Debt ceiling what was cut

However it is done, it is imperative to not just squeak through this latest crisis. Either Congress or the Biden administration needs to do future policymakers a huge favor and render the debt ceiling moot forevermore.

It has already done enough damage. Working Economics Blog. Posted September 27, at pm by Josh Bivens. The debt limit: Measures no coherent economic value. Has no relationship to any economic stressor facing the country. Has been used time and time again to enforce misguided austerity policies. Overview of the debt ceiling The U.

The debt ceiling measures no coherent economic indicator The statutory debt ceiling is a completely arbitrary value—there has never been any economic justification for any of its historical values and it is raised or suspended periodically purely based on congressional whim.

A recession caused by an arbitrary legal rule that spending cannot exceed falling taxes means that the budget would actually act as an automatic de stabilizer. Search for:. Sign up to stay informed New research, insightful graphics, and event invites in your inbox every week. The vote was along party lines, with every yes from Democrats and every no from Republicans. President Joe Biden is expected to sign the measure into law before Oct. House passage warded off concerns that the United States - the world's largest economy - would go into default for the first time, but the temporary extension set the stage for continued fighting between the parties.

Republicans insist Democrats should take sole responsibility for raising the debt limit because their party wants to spend trillions of dollars to expand social programs and tackle climate change.

Democrats say the increased borrowing authority is needed largely to cover the cost of tax cuts and spending programs during former Republican President Donald Trump's administration, which congressional Republicans supported.

The U. Treasury will exhaust its borrowing authority by Oct. After a failed Senate effort to temporarily suspend the debt ceiling and avoid a government shutdown after the federal fiscal year ends on Thursday, Democrats are working on separate measures to address the borrowing limit and keep federal agencies operating.

While a government funding measure would likely have broad bipartisan support, a stand-alone debt ceiling measure could still fail in the face of Senate Republican opposition. Democratic Senate Majority Leader Chuck Schumer and Republican leader Mitch McConnell have jousted repeatedly about whether debt has hit the limit due to President Joe Biden's agenda or initiatives undertaken during former President Donald Trump's term, including sweeping tax cuts enacted in The truth is that both parties have contributed to the run-up in debt over the past few years.

Personal Finance. Your Practice. Popular Courses. What Is a Debt Ceiling? Key Takeaways The debt ceiling is the maximum amount that the U. When the debt ceiling is reached, the Treasury Department must find other ways to pay expenses.

Otherwise, there is a risk the U. The debt ceiling has been raised or suspended several times to avoid the risk of default. Pros Holds the nation's finances in check Debt can be used to fund U.

Cons The debt ceiling continues to be raised when the limit has been hit. Article Sources. Investopedia requires writers to use primary sources to support their work. These include white papers, government data, original reporting, and interviews with industry experts. We also reference original research from other reputable publishers where appropriate. You can learn more about the standards we follow in producing accurate, unbiased content in our editorial policy. Compare Accounts.

The offers that appear in this table are from partnerships from which Investopedia receives compensation. This compensation may impact how and where listings appear. Investopedia does not include all offers available in the marketplace. Statutory Debt Limit The statutory debt limit, also called the debt ceiling, is the limit to the amount that the U. Treasury can borrow to meet its obligations.

Debt Ceiling Crisis The U. Debt Ceiling Crisis was a contentious debate on the borrowing limit of the United States government in July What Is a Trillion-Dollar Coin?