As the government shutdown continues and politicians remain at a standstill on lifting the debt ceiling, many people are left wondering how worried they should actually be. The truth is, if the debt ceiling isn’t lifted soon, it could have serious consequences for the US economy. In this article, we’ll discuss what would happen if the debt ceiling wasn’t raised and how to prepare your finances in this uncertain time. So if you’re wondering just how worried you should be about the looming deadline, read on to find out more.
What is the debt ceiling?
In the United States, the debt ceiling is the maximum amount of money that the government is allowed to borrow in order to finance its operations. The debt ceiling is set by Congress and it is raised periodically as needed. If Congress does not raise the debt ceiling, the government will not be able to borrow any more money and it will be forced to cut spending or default on its debts.
The debt ceiling has been a controversial issue in recent years. Some people believe that it is necessary to limit government borrowing in order to reduce the national debt. Others believe that the debt ceiling should be raised whenever necessary in order to avoid a government shutdown or default.
The current debt ceiling is $31.4 trillion and it was last raised in 2021. The next time it will need to be raised is sometime in 2023. If Congress does not act before then, the government could face a shut down or default on its debts.
Some people are concerned about the possibility of a government shutdown or default if the debt ceiling is not raised. However, it is important to remember that Congress has always eventually raised the debt ceiling when it has been needed. Therefore, it is likely that they will do so again in 2023.
The history of the debt ceiling
The debt ceiling is the statutory limit on the amount of money the federal government can borrow. The current debt ceiling is $31.4 trillion, and it was last raised in December 2021.
The debt ceiling has been a source of controversy in recent years, as some lawmakers have called for it to be raised or eliminated altogether. The debt ceiling was first enacted in 1917, when Congress established a limit of $11 billion for war-related borrowing. In 1939, the debt ceiling was raised to $45 billion, and it has been increased numerous times since then.
Some critics argue that the debt ceiling is unnecessary and that it only serves to create brinksmanship and uncertainty. They point to the 2011 debt ceiling crisis, when Congress nearly failed to raise the debt limit and the U.S. credit rating was downgraded, as evidence that the debt ceiling is more trouble than it’s worth.
Others argue that the debt ceiling is an important check on government spending and borrowing. They argue that without a limit on how much money the government can borrow, there would be no fiscal responsibility and lawmakers would be free to spend without consequence.
The debate over the debt ceiling is likely to continue in coming months as Congress debates how to address the nation’s growing debt problem.
Why is the debt ceiling a problem?
If the debt ceiling isn’t lifted, it could have a major impact on the economy. The debt ceiling is the limit on how much money the federal government can borrow. If the debt ceiling isn’t raised, the government won’t be able to borrow any more money and will default on its debt. This could lead to a financial crisis and a recession.
How can the debt ceiling be lifted?
There are a few different ways that the debt ceiling can be lifted. One way is for Congress to pass a law that would raise the debt ceiling. Another way is for the President to use his authority under the 14th amendment to raise the debt ceiling on his own.
The first option, passing a law to raise the debt ceiling, is obviously the preferred option since it would require Congressional approval. However, it’s not clear if Congress will be able to come to an agreement on this issue before the August 2nd deadline. If they can’t, then the President may have to take matters into his own hands and use his Constitutional authority to raise the debt ceiling.
Some people have argued that even if Congress doesn’t pass a law raising the debt ceiling, the President could still use his power under the 14th amendment to do so himself. This argument is based on the fact that the 14th amendment says “the validity of the public debt of the United States…shall not be questioned.”
However, it’s far from clear whether or not this option would actually be legal. There’s significant debate on this issue, and it’s possible that any decision made by the President in this situation could end up being challenged in court. So while it’s definitely possible that this option exists, it’s far from certain.
At this point, we’ll just have to wait and see what happens. It’s possible that Congress will reach an agreement and raise the debt ceiling before the August 2nd deadline. If not, then the President could be forced to take action on his own.
What happens if the debt ceiling isn’t lifted?
Without an increase in the debt ceiling, the U.S. government would not be able to borrow any more money and would have to rely on tax revenue and existing spending levels to fund its operations. This could lead to a partial shutdown of the government if Congress cannot agree on a budget. In addition, the U.S. Treasury would be unable to pay all of its bills in full and on time, which could cause a loss of confidence in the United States’ ability to repay its debts and result in higher interest rates.
Conclusion
In conclusion, not raising the debt ceiling would have serious consequences for our economy and our country as a whole. It is important that we remain vigilant in monitoring negotiations between Congress and the President over how to raise the debt ceiling so that it doesn’t become an issue again. We should also ensure that politicians understand their responsibility to manage public funds responsibly, or else risk crashing into a financial crisis with devastating long-term implications.
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