Debt Ceiling Looms Large – Again

Debt Ceiling Looms Large – Again

According to Treasury Secretary Janet Yellen, the government could hit the debt ceiling by December 15 and risk defaulting on its loans for the first time in history. The debt ceiling is a restriction Congress put on the federal government to control how much money it can borrow to pay its bills. Since the federal government spends more than it takes in, the government must borrow money to cover its shortfall and raise or suspend the debt ceiling.

In October, Congress voted for a short-term solution to prevent default, increasing the debt limit by $480 billion after a standoff between Democrats and Republicans. Republicans initially refused to raise the debt ceiling in protest of the Democrats’ Build Back Better Act, insisting that Democrats raise or suspend it on their own through the reconciliation process. Raising or suspending the debt ceiling has historically been a bipartisan affair. Congress has a limited window to act as Senate rules governing reconciliation and budgetary processes require time and debate.

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