It's theater. It has been raised consistently since the beginning.
https://en.wikipedia.org/wiki/History_of_the_United_States_debt_ceiling#Historical_debt_ceiling_levels
There is no reason to have a debt limit at all. Most countries don't. Congress votes on budget and tax and the debt is the consequence of those. It only exists to give deficit hawks a leverage point to cut things but never raise taxes of course.
Raising taxes and avoiding recessions are the only things that can reduce the debt significantly and cutting the budget raises recession risk, so they will only make the debt larger in the long run.
How much does the deficit even matter? I know interest payments are a couple hundred billion a year but I don't really know 1) how big a deal that is, and 2) what the actual effects of those payments are.
Debt to gdp level keeps going up so it's hard to argue that there isn't something wrong, even if the current debt level is fine. But we have kept cutting taxes and having recessions. Some of the recessions have been very bad.
The debt is a savings device called treasury bond. There are other savings devices but US government debt is the largest single thing. The stock market is larger but consists of thousands of things. If you want to reduce the debt, you have to reduce people's savings. You can do that by taxing more, or people can voluntarily spend their savings. Nearly every time money changes hands, there's a tax. So the government will recover money it spends eventually. It's just a matter of getting money to change hands enough times, or increasing tax so that it does not need to change hands as many times. The government borrows money for 30 years at about 4% right now which is very low, so I think it will recover the money it spends. Wealth is very concentrated so debt reduction would probably reduce wealth inequality. Like I said, reducing the debt will require higher taxes and avoiding recessions. It's not bad for people to have savings but it shouldn't all be sitting in a few people's bank accounts.
If it has real consequences, they will have been entirely avoidable. I guess you could say that that makes it both theater and real at the same time, which is fittingly postmodern.
The video on this page now redirects to a much more recent one about the Ukraine-Russia war, but the image of Obama saying "we are still a triple-A country" is burned in my brain from when our credit rating got downgraded and... nothing happened. I'm not sure that any financial consequences can ever alter the trajectory of the current US government, since financial consequences require a larger financial institution to enforce them and there is no financial institution in the world larger than the US Federal Reserve.
Theater with consequences. Real working people will miss paychecks. Anyone who works for the federal government and not in the military (except oddly enough the coast guard)
People will get evicted. People will get payday loans, kickstarting them on the cycle of poverty.
Imagine two people play fencing but every time someone gets poked 1000 poor people lose their housing
it's theater, but all of the US is a stage and we are the captive audience of a play called Ideology.
if they default, I don't see how the cost of borrowing won't go up even more because federal government would be downgraded as something below AAA by ratings agencies. or maybe they wouldn't dare?
the irony of not making payments on debt is that the cost of making the payments go up. the lenders are the ones who benefit from this, because they can claim it's higher risk to lend to the US govt.
my view is that this is all a bunch of priests arguing about how to best serve an mysterious god called "the market". rest assured whatever they decide to do will be best for themselves and shittier for us.
Theater. This happens every few years. It is high drama for political junkies. In the end, the military gets more money and things chug along as before. It is quickly forgotten.
