As the United States continues to grapple with the ongoing COVID-19 pandemic, another looming crisis is on the horizon: the debt ceiling. The debt ceiling is a legal limit on the amount of money the government can borrow to fund its operations. Once the debt ceiling is reached, the government is unable to borrow any more money, which can lead to a default on its obligations.
The current debt ceiling was reinstated on August 1, 2019, at a level of $22 trillion. Since then, the government has been able to continue borrowing money to fund its operations, but the clock is ticking. The Treasury Department has estimated that the government will reach the debt ceiling sometime in the fall of 2021.
The debt ceiling has been a contentious issue in the past, with both Democrats and Republicans using it as a bargaining chip in budget negotiations. In 2011, the debt ceiling debate led to a downgrade of the United States’ credit rating and caused significant turmoil in financial markets.
The stakes are high this time around as well. If the debt ceiling is not raised, the government will be unable to pay its bills, including Social Security and Medicare payments, military salaries, and interest on the national debt. This could lead to a government shutdown, a default on the national debt, and a potential economic crisis.
The Biden administration has called on Congress to raise the debt ceiling, arguing that failure to do so would be catastrophic for the economy. However, Republicans have been hesitant to support a debt ceiling increase, citing concerns about the national debt and government spending.
As the deadline approaches, it is unclear how Congress will address the debt ceiling issue. Some lawmakers have proposed eliminating the debt ceiling altogether, while others have suggested tying it to specific spending cuts or reforms.
Regardless of the outcome, the debt ceiling debate is sure to be a contentious one. Brace yourself for a potentially bumpy ride as the United States faces yet another fiscal crisis.