The debt ceiling is the amount of money that America can borrow. It is the limit set by Congress and the national debt cannot rise beyond this limit because it can create economic problems in the nation. However, now the economic condition of US is so bad that the government deficit has ballooned to $14 trillion and the debt for each person on average is supposed to be $45,300.
America’s debt ceiling issue
At the present moment, the debt ceiling of America is $14.294 trillion but if the rate of borrowings go on the way it is running, then the debt ceiling cap will be touched pretty soon. The government deficit, as said before, has already reached a staggering $14 trillion. Thus, there have been discussions on the need to raise the debt ceiling. But, this won’t be much of a big deal for the Congress as they have already done it at least six times in the past three years. The original idea in regards to the debt ceiling was that it would keep control of the national debt. However, now the economic status of the country has reached such a level that the purpose of exerting control over the debt is not served. If the debt ceiling is not raised, America may have to default on most of its financial obligations. This could result in loss of millions of Jobs.
People, financial experts, and even the politicians have been participating in furious debates over the necessity of raising the US debt ceiling. Most of the states and local governments have been forced to increase their debts over the past few years. As a result, there was an increase in the national debt. This again resulted in fewer government grants and increase in taxations. Thus, more and more people have started defaulting on their debt payments. This again resulted in the increase of the household debt.
All of these events resulted from the economic downturn of the world and the country too after the recession of 2007-2009 and the bad financial habits of most of the consumers. However, the chairman of the House Budget Committee opined that if the debt ceiling is to be raised the government should also include new budgeting techniques and spending cuts in their financial planning.
So, the idea is that the debt ceiling would have to be increased but in turn the government will have to rework a budget in order to cut down on the expenses. In addition, the people of America will have to become much more responsible towards their finances so that they can avoid incurring any more debt. Otherwise, the investment portfolio of the country is bound to suffer and the value of bonds and stocks are going to sink (Top image: Flickr | Images_of_Money).
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