Debt ceiling: what the heck is it?
This week we will be discussing aspects related to the US debt ceiling. If you’re unfamiliar with the term, here’s a quick summary.
The debt ceiling is A legal limit on the amount of government bonds the U.S. government is allowed to borrow. This is effectively intended to keep the government from spending more than it budgeted, but it has been a source of political controversy in recent years as lawmakers debate whether to raise the cap.
A debt ceiling does not limit how much a government can spend, but rather how much it can borrow to finance that spending. Congress has the power to raise or lower the debt ceilinghas been addressed many times in the past.
Think of it like a government credit card limit. Just like there are limits on how much you can borrow with a credit card, governments also have limits on how much you can borrow. Sometimes they raise it because the government needs to borrow more money to cover the costs of schools, roads, the military, etc. It has caused some problems in the past when Congress disagreed on whether to raise it.
Since the modern debt ceiling was first set in 1917, Congress has raised this limit more than 100 times. The frequency of increases has changed over time, with some times seeing multiple increases in a year and others continuing for years.
A government shutdown or default is something we all want to avoid.
