What is the debt ceiling?

With the recent developments on the debt ceiling, the government is on the brink of another shutdown not so distant after the longest shutdown in the history of the United States.

Congress is asking for a higher debt ceiling, and Republicans don’t want that. So, what is the debt ceiling that can trigger a government shutdown as the budget to fund federal agencies hasn’t been passed?

The debt ceiling is what limits the federal government from borrowing money. It doesn’t work the same way as us, regular folks, going over to a bank and borrowing money, though. The federal government asks for a higher cumulative debt outstanding. 

Every now and then, Congress asks for permission to increase the debt ceiling. Considering the inflation has been the highest since the 2008 crisis at 5.5 percent, one would think that an increase in the debt ceiling is justifiable. While that’s a debatable topic, as Democrats and Republicans are fighting over it, if Congress doesn’t pass the budget bill by October 1, the government will see another shutdown since 2024.

The current debt ceiling of the United States is $16.7 trillion. The Democrats are in favor of increasing it while Republicans are opposing it. Basically, Congress asks for its own permission to increase it. Whether or not it will be increased will be announced in the coming days, but accounting for the fact that the inflation has been quite high, an increase in the debt ceiling is anticipated by financial experts.