Content Tagged: debt ceiling

Political Cartoon Roundup, Debt Ceiling Style

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March 4, 2014

Some great political cartoons have popped up in the last few weeks on the national debt, the proposed budget(s), and the looming debt ceiling.

139454 600 On to the Next Debt Limit cartoons

RJ Matson, St. Louis Post Dispatch, 2014

 

144565 600 Debt Ceiling Ahead cartoons

Michael Ramirez, Investors Business Daily, 2014

 

144608 600 Stressed Teens cartoons

Steve Kelley, The Times-Picayune, 2014

 

144545 600 Debt Ceiling Stuck cartoons

Chip Bok, 2014

 

144288 600 Speaker Boehner Lets House Vote to Lift the Debt Limit cartoons

RJ Matson, St. Louis Post Dispatch, 2014

 

 

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Will the Debt Ceiling Rise by $1.2 Trillion?

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January 23, 2011

Will the federal deficit increase even more in 2012? This question remains a topic of debate for many politicians in Washington this month as President Obama announced the need to raise the debt ceiling by another $1.2 trillion. According to a January 12, 2012, article by David Lawder for Reuters, President Obama sent a message to John Boehner (R-Ohio), the House of Representatives Speaker, stating that more money would be needed to “meet existing commitments.” If this proposal passes, then the total nation debt would surpass the $16 trillion mark.

As stated in the article, there is very little time for lawmakers to vote against Obama’s proposition, thus preventing a similar crisis that nearly brought Congress to default in the summer of 2011. However, many Republicans see this proposal as a chance to present Obama as an economic squanderer and hopefully dampen his chances of obtaining a second term in office. From the article:

“The President’s runaway borrowing threatens the foundation of our economy and the financial future of every hardworking American,” said Senator Jeff Sessions, the top Republican on the Senate Budget Committee.

 

The debt limit increase by President Obama was originally planned to occur in December, yet officials asked him to wait until Congress came back into session in 2012. To continue funding the “existing commitments,” the Treasury Department has had to pull money out of Exchange Stabilization Fund and might have to take other measures until the new debt ceiling is established. Lawder also states that the debt limit has “increased by $900 billion since last summer’s debt brawl to $15.194 trillion.”

Teachers could use this article to discuss with students the need to increase the federal deficit ceiling. Some questions to consider: What are the “existing commitments” President Obama speaks about? What federal programs might experience cuts for this debt increase? What programs might receive more funding? How does this increase impact the local and state levels of government? To what extent does this debt increase influence American foreign trade and humanitarian policies? Students should look at President Obama’s proposal from a variety of perspectives in order to better comprehend how the raising of the debt ceiling impacts local, state, national, and international spheres.

Students could also see how President Obama presents this topic during his State of the Union on January 24, 2012. How might he put forth this idea to the American people? What do political commentators say about it after the address? Listening to a range of viewpoints should allow students to see how complex the issue of increasing the national debt is to media and political outlets.

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Differentiating Instruction on the Deficit Panel: A Timeline and Graphics

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November 16, 2011

The New York Times has put together an interactive timeline of the significant events related to the federal budget talks preceding and succeeding the creation of the deficit panel.  This timeline gives a short summary of what happened on the day marked, a link to a complete article published on that day, and a chart or other visual representation of that particular day’s events or proposals.  This timeline lends itself to a number of lessons and in-class activities that will engage different types of learners.

Explaining the Timeline

The timeline begins at the bottom of the website on July 21 and then progresses to the deficit panel’s deadline: November 23.  Below is a short summary of the first and last point on the timeline. These summaries are provided in order to demonstrate how the timeline provides information:

On July 21, President Obama and Speaker John A. Boehner were working to complete a budget plan that would reduce the deficit by $3 trillion over ten years.  The graphic below the date details three alternative plans proposed to Congress: the McConnell-Reid Outline, the ‘Gang of 6’ Plan, and the Cut, Cap, and Balance Plan.  This chart provides a short summary and comparison of the three plans.

On November 23, the committee must present its plan to cut the deficit by at least $1.2 trillion over 10 years.  If the committee does not agree on a plan, automatic cuts will begin. Below the short explanation is a visual representation of the automatic cuts by area of the budget (defense, non-defense discretionary, nonexempt mandatory, Medicare, and exempt entitlements).  Each of these areas of the budget is explained further under its respective image.

