In the middle of Washington D.C., the US economy hangs in the balance, and the situation could get worse. As time passes, officials can uphold it or plunge the nation into an economic nightmare. The question: What exactly is the US debt ceiling, and how does it impact us?
The fate of the US economy lies in the hands of 435 representatives, and the American people are watching. As the world eyes the U.S. market, what will the future hold? Success or demise?
What is the debt ceiling?
“It’s a self-imposed cap on the total amount of money that the US is authorized to borrow to pay its bills – such as social safety net programs, interest on the national debt, and salaries for government workers and members of the armed forces,” as written by Gabi Thesing Senior Writer at the World Economic Forum.
weforum.org says There’s a limit on how much debt the government can go into so it still pays its bills. the government needs to pay for the benefits it gives out. Including Social Services.
When will this issue impact us again?
“The U.S. is expected to hit its debt limit on January 19, 2023, earlier than many expected. However, U.S. Treasury Secretary, Janet Yellen plans to invoke extraordinary measures that should enable the government to continue to meet its obligations for several months until an estimated date of “early June”,” as written by Simon Moore, senior contributor to Forbes online.
According to CNN.com, We hit the debt ceiling in June. And they revised it in time so we didn’t default at that moment. It is likely we will suspend it again so the government can pay its bills and avoid the issue as the election rolls around.
What are the effects of it?
“Potential repercussions of reaching the ceiling include a downgrade by credit rating agencies, increased borrowing costs for businesses and homeowners alike, and a dropoff in consumer confidence that could shock the United States financial market and tip its economy—and the world’s—into immediate recession,” as written by Noah Berman, assistant writer and editor at CFR.
According to cfr.org, We would all be poor. It would be a nightmare as consumer confidence would plummet. And the economy would go into an immediate recession.
Who does it affect?
“The government is scheduled to pay $25 billion in Social Security benefits on June 2 — one of several big payments the program will make over the course of the month.” “One of the first big bills coming due on June 1 — according to an analysis by the Bipartisan Policy Center — is $12 billion in veterans benefits. If there’s not enough money to pay those benefits, people who’ve already sacrificed a lot for their country will be forced to sacrifice even more.” “The real estate website Zillow estimates that a prolonged government default could send mortgage rates soaring as high as 8.4%, from about 6.4% today.” all quotes come from an article written by Scott Horsely, chief economics correspondent at NPR
According to NPR.org, it would affect everyone. As the government wouldn’t be able to pay for welfare and veteran aid. And the housing market would become a problem as mortgage rates skyrocket. every government service would halt as they try to pay off the bills.
Where?
All decisions involving this matter happen in Washington DC. The decisions they make have the impact of making everyday life a nightmare or a fairytale. If it comes to a standstill it all comes crashing down.
