{"id":573367,"date":"2023-05-07T00:00:00","date_gmt":"2023-05-06T21:00:00","guid":{"rendered":"https:\/\/en.buradabiliyorum.com\/10-questions-answered-on-the-debt-limit\/"},"modified":"2023-05-07T00:00:00","modified_gmt":"2023-05-06T21:00:00","slug":"10-questions-answered-on-the-debt-limit","status":"publish","type":"post","link":"https:\/\/buradabiliyorum.com\/en\/10-questions-answered-on-the-debt-limit\/","title":{"rendered":"#10 questions answered on the debt limit"},"content":{"rendered":"<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_85 counter-hierarchy ez-toc-counter ez-toc-custom ez-toc-container-direction\">\n<p class=\"ez-toc-title\" style=\"cursor:inherit\">Table of Contents<\/p>\n<label for=\"ez-toc-cssicon-toggle-item-6a42d7070f8e5\" class=\"ez-toc-cssicon-toggle-label\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #dd3333;color:#dd3333\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #dd3333;color:#dd3333\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/label><input type=\"checkbox\"  id=\"ez-toc-cssicon-toggle-item-6a42d7070f8e5\" checked aria-label=\"Toggle\" \/><nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/buradabiliyorum.com\/en\/10-questions-answered-on-the-debt-limit\/#What_is_the_debt_ceiling\" >What is the debt ceiling?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/buradabiliyorum.com\/en\/10-questions-answered-on-the-debt-limit\/#How_high_is_the_debt_ceiling\" >How high is the debt ceiling?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/buradabiliyorum.com\/en\/10-questions-answered-on-the-debt-limit\/#What_happens_if_the_US_defaults_on_its_debt\" >What happens if the U.S. defaults on its debt?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/buradabiliyorum.com\/en\/10-questions-answered-on-the-debt-limit\/#Why_does_the_US_have_a_debt_ceiling\" >Why does the U.S. have a debt ceiling?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/buradabiliyorum.com\/en\/10-questions-answered-on-the-debt-limit\/#How_many_times_has_the_debt_ceiling_been_raised\" >How many times has the debt ceiling been raised?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-6\" href=\"https:\/\/buradabiliyorum.com\/en\/10-questions-answered-on-the-debt-limit\/#Has_the_US_ever_defaulted_on_its_debt\" >Has the U.S. ever defaulted on its debt?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-7\" href=\"https:\/\/buradabiliyorum.com\/en\/10-questions-answered-on-the-debt-limit\/#What_happens_to_Social_Security_payments_and_other_benefits_if_the_US_defaults\" >What happens to Social Security payments and other benefits if the US defaults?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-8\" href=\"https:\/\/buradabiliyorum.com\/en\/10-questions-answered-on-the-debt-limit\/#What_happens_to_my_investments_if_the_US_defaults\" >What happens to my investments if the U.S. defaults?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-9\" href=\"https:\/\/buradabiliyorum.com\/en\/10-questions-answered-on-the-debt-limit\/#What_is_Washington_doing_to_address_the_debt_limit\" >What is Washington doing to address the debt limit?\u00a0\u00a0<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-10\" href=\"https:\/\/buradabiliyorum.com\/en\/10-questions-answered-on-the-debt-limit\/#How_much_higher_will_the_debt_limit_rise\" >How much higher will the debt limit rise?<\/a><\/li><\/ul><\/nav><\/div>\n<p><img decoding=\"async\" src=\"https:\/\/thehill.com\/wp-content\/uploads\/sites\/2\/2023\/05\/news-illustration_050323mm-gn-adobe-stock-getty_debt-ceiling.png?w=900\" \/><\/p>\n<div>\n<p>As Congress battles over how to keep the nation from defaulting on its debt ahead of a looming deadline, Americans are getting a primer on the country\u2019s borrowing limit.\u00a0<\/p>\n<p>This week, the Treasury Department warned it could run out of \u201cextraordinary measures\u201d to stave off a federal default as soon as June 1. If the U.S. runs out of cash to pay its bills, experts fear the global economy and financial system could face a catastrophe.<\/p>\n<aside class=\"ad-unit ad-unit--mr1_ab\"><\/aside>\n<p>Here\u2019s ten questions and answers about the debt limit, what\u2019s at stake and what Washington is doing about it.<\/p>\n<h2><span class=\"ez-toc-section\" id=\"What_is_the_debt_ceiling\"><\/span><strong>What is the debt ceiling?<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>The debt limit \u2014 also referred to as the debt ceiling or the country\u2019s borrowing limit \u2014 is a cap on how much money the Treasury can owe to cover the country\u2019s bills.<\/p>\n<p>Raising or suspending the debt limit doesn\u2019t authorize new spending. Doing so simply allows the government to keep borrowing money to pay expenses that were already <a href=\"https:\/\/buradabiliyorum.com\/en\/category\/download-scripts-themes-apps\/\" data-internallinksmanager029f6b8e52c=\"9\" title=\"Download Scripts &amp; Themes &amp; Apps\" target=\"_blank\" rel=\"noopener\">app<\/a>roved by Congress and the White House.