The government hit its borrowing limit in late January. The debt ceiling has already been reached. hit the debt ceiling What happens if the debt ceiling is reached? Why should I care? 5 ways your finances could be impacted now that the U.S. At that point, the US may run out of money to pay its bills and the economy could be thrown into a tailspin. The deadline that could come as soon as June 1, Treasury Secretary Janet Yellen has warned. Biden and Senate Democrats, however, are arguing that any debate about government spending should be separate from a vote on raising the debt ceiling. Republicans, who have a majority in the House, want to cut government spending and are refusing to raise the debt ceiling until Biden and Democrats agree to spending reductions. However, over the years both parties have tied it to government spending and used the debt ceiling as a cudgel to force the hand of the president. It merely raises the limit the government can borrow to pay back commitments already agreed upon by Congress. That vote does not pledge any additional spending. In order to pay its bills to those it borrowed from and dole out money for everything from Medicare benefits to military salaries, the government needs more money, the debt ceiling has to be raised.Ĭreated in 1917, the legislative cap has to be raised by a majority vote in both the Senate and the House of Representatives. The debt ceiling is the limit placed by Congress on the amount of debt the government can accrue. Here's what to know about the debt ceiling, why it gets raised, and what happens if we default: What is the debt ceiling? This would be a historic and catastrophic first that economists say would send the global economy into chaos.Īs partisanship has become further entrenched across the country and especially in Washington, a previously routine congressional vote is emerging as a lightning rod for debate over government spending. Those bills include debts to bondholders and outlays on everything from national parks to Social Security checks. That deadline could come as soon as June 1, when it is estimated the United States will run out of money and fail to pay its bills. The fast-approaching deadline is prompting panic among financial analysts and everyday Americans alike. In what has become a terrifying game of chicken, President Joe Biden and congressional Republicans have reached a stalemate over the U.S.
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