Credit Limit: What’s It All About?
During this week we are going to discuss aspects related to the US debt ceiling, so here is a little summary in case you are not comfortable with the term.
credit limit is a Legislative limit on the amount of the national debt authorized to be borrowed by the United States government. This is, effectively, intended to ensure that the government does not spend more than it can afford, but it has been a source of political controversy in recent years as lawmakers debate whether the limit should be whether to increase or not.
The debt ceiling does not limit the amount a government can spend, but rather the amount it can borrow to meet that expenditure. The United States Congress has the power to raise or lower the debt ceilingAnd this has been raised many times in the past.
You can say it is like a credit card limit for the government. Just like there is a limit on how much money you can borrow on your credit card, the government also has a limit on how much money it can borrow. Sometimes they increase it because the government needs to borrow more money to pay for things like schools, roads, and the military. It’s caused some problems in the past when Congress hasn’t agreed on — yes, that happens a lot — whether to take it up or not.
Since the modern credit limit was first established in 1917, Congress has increased the limit more than 100 times. The frequency of increases varies over time, with some periods seeing multiple increases in a single year and others lasting several years without change.
We all want to avoid a government shutdown or default on debt payments.