Essay on The Dangers of The Debt Ceiling

There is a widespread concern about rising levels of debt. Debt can become disastrous for those who live alone or those families who are already having problems with supporting their family. The people who might be struck by debt, they might have trouble recovering. Debt can cause Americans to lose their homes and stability they need to feed, and shelter their families. Although debt comes upon us Americans quickly, people can see debt as terrible thing to be stuck with. It has many disadvantages that can devastate to people.

The growing national deficit is a looming problem in the United States now more than ever. The national debt is constantly increasing and government spending is out of control. If these issues are not solved then they could spell disaster for the nation’s economy when the infamous debt ceiling is finally reached. Currently the national policy on the debt is to continue raising the debt limit until a solution is found that is agreeable between both parties in Congress. The two main issues of over spending and the constant raising of the debts ceiling by Congress can both be resolved by government spending reform, balancing the federal budget and initiating pro-growth policies in order to increase the government’s tax revenue.

In 1917, the United States Congress applied the concept of a "debt ceiling". Prior to 1917, Congress had to directly authorize the amount of each borrowing. The debt ceiling was put in place to provide more flexibility to finance the US involvement in World War I. After the application of the debt ceiling, the United States Treasury could borrow any amount needed as long as it keeps the total at or below the authorized ceiling. I believe a debt ceiling is a very necessary component of American politics as long as it is used correctly; however, it has been abused by frequent increases, and should be monitored more effectively.

This growth in national debt has blunt consequences on inflation, interest rates and growing economy. Foreign control of large amounts of government debt means that the taxes will have to be raised to repay debt and percentage owned to overseas governments which is not acceptable. Assuming that trade deficiency also exists it will lead to depreciation of dollar which effect its position as a reserve currency, and if during this process any new currency emerge as a replacement of reserve currency, higher interest rates will be required to sell the debt to foreign countries (Inflation). Raised interest rates have a negative impact on the economy and high accumulation of debts leads to high interest rates (Spending). Hence the economy suffers. This means that the funds for government programs like Social Security and Medicare are not enough (Economic Progress Under Obama). Another consequence of high national debt is the reduced flexibility in fiscal policy (Spending).

Many United States' citizens are unaware of the country's current financial state. Many assume that one of the world's wealthiest countries could never be in debt. This is untrue however, and, in fact, the country with the greatest income per capita is in major debt. This study will examine possible solutions to reducing the United States' national budget deficit.

Some has likened the United States current debt problems as the “Titanic.” A foreboding doom that will affect every citizen in America. One may ask about where and who this problem started with, one will probably obtain different answers. Currently, the United States credit is maxed out and credit rating could be affected even if payments continues to be made. It has also been said by the president that even Social Security and Medicare recipients may not obtain their money if the two August deadline is not met to raise the debt ceiling. Tough choices

The United States economy currently faces several problems affecting people throughout the country. These problems are ultimately affecting the growth of the United States. The growth of federal debt and deficit is seen as a major problem by the people of the United States especially when many people do not see the next president doing much more to improve it. The unbalanced labor market and immigration’s possible role in that has also been a discussion for many American citizens. It is important to also address the inequality regarding income. The deep-rooted trend of the rich getting richer and everyone else declining or remaining the same has created a lot of anger throughout the country. Lastly, the housing market has a huge affect on the economy considering housing is the biggest asset and one of the biggest drivers of wealth. Federal debt and deficit, immigration and the labor market, income inequality, and housing have all had negative effects on the United States economy today, while also affecting each other.

There are many issues with the U.S. economy that are up for debate and in need of corrections. Possibly the most alarming issue that is not garnering enough attention is the looming debt ceiling crisis the U.S. is currently facing. The debt ceiling is the amount the U.S. can borrow to pay its bills and avoid default. Congress has acted on the debt ceiling 78 separate times by raising, temporarily extending, or revising the definition of the debt limit since 1960 (Pianin, 2017). These actions are necessary to avoid the government facing default on its debt. The government must act to avoid default by raising the debt ceiling or abolish the debt ceiling.

The U.S. national debt is currently $18 trillion dollars and it is rising fast. The national debt today is the highest the U.S. has ever seen. In George Washington’s Farewell Address, he declared the U.S. should avoid going into debt. If the nation end up in a deficit, that the debtors were responsible for paying off the debt so that it doesn’t burden the future generations. Like the rest of this advice in his Farewell Address, the nation ignored it. The ideal goal right now should be to stop the debt from increasing anymore because it is impossible to stop the debt from increasing and expect to pay it off in this generation.

Many Americans today are aware that the United States is in debt, however, some may not realize by how much. Currently, the United States National Debt is up to 18 trillion dollars and is steadily increasing. This is a serious problem for the U.S., especially for millennials, who are going to be the ones living and dealing with the debt left behind for them. Increased spending, borrowing from China, and interest on the money borrowed are setting up our economy for an eventual crash, one that the upcoming generation may not be prepared for. Every dollar that accumulates into the debt will have to be repaid with interest at some point, making it harder to pay back. To gain a better understanding of how the U.S. dug itself into such a deep hole, one should start at the beginning of where the debt started.

On the Sixth Avenue in Manhattan, there is a national debt clock that shows the amount of United States national debt. The clock was first installed in 1989, and can show up to ten trillion dollars. It ran out of digits in October 2008 when the sum of debt exceeded the amount. A new clock with two extra digits is going to be installed (Izzo 2 ).

The government has to consider raising the debt ceiling or there will be severe consequences for the American people. Because of the excessive amount of national debt, people may not continue receiving their funding from the government. “Without raising the limit, the federal government may have to stop or delay payments such as Social Security checks, Medicare benefits and military salaries” (Murray, S. 2011). Not only will the debt crisis affect the American people, but it will impact the global economy as well.

Hello, Kel. To answer your, let me begin by saying I believe not raising the debt ceiling along with a balanced budget amendment would not only lead to control of government spending, but it would also control the rate at which the government grows. To be honest many of the government programs and employees today serve only as a drain on taxpayers. If you go to https://www.tedcruz.org/five-for-freedom/ he lays out how he would reign in spending by abolishing useless bureaucracies. I believe if we gradually institute a balanced budget amendment then there won’t be chaos, and down the long run we won’t be in the same mess as Greece.

Criscitello (2013) raises some interesting points and certainly portrays our national debt rather accurately, “a debt blob” (p. 1). While finance is not a strength of mine, Criscitello’s (2013) ideas make sense as there certainly needs to more than two equally ominous options of increasing the ceiling or default. As such, his call for “budgetary restraint” from one budget year to the next seems feasible. Through my limited understanding of the debt ceiling issue, raising the ceiling does not allow for increased spending like a personal credit card, rather it provides a means for which it allows the US to meet its financial obligations. Failure to raise the ceiling does nothing but the world’s financial markets in chaos so it makes no sense

One significant challenge to business success in this rapidly changing global economy is that many business are focused on efficiency and economic of scales. Just like the example provided by Michael H. Hugo on Chapter 1, many companies are focused on lowering operating cost as much as possible. This is causing for executives not leave any room for unpredicted changes limiting the company’s ability to respond to customer’s changing needs.