The United States’ debt has nearly tripled since the year of 2009, as the Congress has authorized trillions of dollars in spending over the last decade. As Kavan Choksi Finance Expert mentions, over this period, the ability of the US Treasury Department to borrow money to make payments on that debt has repeatedly run into a congressionally mandated limit on borrowing. This limit is known as the debt ceiling.
Kavan Choksi Finance Expert discusses what the United States debt ceiling actually is
The debt limit or ceiling was created by the Congress in 1917. It is responsible for setting the maximum amount of outstanding federal debt the U.S. government can incur. The Treasury Department of the United States reached its debt ceiling of $31.4 trillion in the January of 2023. Subsequent to months of debate, lawmakers voted in June to suspend the ceiling until January 2025. The US government has run a deficit averaging almost $1 trillion each year since 2001. This basically means that it spends a lot more funds than it receives through taxes and other revenue. In order to make up for this difference, the Treasury Department has to continue to borrow money for the purpose of financing payments that Congress has already authorized. As of June 2023, the total national debt of the United States stands at more than $32 trillion.
Over the years, the efforts to abolish or raise the debt ceiling have become a topic of heated debate among distinctive policymakers. A few lawmakers who decry government debt have used negotiations to alter the debt limit in order to force spending cuts. In fact, congressional brinkmanship over the issue has increasingly led to disruption, including shutdowns.
It is important to understand that congressional action to suspend or raise the does not essentially increase the financial commitments of the country, as decisions to spend the funds are legislated separately. As Kavan Choksi Finance Expert further mentions, any change to the debt ceiling requires majority approval in the House and sixty votes in the Senate.
It becomes necessary to suspend or raise the debt ceiling when the government has to borrow more funds to pay off its debts than is federally authorized. Raising the ceiling has been a relatively routine procedure for Congress for the last decades. Whenever the Treasury Department could no longer pay the government’s bills, Congress has acted fast. In fact, sometimes it unanimously voted to increase the limit on what it could borrow. The debt ceiling has been increased 78 times by the congress since 1960, most recently in 2021. 49 of these increases were implemented under Republican presidents, and 29 under Democratic presidents.
Congress may even opt to suspend the debt ceiling, or allow the treasury to supersede the debt limit for a temporary basis, instead of raising it by a specific amount. This move was relatively rare during the first ninety years of the ceiling’s existence. However, Congress has suspended the debt limit eight times since 2013, most recently in June 2023.
