Delaying Nation’s Debt-Limit Increase Only Makes Matters Worse, Warns Elon Musk

Elon Musk speaks at the 2020 Satellite Conference and Exhibition in Washington, D.C., on March 9, 2020. (Win McNamee/Getty Images)

Industrialist Elon Musk stated that delaying the raising of America’s debt ceiling will only make consequences worse, as the United States is only a few weeks away from breaching the limit.

“In the end, all debts must be paid, just a question of when. Later makes it worse,” Musk posted in a May 8 tweet. He was responding to a tweet about Treasury Secretary Janet Yellen’s warning on Sunday that any failure to raise the national debt limit could result in economic chaos. Back in January, Yellen said that the government can only pay its bill through early June with the current debt limit of $31.4 trillion. The limit was hit in January. Washington now only has a few more weeks before the country risks breaching the ceiling.

In a May 6 tweet, The Kobeissi Letter, an industry-leading commentary on the global capital markets, warned that though the failure to raise U.S. debt ceiling would be catastrophic, taking on additional debt “is a crisis itself.”

Since 2008, the United States has added $22 trillion in debt—$8 trillion of which has been accumulated since 2020. It had taken the country 230 years to add its first $8 trillion in debt.

In 2022, the net interest expense on U.S. debt was approximately $475 billion, which comes to around 10 percent of the nation’s tax revenue.

“Within the next 10 years, total U.S. debt is estimated to hit $50 trillion with annual interest expense well over $1 trillion. Soon, interest will be the U.S. government’s largest expense. Each time the debt ceiling is raised, the crisis gets worse. We need a sustainable solution,” the tweet said.

Breaching the Debt Ceiling

In a May 1 letter (pdf) to House Speaker Kevin McCarthy (R-Calif.), Yellen revealed that the Treasury would be unable to continue satisfying the government’s financial obligations “potentially as early as June 1” in case Congress does not raise the debt limit.

“We have learned from past debt-limit impasses that waiting until the last minute to suspend or increase the debt limit can cause serious harm to business and consumer confidence, raise short-term borrowing costs for taxpayers, and negatively impact the credit rating of the United States,” the letter said.

“If Congress fails to increase the debt limit, it would cause severe hardship to American families, harm our global leadership position, and raise questions about our ability to defend our national security interests.”

Federal Reserve chair Jerome Powell has warned that failing to raise the debt limit would push the United States into “an unchartered territory.” The consequences to the American economy could be “highly uncertain.”

“No one should assume that the Fed can protect the economy from the potential short- and long-term effects of a failure to pay our bills on time.”

Raising Debt Limit

To resolve the issue of raising the debt ceiling, President Joe Biden is scheduled to meet with McCarthy on May 9. Both of them have been locked in limbo regarding the issue, with Biden asking Congress to raise the debt limit without any condition while McCarthy insisting that the GOP will not consider increasing the limit unless the president agrees to cut down future spending.

On April 29, House Republicans passed the “Limit, Save, Grow Act” that seeks to raise the borrowing limit by an additional $1.5 trillion while implementing spending cuts of $4.5 trillion over 10 years. However, Democrats have rejected the proposal, and refused to counter the offer.

On May 6, a group of 43 Senate Republicans wrote a letter to Senate Majority Leader Chuck Schumer (D-Calif.) saying that they “oppose raising the debt ceiling without substantive spending and budget reforms.”

In a May 1 tweet, Rep. Byron Donalds (R-Fla.) said that those who want to raise the debt limit without any conditions are “ignoring fiscal and economic realities.”

“We’re running up debts faster than we’ll EVER have an ability to pay off. China’s trying to negotiate AROUND the U.S. dollar to remove us from world currency reserve status. These are MAJOR issues.”