The U.S. economy is a frequent topic of global discussion and is often seen as an indicator of world events to come. The debt ceiling debate is no different — it has sparked nationwide and global worry about fiscal ramifications and what will happen to the global ramifications — but it should be raised.
The debt ceiling is a legislative initiative that was rudimentarily created in 1917. It allows congress to “raise” the ceiling in order to restrain the Federal Treasury from paying off expenditures that have already been incurred. The raising of the debt ceiling is a measure taken after “extraordinary measures” are taken by the treasury.
Effectively, raising the debt ceiling buys the treasury more time to pay off its obligations and stops it from defaulting on its debt – which would gravely effect the U.S and global economy and, historically, has caused a sharp drop in market stock prices while increasing borrowing rates.
A CNS News report published this week addresses nationwide concerns by citing President Obama in saying that “raising the debt ceiling does not raise the nation’s debt.” Obama went on to assert that raising the debt ceiling simply “says you got to pay the bills you’ve already racked up, Congress.”
While some might argue that raising the national debt ceiling encourages willful and often wasteful spending, not raising it offers a possibility of defaulting on a loan or payment – something most banks would frown upon in an individual person’s circumstance.
And while the U.S. government doesn’t have an official credit score, financial analysts have projected that it is somewhere near 650-690, which is about mid-range in terms of bills being paid on time and credit limits. Other countries such as Japan, France and Britain have similar scores.
Both options in this depart are particularly polar and could result in horrible short-term results for long term gains. I favor raising the debt ceiling because while it may cause a decline in trust in the treasury and the government, defaulting on a payment or loan, has longer reaching costs of no longer having the same credit.
The debt ceiling should be raised because, while it will eventually cause more debt, it will save our government from immediate financial ruin.