Today, the economic situation in the US is still unstable to the extent that the US is facing the problem of raising its debt ceiling to avoid possible default, which undermines the economic development of the US and destabilize the global economy. In such a situation, the President and government have to make the right decision to meet interests of the US society. At this point, it is possible to refer to the article “Bernanke: Debt Ceiling Breach ”˜Calamitous’” by C. Isidore, which focuses on the problem of the rise of the debt ceiling and possible effects of this decision.
The author of the article stresses possible negative effects of raising the debt ceiling. To put it more precisely, this decision is likely to provoke the further increase of the unemployment rate. In addition, the rise of the debt ceiling will increase the pressure on the US economy in a long-run perspective for the government and public will have to pay off the debt. At the same time, the rise of the debt ceiling can undermine the credit rating of the US that may have a negative impact on the economic development because the change of the credit rating, or, to put it more precisely, its deterioration, will be a signal for investors that the US is not reliable enough and, what is more, the deterioration of the credit rating implies the inability of the state to serve its debt as good as it used to. Hence, the rise of the debt ceiling is likely to lead to extremely controversial outcomes.
In this respect, it is possible to refer to different theories to explain the problem of the rise of debt ceiling and its effects. For instance, Talcott Parsons’ Structural Functionalism views the rise of the debt ceiling as an important element of the socioeconomic development of the US. At first, the rise of the debt ceiling should pass through the adaptation stage, which implies that all groups within the society will come to agreement on the rise of the debt ceiling and the decision should meet interests of the entire nation.
Furthermore, the rise of the debt ceiling should lead to the goal attainment, which is the improvement of the economic development of the US. If the agreement has been attained and the goal defined the integration state should begin, when the rise of debt ceiling should occur. At the same time, it is necessary to take into consideration latency, for certain part of the society may oppose to the rise of the debt ceiling or be ignorant of its possible effects.
Furthermore, Ralf Dahrendorf’s Conflict theory implies that the decision on the rise of the debt ceiling is taken on the ground of the growing conflict between different groups within the society. There are different groups interested in the rise of the debt ceiling, for instance political and economic elite, whereas, on the other hand, there are groups, who may suffer from the rise of the debt ceiling, for instance, unemployed. Hence, the implementation of the decision on the rise of the debt ceiling can provoke conflict within the US society.
Finally, Norbert Eliash’s figuration power implies that the rise of the debt ceiling will be taken by the ruling elite on the ground of its power and its interests.
Isidore, C. “Bernanke: Debt Ceiling Breach ”˜Calamitous’” CNN Money. 2011.
Latham, Scott F. and Michael R. Braun. “The Performance Implications of Financial Slack during Economic Recession and Recovery: Observations from the Software Industry.” Journal of Managerial Issues. 20:1, 2008, p.30-42.