The Debt Ceiling: What is it?

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Wall Street Journal

Democrats (donkeys) vs Republicans (elephants) arguing about the idea of debt ceiling

Kelvin Mungai, CBN Staff

The debt ceiling is a legislative limit on the amount of debt that the federal government of the United States can legally borrow. This limit was set by Congress and has been in place since 1917, though the limit is susceptible to changes like increases or decreases. The whole purpose of having a debt ceiling is to ensure that the government does not spend more money than it takes in. This would lead to a higher level of national debt and potentially dangerous levels of inflation. 

The debt ceiling has been a source of controversy and debate in recent years, as the government has reached or exceeded the limit multiple times. When the debt ceiling is reached, the government can no longer borrow money, so it must rely on other means to fund its operations, such as selling assets or issuing new types of debt. This can lead to a government shutdown or other financial crises.

Recently, fears of the federal government hitting the debt ceiling have increased greatly and this isn’t without proper caution. The federal government is very close to reaching the debt ceiling. Congress can raise the limit before the deadline, but complications in Congress, such as House conservatives threatening to delay the process are making this become a scary situation. If Congress fails to raise the debt ceiling before the deadline then this would have national and worldwide economic consequences.

Essentially, the debt ceiling is a very important tool of Congress that’s also a source of controversy. While raising the debt ceiling may be necessary to fund important programs and services, it is also important to find a balance between borrowing and cutting spending to reduce the national debt.