The latest fight in the government scene regards something called the debt ceiling. Every year, Congress limits the amount of money the government can borrow, something called the debt ceiling. If they exceed that, Congress needs to vote to raise the ceiling or suspend it so that the Treasury can issue debt. The last time Congress suspended the debt ceiling was in 2019, and the limit was put back in place in August. The debt ceiling has created a major problem now, and it looks like partisanship will come into play.
For the Treasury to pay its bills back, the debt ceiling needs to be raised so that they can borrow cash. The deadline for this is unknown, with the CBO estimating that it would be sometime in October or November, while think-tanks in Washington believe that the end of the month will be the deadline. According to Janet Yellen, the secretary of the Treasury, they have been resorting to extreme measures of raising cash, and that it likely wouldn’t last for long. If the debt ceiling stays the same, it’s very likely that the US would default on those payments, which could cripple the economy and send us into the worst recession in US history. This is still partisan though as Republicans aren’t on board with the idea of raising the ceiling once again, which could possibly lead to a government shutdown like we saw in the later stages of the Trump administration. The Democrats also have a lot to think about as they are trying to pass two major spending bills that require borrowing, so the best way to describe this is a political conundrum that could have a major effect on the economy. What’s your opinion on raising the debt ceiling?
I am not a financial advisor and my comments should never be taken as financial advice. Investments come with risk, so always do your research and analysis beforehand.