How Close Is the U.S. to Hitting the Debt Ceiling? How Bad Would That Be?

[Celerity]

The United States has a cap on the amount of money it can borrow. That means it can run out of cash if the limit isn’t lifted.

https://www.nytimes.com/article/debt-ceiling-us-economy.html

https://archive.ph/mnd7A



Washington is gearing up for another big fight over whether to raise or suspend the nation’s debt limit, with Treasury Secretary Janet L. Yellen warning last week that the United States will reach its existing borrowing cap of $31.4 trillion on Thursday.

The United States borrows huge sums of money by selling Treasury bonds to investors across the globe and uses those funds to pay existing financial obligations, including military salaries, safety net benefits and interest on the national debt. Once the United States hits the cap, Treasury can use “extraordinary measures” — suspending some investments and exchanging different types of debt — to try to stay beneath the cap for as long as possible. But eventually, the United States will need to either borrow more money to pay its bills or stop making good on its financial obligations, including possibly defaulting on its debt.

Responsibility for lifting or suspending the borrowing cap falls to Congress, which must get a simple majority in both the House and Senate to vote for any change to the debt limit. Raising the debt limit has become a perennial fight, with Republican lawmakers using it as leverage to try to force spending cuts. This year is shaping up to be the messiest fight in at least a decade. Republicans now control the House and they have adopted new rules governing legislation that make it more difficult to raise the debt limit and strengthen Republicans’ ability to demand that any increase be accompanied by spending cuts. Senate Republicans have also insisted that increases to the debt limit should be tied to “structural spending reform.”

President Biden has said he will oppose any attempt to tie spending cuts to raising the debt ceiling, raising the likelihood of a protracted standoff. All of this drama raises the question of what the debt limit really is, how it got here and why the United States does not do away with debt limit entirely and spare the nation from its periodic face-off with an economic time bomb.

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[TigressDem]

1. Link to US Debt Clock

https://www.usdebtclock.org/

[Celerity]

2. thanks