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About the National Debt Ceiling

The U.S. Congress has been voting to raise the debt ceiling periodically since 1917.

The U.S. Congress has been voting to raise the debt ceiling periodically since 1917.

The United States federal debt ceiling is a catastrophe waiting to happen. While the ceiling is always raised, the never-ending periodic rise of borrowing power is a cycle without a foreseen end packed with bargaining levers.

What Is the Debt Ceiling?

The debt ceiling is important for all Americans to understand because it is the federal debt limit keeping the debt from growing beyond a certain point by law. This is the debt of all Americans so citizens should take this topic seriously.

The government spends more money than it receives and has been doing so since this democracy was created. The biggest difference between the national debt in years past and the present day is that the federal government receives trillions less in revenues than it pays out.

Current National Debt

As of January 2023, the national debt was more than 31 trillion dollars ($31,501,000,000,000). To bring this balance to zero, each citizen in the United States would have to shell out $94,000 (or $247,000 if we are only talking about U.S. taxpayers).

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Increasing Revenues

It’s possible for the government to make up the difference by selling more U.S. government bonds to investors. Much of this bond debt is now held by foreigners. For every month the government spends more than it brings in, the government runs a deficit, forcing it to borrow by selling U.S. Treasury Bonds.

Throughout recorded history, it has been common for countries to loan each other money. In 2022, debt owed by the federal, state, and local governments to foreign nations has accumulated a staggering 30 trillion dollars. The foreign nations that hold the most U.S. debt are Japan and China.

When the Ceiling Was Created

Prior to World War I, Congress would vote each time the Treasury needed to borrow money to give the Treasury. To create a more flexible way to go into debt, Congress created the debt ceiling on the federal debt in 1917.

In this current system, when the debt gets to the set limit, Congress votes to lift the ceiling. The vote often involves bargaining and shouting matches, making it more difficult to get the vote through. The vote has always gone through, but it is not always smooth sailing.

In 1995, President Clinton and Speaker Gingrich came to a debt ceiling raise deal only after the government experienced a shutdown. The deal spawned after a commitment was made to balance the budget before the dot-com bubble burst.

In 1995, President Clinton and Speaker Gingrich came to a debt ceiling raise deal only after the government experienced a shutdown. The deal spawned after a commitment was made to balance the budget before the dot-com bubble burst.

Raising the Ceiling

If the federal debt reaches the debt ceiling and Congress is not able to get a vote passed to do so, it’s the equivalent of not paying a credit card bill. Essentially, funds have already been spent and the government is trying to stay afloat financially.

Contrary to the belief of some people, not raising the debt ceiling does not cut spending. Failure to raise the ceiling could prove to be devastating. Congress has used it as a tool to persuade the sitting president to do things that this office wouldn’t normally do in order to make a deal to pass a law to raise the ceiling.

So what happens when the United States can’t pay its bills? What we have seen in history is the government having its credit rating dropped when it was close to defaulting on debt. This occurred in April of 2011 after the Standard & Poor's rating agency downgraded the U.S. to a credit score of AA+ from AAA just days after Congress voted to raise the debt limit with the Budget Control Act of 2011.

If the legislation does not get passed to raise the debt, the government is forced to cut spending on programs. In other words, the government will experience a shutdown. This will start with a cut to federally funded tourism and will extend to other program cuts. Eventually, the government will cut all but what it needs to run to provide national security.

After more time passes, you would see slower payments for social security benefits and paychecks to military personnel as the bills keep piling up. Let’s hope it never gets to that point. There are legal questions over the legality of the Treasury Department prioritizing bill payments where they are paying some on time and delaying or putting a complete halt on others.

Ultimately it hurts the public so everyone in Congress puts their seat at risk if this type of catastrophe occurs.

Long-term effects include losing investors' confidence globally because the United States cannot manage its finances. As a result, investors may demand higher interest rates for U.S. Treasury Bonds, costing U.S. taxpayers billions.

Speaker McCarthy says that he will work on cutting spending, but it remains unclear if he can get a vote passed in 2023 to raise the federal debt ceiling under his leadership. 

Speaker McCarthy says that he will work on cutting spending, but it remains unclear if he can get a vote passed in 2023 to raise the federal debt ceiling under his leadership. 

National Debt of Today

In January of 2023, the U.S. once again hit the debt ceiling, causing an ongoing political debate about government spending. Due to the political climate of these times, it may be difficult for Congress to raise the ceiling.

This content reflects the personal opinions of the author. It is accurate and true to the best of the author’s knowledge and should not be substituted for impartial fact or advice in legal, political, or personal matters.

© 2023 Joshua Crowder