OPINION

The debt ceiling affects your financial bottom line. Don't let political theater obscure the facts.

Patrick R. Miller
Special to Gannett Kansas

The debt ceiling debate in Washington seems distant from average Kansans, but it affects your finances more than you think.

The debt ceiling is the limit on the amount of money the federal government can borrow. Congress invented it in 1917 to simplify creating debt and issuing bonds. It has been raised through various means 78 times since 1960, per Treasury Departments records, typically with bipartisan support and more frequently under Republican presidents.  

The debt ceiling itself doesn’t authorize new spending. Rather, it allows government to finance commitments it already made. Today, that still includes many expenditures on debt that Donald Trump authorized while president.

Politics being theater, the debt ceiling is suddenly controversial and partisan again. Many Republican politicians who consented to raising the debt ceiling under Trump are clutching their proverbial pearls at doing it now, raising the specter of financial default.

How does this affect Kansans?

First, federal dollars directly impact Kansas pocketbooks.

Default could leave the government unable to pay its bills. That could mean stoppages or delays in Social Security checks, Child Tax Credit payments, farm subsidies, military pay, veterans’ benefits, and postal worker paychecks. Medicare and Medicaid would be threatened.

Second, uncertainty over the debt ceiling affects your retirement and other investments.

Kansans with retirement or investment accounts probably own government debt via Treasury bonds. Default would undermine the value of those typically safe investments, jeopardizing your financial security and net worth.

Even risking default hurts your investments short term. When debt ceiling political theatrics create financial uncertainty and make markets fall, that directly decreases your net worth. Kansans who checked a 401k or Roth IRA around Oct. 1 might remember this pain.

Bluntly, the politics industry often lies and misleads about debt. Many politicians, paid spokespeople, and infotainment “news” personalities profit from selling you half-baked, victimhood-wallowing political narratives, hoping to rile you up for votes, donations and ratings.

Debt sounds bad. It’s easy anger fodder for sexy and distracting lies like: China owns most American debt and can bankrupt us anytime, welfare and foreign aid drive the debt, or only one party creates debt.

In reality, Americans own over 70% of the national debt, per the Treasury. Foreign investors cannot simply demand payment. Social Security is the biggest government expenditure; that plus Medicare and defense are about half the federal budget in many years.

The last president to sign a balanced budget was Bill Clinton. And both parties happily deficit spend while pretending that they don’t.

Under Trump, the debt ceiling increased three times without controversy. Most recently, he suspended the debt ceiling in 2019. Both of our current Kansas U.S. senators supported Trump on his debt extensions at least once. Trump’s presidency added $7.8 trillion to the national debt, bringing it to $28 trillion, per Federal Reserve data.

Basic economics: for the country, there are pros and cons to the debt ceiling and debt itself. But, for the financial bottom line for individual Kansans trying to survive economically and save for retirement, even the risk of debt default is a financial harm. Maybe many politicians don’t realize that. Or maybe they do but they hope you don’t.

Ideally, mature politicians could get America’s long-term financial act together without jeopardizing our individual financial security today. Sadly, that seems too responsible a hope.

Patrick R. Miller is an associate professor of political science at the University of Kansas.