<\/p>\n<h2><span class=\"ez-toc-section\" id=\"How_high_is_the_debt_ceiling\"><\/span><strong>How high is the debt ceiling?<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>The debt ceiling was last raised to roughly $31.4 trillion in late 2021 after a tumultuous showdown between the White House and Senate Republicans.<\/p>\n<p>The national debt hit that threshold in January, prompting the Treasury to take emergency measures to buy time for congressional action. Those measures involve suspending investments of certain funds that count against the debt limit, the department <a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/home.treasury.gov\/system\/files\/136\/Description_Extraordinary_Measures-2023_01_19.pdf\">explained<\/a> at the time.\u00a0<\/p>\n<p>House Republicans introduced a bill \u2014 the Limit, Save, Grow Act of 2023 \u2014 last month that would raise the debt limit by $1.5 trillion or through March 2024, whichever occurs first. But they attache a host of partisan spending proposals to the plan that most Democrats will not support.<\/p>\n<aside class=\"ad-unit ad-unit--mr2_ab\"><\/aside>\n<h2><span class=\"ez-toc-section\" id=\"What_happens_if_the_US_defaults_on_its_debt\"><\/span><strong>What happens if the U.S. defaults on its debt?<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>Experts and lawmakers have warned of disastrous effects to the economy if the federal government defaults.<\/p>\n<p>While experts expect the nation could see a recession sometime later this year, they warn a federal default would likely speed up that timeline, raising the threat of a drastic slowdown.<\/p>\n<p>\u201cIt would affect lending and borrowing and financial markets,\u201d New York University economics professor Mark Gertler told The Hill, adding that the combination of less borrowing and less spending would trigger recession.<\/p>\n<aside class=\"ad-unit ad-unit--mr3_ab\"><\/aside>\n<p>The nation would also likely see higher interest rates on its debt in the event of a default, as the U.S. would be seen as a less trustworthy borrower. Higher borrowing  would not slow the economy and make it difficult for the U.S. to power through a potential recession<\/p>\n<p>U.S. Treasury bonds are currently regarded as among the world\u2019s safest assets, affording the government a reputation as a reliable borrower on the global stage. That standing allows the government to borrow more money to fulfill its financial obligations.<\/p>\n<h2><span class=\"ez-toc-section\" id=\"Why_does_the_US_have_a_debt_ceiling\"><\/span><strong>Why does the U.S. have a debt ceiling?<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>The debt ceiling was created through the Second Liberty Bond Act of 1917, which gave the Treasury Department the authority to issue bonds and borrow money to fund spending approved by Congress and the president, according to a <a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/crsreports.congress.gov\/product\/pdf\/RL\/RL31967\">2015 report from the CRS<\/a>.<\/p>\n<aside class=\"ad-unit ad-unit--mr4_ab\"><\/aside>\n<p>Before the Second Liberty Bond Act,  the Treasury Department could only borrow money and issue bonds according to specific instructions from Congress. As the size of the U.S. economy and federal budget exploded during World War I, lawmakers were unable to keep up with the volume and complexity of federal spending.<\/p>\n<p>To keep the the nation\u2019s finances in check, the Second Liberty Bond Act imposed a cap on how much debt the Treasury could take on to fund spending, thus creating the debt limit.<\/p>\n<p>In subsequent years, changes were made to allow the Treasury \u201cmore flexibility in debt management and to allow modernization of federal financing,\u201d CRS noted.<\/p>\n<aside class=\"ad-unit ad-unit--mr5_ab\"><\/aside>\n<h2><span class=\"ez-toc-section\" id=\"How_many_times_has_the_debt_ceiling_been_raised\"><\/span><strong>How many times has the debt ceiling been raised?<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>Lawmakers have acted to \u201cpermanently raise, temporarily extend, or revise the definition of the debt limit\u201d on 78 different occasions in the past 63 years, the Treasury Department <a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/home.treasury.gov\/policy-issues\/financial-markets-financial-institutions-and-fiscal-service\/debt-limit\">says on its website<\/a>.<\/p>\n<p>Forty-nine of those instances occurred under Republican administrations, and 29 happened under Democratic administrations.