Debt ceiling: what is it all about?
During this week we will be discussing aspects related to the US debt ceiling, so in case you are not au fait with the term, here is a little summary.
The debt ceiling is one legislative limit on the amount of national debt that the United States government is authorized to borrow. It’s actually meant to ensure the government doesn’t spend more than it can afford, but it’s been a source of political controversy in recent years as lawmakers debate whether or not to raise the cap.
The debt ceiling does not limit how much money the government can spend, but rather the amount it can borrow to finance the expenditure. The US Congress has the power to raise or lower the debt ceilingand it has been brought up many times in the past.
You could say it̵[ads1]7;s like a credit card limit for the government. Just as you have a limit to how much money you can borrow on your credit card, the government also has a limit to how much money it can borrow. Sometimes they raise it because the government needs to borrow more money to pay for things like schools, roads and the military. It has caused some problems in the past when Congress disagrees – yes, it happens quite a bit – on whether or not to take it up.
Since the modern debt ceiling was first established in 1917, Congress has raised the limit more than 100 times. The frequency of increases has varied over time, with some periods of multiple increases in a single year and others going several years without changes.
A government shutdown or default on debt payments is what we all want to avoid.