The Debt Ceiling: Why it Hurts America Essay

825 WordsApr 28, 20144 Pages
The Debt Ceiling: Why it Hurts America 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. On August 2nd, 2011, the date estimated by the Department of the…show more content…
Our government did not make the right move, and we will all see the consequences of it in the long run. Instead of raising the debt ceiling to around $15.4 Trillion dollars, Mr. Obama should have placed at least the same amount of spending cuts as the proposed raised debt ceiling, if not more. The debt ceiling debate really comes down to your individual view on fiscal economics. If a person follows the general conservative view they recognize the fact that a government can only spend as much as it takes in. A liberal point of view would see a country’s spending as a necessary part of keeping a functioning society, and that debt is a side affect of this process. If a country continues to build insurmountable debt, an individual or business is less likely to invest in that country’s bonds or economy in general because they may worry about whether they will be able to cash out and get their money. This depreciation in investor confidence could eventually lead to a drop in the country’s credit rating from the major financial institutions. A drop in credit rating for a country’s bonds shows an overall lack of stability for that country. A decrease in investments in bonds and stocks for a country can hurt GDP and eventually send the country into a recession due to the governments inability to run efficiently. Although some people may be liberal in all political issues
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