The debt limit, also known as the “statutory debt ceiling,” is a legal cap on the amount of money the U.S. government can borrow. This cap is currently set at $31.4 trillion, and the government has reached its limit.
What Happens if the Limit is Not Raised?
If the debt limit is not raised, the government will be unable to borrow any more money, which would lead to a shutdown of many government services and a potential economic crisis. The last time the debt limit was not raised promptly, in 2011, led to a downgrade of the U.S. credit rating and a significant drop in the stock market.
The current administration, along with many economists and lawmakers, is calling for a significant increase in the debt limit to prevent such a crisis from happening again. They argue that the government needs to be able to borrow money to fund essential services and stimulus measures that are needed to support the economy during the ongoing coronavirus pandemic.
Disagreement
However, not everyone agrees with this position. Some conservative lawmakers and groups argue that the debt limit should not be raised, as it would add to the already staggering national debt and could lead to inflation and long-term economic problems.
Wrap Up
The debate over the debt limit is a complex one, with valid arguments on both sides. However, the government needs to be able to borrow money to fund essential services and support the economy during a crisis. Not raising the debt limit could lead to a government shutdown and a potential economic catastrophe. It remains to be seen how lawmakers will ultimately decide to handle this issue, but it is clear that a decision needs to be made soon to avoid a potential crisis.