Bringing the Timeline into Your Classroom

This timeline could be incorporated into your classroom in a number of ways.  One way would be to provide students with both the image presented on the day of the timeline and the complete article linked to that day.  While both provide similar information, each caters to a different type of learner.

As an activity, students can create a physical timeline on the ground of the classroom. On each point, there will be both a short summary and a visual/graphic summary.  Students may be split up into groups and asked to work on one date of the timeline using the information provided for that date.  Once the students have completed their own parts, they can put the timeline on the ground in order and take turns walking through it, engaging the students physically as well as intellectually.  As they walk through the timeline, they should read each summary and observe the image or chart connected to that day.

For homework, students may be asked to consider the part of the timeline they worked on relative to the entire chart: why did the New York Times believe that the day on which you worked was so important for understanding the progression of the government’s dealings on the deficit?  Would you have presented the information in the same way? Why or why not?

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New York Times Editorial Calls for End to Debt Limit

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August 5, 2011

A recent editorial in the New York Times calls for an end to the debt limit, arguing that it is “far too dangerous and unstable for lawmakers to use as a political weapon.”  The editorial suggests that the recent debt ceiling debate caused an artificial national crisis, put Americans’ savings at risk, and undermined investors’ confidence in the stock market.  It argues that the debt limit is meaningless and arbitrary, and ultimately does more harm than good.  From the article:

It’s an illusion of a law, instituted in World War I, to persuade gullible taxpayers that Congress is exercising responsible oversight over borrowing. Congress already controls spending and taxation, and if it wants a smaller debt it can cut spending or raise taxes at will. To allow the deficit to rise, and then refuse to pay for it months later, is the definition of financial irresponsibility.

The article also cites a New York Times editorial from June 29, 1961, which argued that the debt ceiling “can force the Government into devious and costly financing, and has done so in recent years.”  The 1961 article goes on to “regret that President Kennedy did not seek the establishment of a plainly unrestrictive ceiling, if not outright repeal.”

Teachers could use these two editorials as part of a lesson about the history of the debt ceiling debate.  Students could research the original implementation of the debt limit and identify times throughout the nation’s history in which an increase in the debt ceiling has been contested.  As students research arguments on both sides of this issue, they should be encouraged to develop their own opinions about the debt ceiling.  This lesson would be a good introduction to the debt ceiling debate and provide important information about the history of American fiscal policy.

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Agreement Reached to Increase Debt Ceiling and Reduce Budget Deficit

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August 2, 2011

Last Sunday evening, President Obama addressed the nation to announce that an agreement had been reached to increase the debt ceiling and reduce the federal budget deficit.  The president noted that the agreement “will allow us to avoid default…[and] begin to lift the cloud of debt and the cloud of uncertainty that hangs over our economy.”  From the address:

Now, I’ve said from the beginning that the ultimate solution to our deficit problem must be balanced.  Despite what some Republicans have argued, I believe that we have to ask the wealthiest Americans and biggest corporations to pay their fair share by giving up tax breaks and special deductions.  Despite what some in my own party have argued, I believe that we need to make some modest adjustments to programs like Medicare to ensure that they’re still around for future generations.

The compromise President Obama was looking for appeared unlikely until Sunday evening.  Jackie Calmes and Jennifer Steinhauer, writing for the New York Times, report that Sunday’s “deal was forged over choices and Chinese food.”  They outline the series of phone calls and conversations that began on Friday night and continued for the next 48 hours.  Calmes and Steinhauer wrote:

In between… was a weekend of nonstop horse-trading, from a windowless Capitol basement room to the Oval Office, over a deal to increase the $14.3 trillion debt ceiling and reduce future budget deficits. There were flashes of hope and heart-stopping moments when failure — and a government default on its bills — seemed inevitable.

Ultimately, after much negotiation and discussion, the two parties came to an agreement and President Obama announced the deal to the American public.

Over the past several weeks, the Understanding Fiscal Responsibility blog has been covering the debate about the federal debt ceiling and detailing different ways this topic could be discussed in high school classrooms.  Now that an agreement has been reached, teachers can use this topic as a case study on the role of compromise in the federal budgeting process.  The New York Times has several resources to help shape such a lesson, each explained below.

