What is Debt Ceiling?
The debt ceiling, also known as the debt limit, is a statutory limit set by the United States Congress on the amount of national debt that the U.S. Treasury can issue to fund the government's operations and meet its financial obligations. It represents the maximum amount of money that the government is allowed to borrow to cover its budget deficits.
The debt ceiling serves as a mechanism to control government borrowing and ensure that the total debt does not exceed a certain level. When the government reaches the debt ceiling, it cannot issue additional debt to meet its financial obligations unless the limit is raised or suspended by an act of Congress.
Raising or suspending the debt ceiling requires legislation to be passed by both houses of Congress and signed into law by the President. Historically, raising the debt ceiling has been a contentious political issue, as it often involves debates and negotiations over fiscal policy, spending priorities, and the overall level of government debt.
If the debt ceiling is not raised or suspended and the government exhausts its borrowing capacity, it could lead to a situation where the government is unable to pay its bills, potentially resulting in a default on its financial obligations. This would have severe consequences for the U.S. economy and financial markets, causing disruptions and damaging the country's creditworthiness.
The debt ceiling is an important aspect of fiscal policy in the United States, and debates surrounding it often involve discussions about government spending, taxation, and overall fiscal responsibility.
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"Speaker McCarthy Addresses Debt Ceiling Negotiations with President Biden: Congressional Republicans Stand United"House Speaker Kevin McCarthy has emphasized the urgency of reaching a deal on the debt limit this week to prevent the United States from defaulting on its obligations for the first time. McCarthy is scheduled to meet with President Joe Biden, with Treasury Secretary Janet Yellen setting a "hard deadline" of June 1 for raising the borrowing limit.
McCarthy acknowledged that Republicans are making demands on the debt ceiling now, despite not making spending cuts during Donald Trump's presidency. He attributed this to the difference in the speaker at the time, Nancy Pelosi.
While downplaying the possibility of a revolt among conservative Republicans over any potential deal, McCarthy did not explicitly state that he would only bring a bill to the floor if it had majority Republican support. He expressed confidence that the current negotiations would garner support from a majority of Republicans.
Regarding the spending levels that Republicans have advocated for, McCarthy clarified that nothing has been agreed upon yet. He commended the professionalism and expertise of the individuals working on the negotiations from the Biden administration.
McCarthy did not explicitly state whether work requirements for social safety net programs were a red line for him, but he defended the Republican demand to include them, citing studies that suggest their benefits for individuals.
input from / nbcnews / AI
