June 1, 2023: the predicted date U.S. Treasury Secretary Janet Yellen warns about. This day will mark the moment the U.S. runs out of money and faces the inability to pay back its debts. With the impending issue, economists claim would send the global economy into chaos, lawmakers and the Biden administration scramble to negotiate a solution to the economic crisis. Although news of bipartisan talk has spread, each side shows signs of division within their solution discussions.

According to the U.S. Department of Treasury, the “debt ceiling” or “debt limit” refers to the total amount of money that the United States can borrow to pay for welfare programs, military spending and other legal obligations. Congress remains in charge of authorizing the amount of debt the country can accumulate. Since 1960, Congress raised the debt ceiling 78 times. The federal government already hit the debt limit in January and since then has taken extraordinary measures including managing funds toward the federal debt and moving investments. 

With the failure to pay the upcoming debts, the U.S. will face unprecedented debt default. Similar panic previously occurred as the last time the U.S. faced an incoming default appeared in 2011. Economists predict a dangerous default would push every economic sector into chaos and would drive domestic and international economies into crises. U.S. citizens would also feel the brunt effects of the default. Economic chaos would include the collapse of the values of homes, millions of Americans losing their jobs and the crashing of the stock market.

“Well, as they keep saying in the news, right, if we default, then some of the things are going to definitely impact us like our borrowing of money. We already have high inflation and they’re already saying that if we default on our debt,  the cost of [borrowing] money is going to be more. If someone’s trying to buy a new house, their interest rates could be up as high as eight and a half or nine percent. One of the things that inflation is doing is devaluing our dollar. Our dollars are not worth as much as it has been in the past. That’s an issue and if we default, then that’s going to impact the value of our dollar,” Financial Literacy teacher Sheryl Cox said. 

The debt limit remains a debated topic in American politics. Previous presidents, including former president Barack Obama, have reached stalemates over the same issue as each resulted in increasing the debt limit. Within the new Republican-majority House of Representatives, they now push to cut government spending and refuse to increase the debt ceiling unless negotiations with Biden promise reductions in federal spending. Biden voiced an unyielding stance that the discussion on raising the debt limit should remain a separate topic from talks of regulating federal spending. 

In the last week, Biden met with congressional leaders from both the Democratic and Republican parties for talks of future plans to deal with the approaching deadline. The appearance of any deal in sight seems far from coming to fruition. Contrasting reports from the talks come from the White House and Republican lawmakers. President Biden expressed optimism about advancing toward a deal regarding the limit. Republican Speaker Kevin McCarthy has told the press that the talks between lawmakers produced minor progress and negotiations between leaders would continue with additional meetings scheduled this week. 

“I still think we’re far apart. It doesn’t seem to me yet that they want a deal. It seems like they want to look like they’re in a meeting. They’re not talking about anything serious,” McCarthy said.