The Current Issue with the Debt Ceiling

Over the past few weeks, I’m sure you seen or heard people talking about the debt ceiling and the vast scenarios of which could happen if we default on our debt. Conservatives have been complaining about how the democrats are doing nothing and democrats are complaining about conservatives cutting too much. With all the controversy, we have yet to come to a solution.

What is the debt ceiling? Why is a debt ceiling important?

The debt ceiling is exactly what it sounds like - it’s the total amount of money the US government can spend. It’s important because it puts a limit on the total amount of the money the US government can spend.

What would happen if the debt ceiling isn’t raised?

It’s pretty simple, the government couldn’t spend more money. Funding would be cut off, government salaries wouldn’t be paid, Medicaid and social security would have issues, and above all, the government would default on its debt.

If the US were to default on its debt, we would be in a very bad situation, but I am here to tell you that wouldn’t happen. The VIX (the markets fear gauge) has barely moved at all, meaning wall street is strongly certain the ceiling will raise.

If you need more convincing, history speaks for itself. Over the past 10 years, the debt ceiling has been raised 7 times.

Problems raising the debt ceiling causes.

If Congress raises the ceiling every time they reach it, then you really don’t have a debt ceiling (you have a suggestion). Raising the debt ceiling solves short-term problems but causes massive long-term problems. By raising the debt ceiling, we are allowing the same issue that caused the debt to get to the ceiling (uncontrolled deficit spending) to continue. Without stopping deficit spending, we will continue to hit debt ceilings until we take on so much debt no one will buy debt from us. When this happens, even bigger issues arise.

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