NewsNational Politics

Actions

What exactly is the debt ceiling?

And how would a default impact your family?
Sept 11 AP Poll Civil Liberties
Posted at 12:34 PM, Sep 30, 2021
and last updated 2021-09-30 17:04:30-04

WASHINGTON, D.C. — Congress is taking action Thursday to avert a government shutdown. However, lawmakers are doing so by not addressing the debt ceiling.

Treasury Secretary Janet Yellen has said if Congress doesn't raise it by October 18, America will default on its financial obligations for the first time in history.

WHAT IS THE DEBT CEILING?

The debt ceiling is the amount of money the government can borrow to pay its bills, somewhat like your credit card limit.

Currently, the debt ceiling is $28.4 trillion, which is right around the amount of federal debt the country has accumulated.

If you are wondering if all countries have to deal with the debt ceiling, it is for the most part a uniquely American issue.

The United Kingdom, Japan, Canada, Germany, and France don't have debt ceiling votes like this.

Only two countries have debt limit rules, Denmark and Poland. However, economists say it's not really controversial in those countries.

The debt ceiling issue exists in the United States mainly because of our Constitution.

Article 1, Section 8 says “Congress shall have Power {..} to borrow Money on the credit of the United States.”

In 1917, during World War I, Congress gave the Treasury Department more flexibility to borrow money.

The first official debt limit was set at $45 billion in 1939, according to the Bipartisan Policy Center.

According to the Treasury Department's website, since 1960, Congress has acted 78 separate times to raise the debt limit.

America has never let it lapse, although lawmakers came close during the Obama presidency.

THE DEBATE

Why is the country facing a debate over the debt ceiling? In short, because of disagreements between Republicans and Democrats.

Sen. Chuck Schumer (D-N.Y.) leads Democrats in the U.S. Senate.

He said on the floor this week about the possibility of default, "Time is short. The danger is real."

The reason the country is facing a possibility of default is Schumer wants Republicans to pass a debt limit increase in a bipartisan fashion.

However, Sen. Mitch McConnell (R-K.Y.) has made it clear Republicans aren't interested in raising the debt ceiling while Democrats are in charge and are proposing trillions of dollars in new spending.

"Our Democratic colleagues will have to do it alone," McConnell said this week.

Democrats are capable of raising the debt limit through the reconciliation process, but that has been rejected over concerns it would procedurally take too long.

As a result, everything from social security checks to military pay hangs in the balance.