<\/p>\n<h2><span class=\"ez-toc-section\" id=\"Has_the_US_ever_defaulted_on_its_debt\"><\/span><strong>Has the U.S. ever defaulted on its debt?<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>A deliberate default by Congress would be unprecedented in recent history, experts say.\u00a0<\/p>\n<aside class=\"ad-unit ad-unit--mr6_ab\"><\/aside>\n<p>There is debate around whether the nation technically experienced a brief default in 1979, after the federal government missed some payments to investors. The incident was chalked up to technical issues at the time, but not without some added costs, research in the years that followed showed.<\/p>\n<p>\u201cBecause of severe technical difficulties, the U.S. government was unable to repay investors in Treasury bills (T-bills) in late April through early May, 1979. This incident led to a 60 basis point increase in T-bill rates at the initial occurrence of the default,\u201d finance professors Terry L. Zivney and Richard D. Marcus wrote in their <a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/onlinelibrary.wiley.com\/doi\/abs\/10.1111\/j.1540-6288.1989.tb00353.x\">1989 piece<\/a>, \u201cThe Day the United States Defaulted on Treasury Bills.\u201d\u00a0<\/p>\n<p>\u201cThe default apparently warned investors that Treasury issues were not completely riskless,\u201d they also wrote.<\/p>\n<aside class=\"ad-unit ad-unit--mr7_ab\"><\/aside>\n<h2><span class=\"ez-toc-section\" id=\"What_happens_to_Social_Security_payments_and_other_benefits_if_the_US_defaults\"><\/span><strong>What happens to Social Security payments and other benefits if the US defaults?<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>Experts warn anyone relying on a check from the government could be a bind if the nation defaults.<\/p>\n<p>In a <a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/www.brookings.edu\/2023\/04\/24\/how-worried-should-we-be-if-the-debt-ceiling-isnt-lifted\/\">recent piece<\/a>, Brookings Institution senior fellows Wendy Edelberg and Louise Sheiner said <a href=\"https:\/\/buradabiliyorum.com\/en\/category\/social-mediaa\/\" data-internallinksmanager029f6b8e52c=\"1\" title=\"Social Media\" target=\"_blank\" rel=\"noopener\">Social<\/a> Security beneficiaries, agencies and contractors could see their payments delayed if the U.S. runs out of cash.<\/p>\n<p>While federal agencies would still possess \u201clegal authority, provided by Congress, to obligate funds,\u201d they warn federal workers could also have to worry about delayed paychecks.<\/p>\n<p>The Treasury would still be obligated to pay federal workers if they U.S. defaults, but experts say they may be unable to do so until the debt limit is raised.<\/p>\n<h2><span class=\"ez-toc-section\" id=\"What_happens_to_my_investments_if_the_US_defaults\"><\/span><strong>What happens to my investments if the U.S. defaults?<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>A federal default would likely cause a meltdown in financial markets as trillions of dollars in U.S. Treasury bonds \u2014 a linchpin of the global financial system \u2014 plummet in value.<\/p>\n<p>Edelberg told The Hill in an interview that the stock market could go into a free-fall if the U.S. defaults., with firms \u201claying off workers en masse because now they are worried about what the economy is going to look like over the next few years.\u201d<\/p>\n<p>\u201cEven the brinkmanship we saw in 2011 imposed costs on the economy. During that crisis, consumer confidence and the stock market plummeted. It also harmed the international reputation of the US,\u201d said John Buhl, a researcher at the Urban Institute, said. <\/p>\n<p>\u201cA repeat of that, let alone an actual default, would make the Fed\u2019s attempt at a \u2018soft landing\u2019 a lot more difficult,\u201d Buhl said.<\/p>\n<h2><span class=\"ez-toc-section\" id=\"What_is_Washington_doing_to_address_the_debt_limit\"><\/span><strong>What is Washington doing to address the debt limit?\u00a0\u00a0<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>Republicans are lining up behind the House GOP bill, which they have called a good starting place in bipartisan debt limit talks. But Democrats, who oppose tying any spending cuts to raising the debt limit, have come out in strong opposition against the plan.\u00a0<\/p>\n<p>House Republicans have proposed capping government spending  at fiscal 2022 levels and limiting spending growth to 1 percent every year for the next decade.\u00a0<\/p>\n<p>Other proposals featured in the bill would impose tougher work requirements for programs like Medicaid and the Supplemental Nutrition Assistance Program, put an end to popular student loan actions implemented under the Biden administration, and target parts of a signature economic bill passed by Democrats last year without GOP support.