About every year, including this year, Congress is tasked with increasing the de
ID: 1127657 • Letter: A
Question
About every year, including this year, Congress is tasked with increasing the debt ceiling that allows the government to continue borrowing. In past decades, such legislation would pass easily because it was authorizing the payment of expenses already incurred. However, in recent years, congressional leaders took the drastic approach to oppose raising the debt ceiling as a way to reign in government spending. Our government faces such a dilemma this April 28th. If these leaders are successful in preventing the debt ceiling from being raised, what would be some benefits and costs of this action?
Explanation / Answer
Ans)
Debt ceiling is limit that Congress impose on how much debt government can carry at given Time. When ceiling is reached treasury department cannot issue any more bonds or notes. By preventing raise in debt ceiling leaders wants government to spend and not to pay bills. When debt reaches ceiling treasury department stop issue notes and borrow from retirement funds which not include social security and Medicare. Moreover if government defaults on interest payments federal government cannot make monthly payments, government will prioritise spending band may stop many cherished programs as well effecting social security and Medicare programs.
However if Congress is successful in prevention of raising debt ceiling then it would lead to default unable to make payment. This would lower government credit in bond market . There will be higher interest rates.people won't get medical checkup,no social security. Government would find difficulty in paying its debt.