, because that would require Republicans to suddenly desire them—the wealthy escape any sacrifice since very few of them rely on the government services that will be cut.”
Republicans in the House wanted to reduce Pell grants — which accounts for the largest portion of non-defense discretionary spending — across the board, but a compromise was struck in order to save Pell grants for undergraduate students. Pell grants, which are allocated to 9 million students, will increase by $17 billion, but the increase comes at a price, with negotiators paying for it by killing federal subsidies for graduate student loans.
According to Laura Meckler of Dow Jones, “Under the eliminated program, lower- and middle-income graduate school students didn’t have to pay interest on their loans while they were still in school.”
This will affect about 1.5 million students. Meckler also stated that cutting the graduate school subsidies for 10 years provided only enough money to maintain Pell grants for undergraduates for two more years, through the 2013-2014 school years. This means that unless something changes in the composition of the House and Senate, Pell grants will be on the chopping block in 2014.