The first New York Times resource that would be beneficial to high school students is an outline of the debt plans that failed.  Beginning with the Biden Talks last June and continuing through the second Boehner plan in late July, this interactive website describes nine attempts to raise the federal debt limit and address the nation’s growing deficit.  It details each of the plans and explains the factors that contributed to their failure.

The second resource from the New York Times builds upon the first, but provides additional information about the plans proposed between July 21 and July 31.  This resource provides a detailed outline of the “11th-Hour Deal” that President Obama described in his address to the nation last Sunday night.  The plan is outlined in a graphic organizer that clearly explains each of the steps in the process.

The third New York Times resource that would be beneficial to high school students is a breakdown of votes across the political spectrum.  This resource shows Republican and Democratic votes on the House bill to increase the debt ceiling, and further divides each party into Freshman Republicans, Tea Party Candidates, Freshman Democrats, Blue Dog Democrats, etc.  Students could use this information in coordination with a US map showing the geography of the House vote to better understand how the vote broke down nationwide.

Teachers could use these three resources, along with articles citied in earlier Understanding Fiscal Responsibility blogs, to help students understand the debate about the federal debt ceiling.  As part of this lesson, students should better understand the role of compromise in democratic government and be able to articulate how those compromises shape the United States’ budget and fiscal policy.

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President Obama and Speaker Boehner Deliver Primetime Speeches

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July 26, 2011

President Barack Obama and Speaker of the House John Boehner both delivered primetime addresses last night outlining competing plans to address the federal budget deficit and national debt.  President Obama began by noting that “neither party is blameless for the decisions that led to this problem, [and] both parties have a responsibility to solve it.”  He then outlined two different approaches: a balanced approach that includes spending cuts and tax increases, and a “cuts-only” approach that does not raise taxes.  The President continued:

So the debate right now isn’t about whether we need to make tough choices.  Democrats and Republicans agree on the amount of deficit reduction we need.  The debate is about how it should be done.  Most Americans, regardless of political party, don’t understand how we can ask a senior citizen to pay more for her Medicare before we ask a corporate jet owner or the oil companies to give up tax breaks that other companies don’t get…

That’s not right.  It’s not fair.  We all want a government that lives within its means, but there are still things we need to pay for as a country -– things like new roads and bridges; weather satellites and food inspection; services to veterans and medical research.

Though the President was critical of a “significant number of Republicans in Congress,” he gave credit to Speaker of the House Boehner for working toward compromise over the last several weeks.   Speaker Boehner took a different approach, arguing that the President “wanted a blank check six months ago, and he wants a blank check today.”  The Speaker continued:

The president has often said we need a ‘balanced’ approach — which in Washington means: we spend more… you pay more. Having run a small business, I know those tax increases will destroy jobs.

The president is adamant that we cannot make fundamental changes to our entitlement programs. As the father of two daughters, I know these programs won’t be there for them and their kids unless significant action is taken now.

Covering the story for the New York Times, Carl Hulse and Jackie Calmes wrote that following a day of “legislative chess moves, back-to-back party caucuses and closed-door meetings” the leaders’ “separate speeches reflected that the two sides are farther apart than ever.” Hulse and Calmes report that neither side appeared willing to compromise during news conferences on Capitol Hill earlier in the day, “creating a distinct air of uncertainty around the Capitol about how the debt limit conflict would end.”

Over the past several weeks, many of the Understanding Fiscal Responsibility blogs have discussed the debate about the federal debt ceiling.  As the August 2 default date approaches, teachers could ask students to create a timeline of the debate, outlining the progress (or lack thereof) of the talks.  Students could create a chart that shows where each side began in the discussions, which points each side has conceded, and which points they are unwilling to negotiate.  Students could then predict how (or if) the stalemate will end before the August 2 deadline.  This activity will help students better understand the debate about the national debt and underscore the importance of compromise in a democratic government.

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Potential Outcomes of a US Debt Default

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July 22, 2011

In a recent column in the USA Today, Thomas J. Donohue of the U.S. Chamber of Commerce and Robert S. Nichols of the Financial Services Forum outlined four ways that a debt default would hurt America.  While the authors concede that “the precise implications of a default are difficult to know in advance,” they predict that a default would halt government operations, increase interest rates, weaken the dollar, and slow economic growth.

