U.S. Debt Ceiling
Duncan Presant - May 31, 2023
The Debt Ceiling is a legislative limit set by the United States Congress on the maximum amount of debt the federal government can borrow to fund its operations.
U.S. Debt Ceiling: a brief overview
The Debt Ceiling is a legislative limit set by the United States Congress on the maximum amount of debt the federal government can borrow to fund its operations. The system was created during World War 1 to simplify borrowing. Before then, any new spending measure required approval from Congress. The current debt limit is $31.381 trillion and was reached in late January. Since then, the U.S. treasury has invoked “extraordinary measures” so that the U.S. can pay its bills and avoid default; however, these funds could run out as early as June 1st .
Historically, when the U.S. reached its maximum allotted debt, Congress would raise the debt ceiling, which enables the U.S. government to borrow more money to pay its obligations. This occurs quite regularly, as Congress has raised the debt ceiling 78 times since 1960. If the U.S. were to default, there would be a pause on tens of billions of dollars of payments, including social security, Medicare, and interest on past debt. This would likely lead to downgrades of the country’s credit rating, increased borrowing costs, and broader economic instability.
Click here to continue reading...