National Debt Ceiling
July 28, 2011
To Americans it will come as no surprise that the government has an obscene amount of debt. This debt continues to grow every day. Some of the major reasons the government is now in so much debt include tax cuts, health care spending, wars and stimulus packages. The question is when does it stop and is there even a point at which they are required to stop adding to their debt? The fact of the matter is that there is a stopping point called the national debt ceiling.
The national debt ceiling was established by Congress in 1917 and was set up as an overall limit to what the government could borrow. This was established because at the time our nation was at war and needed funding for it. So, Congress decided to allow the government to borrow money as needed as long as it didn’t pass a set limit. It is much like a credit card in that we can borrow on credit as long as we do not go over the card limit. This is essentially what the government is dealing with as it spends and spends. At this point many people are probably wondering why this is so important. In recent months the Treasury has warned officials that the debt was climbing closer to the limit. Most recently the government has issued statements indicating that it has reached the current ceiling which is set at 14.3 trillion dollars. This means that the government is no longer able to borrow money in order to pay its’ obligations.
The issue now is where does the government go from here? Many of their consequent actions will depend on what Congress decides to do. If Congress agrees to raise the limit yet again then we can begin borrowing hence forth. If stick to the limit then the country will be technically be in default and then there will be consequences as a result. Some of those consequences can be quite substantial including hiccups with the stock market. Nevertheless, the government has been at a stand-still on this issue due to pressures to cut the deficit before any other decisions will be made.
In the end the national debt ceiling is an important part of the government spending and right now is a truly important issue. The real question is still to be answered though and that is if the ceiling is raised yet again will the issues ever be resolved? We many never know whether or not the nation will be able to eradicate its’ debt but it is an issue to be aware of because it can affect many more things than people think.