Citing analysis by the Bipartisan Policy Center, Donohue and Nichols report that failing to increase the debt ceiling “would require the United States to immediately cease honoring 44% of its obligations during the month of August.”  They argue that the government would be forced to choose which programs to fund and would have little money left over for essential government operations.

Donohue and Nichols also address the impact a default would have on the debt and deficit.  From the article:

It’s been estimated that a one-notch downgrade in the nation’s credit rating (the smallest reduction) would raise yields demanded by investors by a full percentage point. Higher borrowing costs mean wider deficits and higher debt levels. Even a one-half percentage point increase in rates would increase our annual deficit by $10 billion in the short run, and by $75 billion per year as outstanding debts roll over.

In addition to negative effects on government operations and the national debt, Donohue and Nichols believe a default would also weaken the dollar and dampen economic growth.  They note that a default could potentially downgrade the United States credit rating, which “would accelerate calls for a new non-dollar global reserve currency — to the detriment of every American business, saver, investor and consumer.”  The authors contend that this would lead to slower economic growth causing thousands of Americans to lose their jobs.

Teachers could use this article to help students understand the potential risks involved in defaulting on the national debt.  Students should be encouraged to investigate these claims and determine the extent to which these concerns are evident in the debate on Capitol Hill.  Do the debates about tax increases and spending cuts include a discussion about what might happen if an agreement is not reached?  If so, how are those discussions approached by lawmakers and received by their constituents?  If not, why are those discussions avoided?

As with every article that students discuss, the issue of perspective and bias should also be addressed.  Thomas J. Donohue is the President and CEO of the US Chamber of Commerce, an organization that identifies itself as “the voice of business” whose “core purpose is to fight for free enterprise before Congress, the White House, regulatory agencies, the courts, the court of public opinion, and governments around the world.”  Robert S. Nichols is the President and CEO of the Financial Services Form, a “non-partisan financial and economic policy organization” whose purpose “is to pursue policies that encourage savings and investment, promote an open and competitive global marketplace, and ensure the opportunity of people everywhere to participate fully and productively in the 21st-century global economy.”  How do the missions and purposes of these organizations influence their views about the national debt and the debt ceiling?  Does their experience and expertise in business make their opinions more valuable in fiscal discussions, or does it indicate a potential bias about these issues?  Teachers should encourage students to consider these questions as they develop their own opinions about these important fiscal issues.

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“Grand Bargain” Sought on Federal Budget

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July 12, 2011

President Barack Obama recently held a press conference in which he discussed the ongoing negotiations to reduce the budget deficit and reach an agreement concerning the debt ceiling.  The President reported that he and House Speaker John Boehner are working to craft the “biggest deal possible so that we could actually resolve our debt and our deficit challenge for a long stretch of time.”  President Obama noted that there would be resistance from Democrats and Republicans, but called on both parties to work toward compromise:

There is, frankly, resistance on my side to do anything on entitlements.  There is strong resistance on the Republican side to do anything on revenues.  But if each side takes a maximalist position, if each side wants 100 percent of what its ideological predispositions are, then we can’t get anything done.  And I think the American people want to see something done.  They feel a sense of urgency, both about the breakdown in our political process and also about the situation in our economy.

The President concluded by saying that he would not consider a temporary solution to this problem, arguing that the United States does not “manage our affairs in three-month increments” or risk defaulting on our debts “because we can’t put politics aside.”

Writing for the Washington Post, Dan Balz contends that the speech represented a “political tightrope” for the President, as he continued “prodding Republicans to accept more taxes as part of any budget deal while making clear that he is prepared to endorse potentially major cuts to Medicare and other entitlements — a move Democrats oppose.”  According to Balz, this approach is taken with an eye on the 2012 election and a focus on political independents who are “willing to reward politicians who step outside pure partisanship to solve the country’s problems.”

Many Understanding Fiscal Responsibility blogs have asked students to identify potential areas of compromise between disparate fiscal positions.  In his press conference, President Obama noted that because politicians are often “rewarded for saying irresponsible things to win elections or obtain short-term political gain, when we actually are in a position to try to do something hard we haven’t always laid the groundwork.”  As the August 2 default date approaches, students could compare the political rhetoric today to that of the recent past.  Do Democrats and Republicans today seem more or less willing to compromise?  How do the arguments of both parties compare to those made during the 2010 elections?  How do positions taken during election season influence lawmakers’ policy decisions once in office? Teachers could use these questions to guide a discussion about the difficult but important process of compromise in a democracy.

