Clock Keeps Ticking on Debt Ceiling

A decision to raise the nation’s debt limit is once again on the clock — and inaction from Congress on the issue could have wide-reaching implications.

A decision to raise the nation’s debt limit is once again on the clock — and inaction from Congress on the issue could have wide-reaching implications.

The debt limit, also referred to as the debt ceiling, is the legal cap on the amount the federal government can borrow to avoid defaulting on its debt obligations. The ceiling was set at $28.4 trillion since Aug. 1. If the ceiling isn’t raised and the limit is reached, the federal government is only able to use cash on hand and several “extraordinary measures” permitted by the U.S. Treasury to fulfill government obligations, according to the White House. Once those resources are exhausted, the government loses the ability to pay its bills and fund operations beyond its incoming revenue.

The issue of raising the debt ceiling has been locked in a stalemate in the Senate, with predictions that the U.S. will default on its obligations sometime between mid-December and mid-February if action isn’t taken.

In a blog post from the White House Council of Economic Advisors, the protracted financial and economic fallout from the U.S. defaulting on its debt could weaken the dollar, spike interest rates and have devastating consequences to the nation’s standing in the global market. Closer to home, the results would likely be felt on a very personal level due to the suspension or delay of Social Security retirement payments, Medicaid benefits, veterans’ care, the child tax credit, and federal food and nutrition programs residents and families depend upon to survive.

Congress has always acted when called upon to raise the limit, according to Treasury spokesperson John Rizzo. Since 1960, Congress has acted 78 times to raise the debt limit. Treasury Secretary Janet Yellen warned of the consequences of default.

“Our country would likely face a financial crisis, causing interest rates to rise quickly and restricting access to credit,” Yellen explained. “Additionally, every Social Security beneficiary, every family receiving a child tax credit, every military family waiting for a paycheck or small-business owners receiving a federal loan would be at risk.”

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