<\/p>\n<p>Democrats have instead pushed for raising the debt limit in a \u201cclean\u201d bill without conditions after Republicans approved three debt limit increases under former President Trump without reducing the debt.<\/p>\n<p>But Republicans have drawn red lines against raising the limit without fiscal reforms.\u00a0<\/p>\n<p>Members expect more information about next steps following Biden\u2019s scheduled meeting with Speaker Kevin McCarthy (R-Calif.) and other congressional leaders on May 9.\u00a0<\/p>\n<h2><span class=\"ez-toc-section\" id=\"How_much_higher_will_the_debt_limit_rise\"><\/span><strong>How much higher will the debt limit rise?<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>The  national debt subject to the borrowing limit is on track to potentially reach $52 trillion in 2033, according to <a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/www.cbo.gov\/publication\/58946#_idTextAnchor003\">a February report<\/a> from Congressional Budget Office.<\/p>\n<p>The CBO also projected the federal budget deficit would reach $1.4 trillion in fiscal 2023 and warned that future annual deficits would average $2 trillion over roughly the next decade.<\/p>\n<p>Republicans and Democrats have offered ideas on how to address the nation\u2019s deficits, but both sides have been far apart in their approaches.\u00a0<\/p>\n<p>Republicans have pushed for defense spending increases with sharp reductions in nondefense spending to tackle future deficits. Democrats have instead pressed for tax hikes on the wealthy to bring in more revenue to go toward deficit reduction and help cover boosts to nondefense spending.<\/p>\n<\/div>\n<p>Copyright 2023 Nexstar Media Inc. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.<\/p>\n<blockquote><p><strong><span style=\"color: #ff6600;\">If you liked the article, do not forget to share it with your friends. Follow us on\u00a0<span style=\"color: #ff0000;\"><a style=\"color: #ff0000;\" href=\"https:\/\/news.google.com\/publications\/CAAqBwgKMLG0nwswvr63Aw\" target=\"_blank\" rel=\"nofollow noopener noreferrer\">Google News<\/a><\/span>\u00a0too, click on the star and choose us from your favorites.<\/span><\/strong><\/p><\/blockquote>\n<blockquote>\n<p style=\"text-align: center;\">For forums sites go to <span style=\"color: #ff9900;\"><a style=\"color: #ff9900;\" href=\"https:\/\/forum.buradabiliyorum.com\/\" target=\"_blank\" rel=\"noopener\">Forum.BuradaBiliyorum.Com<\/a><\/span><\/strong><\/p>\n<\/blockquote>\n<blockquote>\n<p style=\"text-align: center;\"><strong>If you want to read more <a href=\"https:\/\/buradabiliyorum.com\/en\/category\/news\/\" data-internallinksmanager029f6b8e52c=\"2\" title=\"News\" target=\"_blank\" rel=\"noopener\">News<\/a> articles, you can visit our <span style=\"color: #ff9900;\"><a style=\"color: #ff9900;\" href=\"https:\/\/en.buradabiliyorum.com\/news\/\" target=\"_blank\" rel=\"noopener\">News category.<\/a><\/span><\/strong><\/p>\n<\/blockquote>\n<p><span style=\"color: black;\"><a style=\"color: #ff9900;\" href=\"https:\/\/thehill.com\/business\/3990884-10-things-americans-should-know-about-the-debt-limit\/\" target=\"_blank\" rel=\"noopener\">Source<\/a><\/span><\/p>\n","protected":false},"excerpt":{"rendered":"<p>As Congress battles over how to keep the nation from defaulting on its debt ahead of a looming deadline, Americans are getting a primer on the country\u2019s borrowing limit.\u00a0 This week, the Treasury Department warned it could run out of \u201cextraordinary measures\u201d to stave off a federal default as soon as June 1. If the&#8230;<\/p>\n","protected":false},"author":1,"featured_media":573368,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"fifu_image_url":"https:\/\/thehill.com\/wp-content\/uploads\/sites\/2\/2023\/05\/news-illustration_050323mm-gn-adobe-stock-getty_debt-ceiling.png?w=1280","fifu_image_alt":"","footnotes":""},"categories":[70897],"tags":[117,134418,134353,73798,80445,124783,134354,134446],"class_list":["post-573367","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-news","tag-business","tag-congress-blog","tag-court-battles","tag-defense","tag-healthcare","tag-international","tag-nexstar-media-wire-news","tag-sunday-talk-shows"],"_links":{"self":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/posts\/573367","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/comments?post=573367"}],"version-history":[{"count":0,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/posts\/573367\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/media\/573368"}],"wp:attachment":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/media?parent=573367"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/categories?post=573367"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/tags?post=573367"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}