Research Paper- The Debt Ceiling
The Debt Ceiling
The debt ceiling issue is the true financial crisis of 2011.
The debt ceiling is the
limit that the government can owe to other sources such as individuals or countries.
limit was set at the staggering, and steadily increasing, $14.294 trillion dollars, as in
The nation is spending much more than it is earning, and therefore
the treasury does not have the financial backing to pay for federal spending, so naturally
it issues debt to pay for the deficit.
It is not that America was in the green before 2011,
but it was due to the recession of 2008 that government spending had increased
dramatically (Uctum, 2000).
The government spending increased on bailouts, an
unemployment increase, and tax cuts.
In order to change the debt ceiling, Congress must
pass legislation, which is then signed by the President to create a law.
By May 2011, over 39% of our nation’s budget relied on additional debt in some
fashion (Cha, 2011).
By raising the debt ceiling, America is allowed to continue
increasing the debt level, but if denied an increase government spending would have to
be cut by over 40%, changing our entire budget system and its products.
made the decision easy by claiming that if the debt limit was not raised, the nation would
default and it would drastically effect the economic in a devastating fashion (Cooper,
Government spending on social security, military salaries, medical benefits, and
interest rates would be either drastically cut or eliminating completely to meet the limit.
Treasury made it quite clear that it is extremely important that the nation not default, so
naturally the limit must be raised (Nolan, 2011).
But was not raising the debt ceiling even an option to begin with?
certain that not raising the debt would lead to negative effects, but on varying degrees of