What is the US debt ceiling?
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Trump called for the elimination of the debt ceiling on Thursday. Here’s what to know about the statutory limit. Donald Trump abruptly rejected a bipartisan plan to prevent a government shutdown before the Friday deadline and called for the outright elimination of the debt ceiling.
The US is one of the few countries with a statutory limit on how much debt the federal government can accumulate. Here’s what to know about the US debt ceiling. The debt ceiling is the limit on the amount of money the US government can borrow to pay for services, such as social security, Medicare and the military.
Each year, the government takes in revenue from taxes and other streams, such as customs duties, but ultimately spends more than it takes in. This leaves the government with a deficit, which has ranged from $400bn to $3tn each year over the last decade. The deficit left at the end of the year ultimately gets tacked on to the country’s total debt.
To borrow money, the US treasury issues securities, like US government bonds, that it will eventually pay back with interest. Once the US government hits its debt limit, the treasury cannot issue more securities, essentially stopping a key flow of money into the federal government.
Congress is in charge of setting the debt limit, which currently stands at $31.4tn. The debt ceiling has been raised 78 times since 1960, under both Democrat and Republican presidents. At times, the ceiling was briefly suspended and then reinstated at a higher limit, essentially a retroactive raising of the debt ceiling.