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Founding Fathers’ Ideas About the National Debt

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July 5, 2011

In a recent article on Time.com, Zachary Karabell argues that the Founding Fathers would be opposed to the idea of the United States defaulting on its national debt.  Karabell concedes that the game of “what would the Founding Fathers say… usually says more about today’s partisan fights than about the Founders,” but notes that they did have strong opinions about the national debt.  From the article:

James Madison, architect of the nation if there ever was one, described national debts as “moral obligations” in Federalist Paper No. 43. George Washington, who was always measured and diplomatic in public utterances, was unequivocal in his thoughts on public debts: “No pecuniary consideration is more urgent than the regular redemption and discharge of the public debt; on none can delay be more injurious, or an economy of the time more valuable.” And that message was delivered directly to the House of Representatives in 1793, where some members were contemplating various defaults.

Karabell argues that these statements represented the prevailing attitudes of the Founding Fathers and are not the result of “cherry-picking quotations.”  He notes that Alexander Hamilton even (controversially) “saw the national debt as a glue for the union, binding disparate elements together in a web of mutual responsibility.”  Karabell concludes that while the pros and cons of incurring national debt can be debated (as they were by the Founding Fathers), “the way of out of debt is not to refuse to pay, or to risk the credit of the country.”

Teachers could use this article as part of a US history lesson about the founding of the nation.  Students could be presented with the documents cited in this article, along with other essays and correspondence written by the Founding Fathers, and discuss whether or not Karabell accurately presented their arguments.

As part of this lesson, students could participate in a class discussion guided by the following questions:  Why do we play, as Karabell put it, the game of “What Would the Founding Fathers Say?”  How do our answers to that question shape the decisions we make as a nation?  What are the strengths and weaknesses with that approach to national issues?  Is Karabell correct that lawmakers’ answers to that question say “more about today’s partisan fights than about the Founders”?  Why or why not?

This lesson would help students connect the events they study in their history classes with the ongoing debate about the national debt, the federal budget deficit, and the debt ceiling.  As students learn more about the history of the nation’s economy, they will be better able to form their own opinions about how best to address our fiscal issues.

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Debt Default Date Rapidly Approaches

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June 29, 2011

Gail Russell Chaddock, writing for the Christian Science Monitor, warns that the House and Senate are only in session at the same time on nine occasions between now and August 2, the date that the United States will default on its debt unless Congress raises the debt ceiling.  Chaddock is concerned that there is “not a lot of time left for Republicans and Democrats to come to terms” on a solution to the nation’s fiscal issues.  From the article:

The House opted this year to take a week off before the July 4 holiday, and the Senate takes a break after. This House is off again for another work period back in member districts the week of July 1; the Senate stays is in town, and so on…

But critics charge that the out-of-sync congressional calendars are not conducive to getting things done in Washington, especially with an impending debt crisis.

Chaddock points out that most members of Congress will not be involved in the negotiations to increase the debt ceiling.  That means that when a deal is worked out, “there remains the formidable job of rallying members to agree to it.”  Chaddock argues that lawmakers need more time in Washington working with colleagues and moving toward a consensus “that is sure to require tough choices and votes.”  She concludes:

In the end, the deal can be cut with the vast majority of 535 lawmakers out of the room, but it can’t be approved without them. To move a House and Senate far apart on taxes, spending, and entitlements, it helps to be there.

Teachers could use this article in a discussion about Congressional responsibilities guided by the following questions:  Where should members of Congress spend the majority of their time?  Does that change when an important issue arises?  Should lawmakers be at home talking with constituents or in Washington working with their Congressional colleagues?  Do you agree or disagree with Chaddock’s implication that nine days is not enough time to reach an agreement on the debt ceiling?  Do you think Congress will schedule additional sessions concerning this issue?  Why or why not?

As the August 2 debt default date approaches, students should be encouraged to observe the number of times Congress meets, and the progress made during those sessions.  As the two parties work toward a solution, students could revisit their answers to the aforementioned questions to see if their opinions have changed.

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