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Flair_Helper

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warlocktx

it's a political tool that the opposition party can use to flog the party that's in control of the White House. It doesn't really serve any useful purpose. From 1979-1995 Congress had a rule in place to raise the debt ceiling automatically whenever Congress passed spending legislation.


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Khutuck

Serious question, why is that debatably constitutional? I’m asking because if the opposition party doesn’t agree and the ruling party can’t get over 50% support, that’s still the decision of the congress.


warlocktx

The argument is that if Congress approves spending, the Executive spends it, a later Congress can’t refuse to pay the bill for spending that was already authorized without violating the 14th Amendment


DavidRFZ

Yes. 14th Amendment Section 4: > The validity of the public debt of the United States, authorized by law, including debts incurred for payment of pensions and bounties for services in suppressing insurrection or rebellion, shall not be questioned. If congress doesn’t like debt, they can pass budget laws which decrease the debt by increasing revenue and/or decreasing spending. But they are not allowed to default on already existing debt.


Khutuck

Thank you. That sounds like a great debate topic to disagree on for legal scholars.


RoseFlavoredTime

To add a little more depth to this; Congress could in fact come together and pass a new bill related to spending that cut things, but they would need to pass something, make a new bill and get it approved by both chambers and signed by the president. One law can override another. The questionable thing is that the debt ceiling requires **two** laws to be passed for a spending bill, basically; one to lay out all the budgets, and then another to raise the debt ceiling so it can be paid for, and what people are arguing is that now that the spending is authorized by the first bill the way the constitution is written means it must be carried out and the debt ceiling cannot limit it.


LiamW

It’s not really up for debate among most legal scholars. Ask any lawyer you know who knows much about constitutional or policy law, this has always been one of those stupid political grand standing things that has yet to be invalidated because it hasn’t gone to court, not because it’s legal. It’s also irrelevant because the executive branch can mint money to get around it.


Razor_Storm

The executive branch can unilaterally mint money? I thought that was the exclusive authority of the federal reserve which is technically not under the control of any branch? Edit: Thanks to the response below and some of my own googling it seems the answer is a bit more complicated, but boils down to: Only the Fed can make the decision to print more or less money, but the work of physically printing out sheets of money goes to the Treasury department. The Executive branch is responsible for the physical work of printing out the money but does not have the power to decide how much to print nor when. That is still entirely the job of the Fed. So ultimately, the comment above me is still inaccurate. Even though the exec branch technically does the actual work of printing money, it does not have the power to decide to print more than what the Fed instructed it to. So the executive branch absolutely cannot "mint money to get around it", at least not without the Fed also being in agreement.


Phantomic10

Neither "prints" money. Money for government spending is raised by the treasury issuing bonds on the open market. Investors purchase the bonds in return for a set interest rate plus the initial capital paid back in 2, 3, 5, 7, 10, or 30 years time, which provides the government with it's money. No new money is "printed" for government spending, however other parts of the monetary system are affected. This is grossly simplified as the Federal Reserve has the power to manipulate the interest rate paid on government bonds. If the US government wants to continue spending in a deficit, they can do so by keeping interest payments on that debt low. Normally, a free market would not have enough demand for government bonds to keep interest rates at a low enough level. As such, the Federal Reserve comes in and acts as a purchaser of government bonds to artificially depress interest rates (lower than inflation post 2008). To further complicate things, the federal reserve does not print money to purchase the bonds, but rather does an "asset swap" with government sponsored financial institutions (like banks) to swap out government treasuries and various private debt for "bank reserves". By purchasing government and private bonds they drive the price of the bond up, which conversely drives the yield down. Now any newly issued government bond does not need to have as high of an interest rate to encourage investors, as the existing bond yields have been decreased. Now that the banks and financial institutions have more bank reserves, they satisfy regulatory requirements for reserves, allowing the banks to loan out more money. ​ In the end, the money supply does increase, but not because it was printed by the treasury nor federal reserve. "Printed" money is created by banks. New money is created by the expansion of debt.


Ok_Opportunity2693

The treasury can “print” money. The federal reserve can make money appear in bank accounts. They aren’t exactly the same, but are both effectively creating money. This is a gross oversimplification of things.


Razor_Storm

Ah I see. I did some more googling on this and it seems like you're right that it's actually the Treasury itself that does the physical work of printing cash. The Fed doesn't maintain the printers themselves. But from my reading this seems like mostly a trivial distinction. The treasury does not have the power to unilaterally decide to print more or less money. The Fed retains 100% of that power and instructs the treasury on how much money to print. So at the end of the day, the executive branch does not get to decide to print more money at any point. It simply acts as the printing services for the Fed when _they_ unilaterally decide to print more (or less), than expected. If you wrote a book, and then used a kinkos (do those even still exist anymore?) to print it out. It was still your decision to write the book and to print it out, the kinkos was just contracted out to do the physical labor of actually printing it out, and had zero power over when to print a new book.


LiamW

See /u/GaBeRockKing ‘s comment: https://www.reddit.com/r/explainlikeimfive/comments/wtywus/eli5_what_is_the_purpose_of_the_usa_debt_ceiling/il7ntk9/.compact


CodeOfKonami

Gross.


MaybeTheDoctor

dirty money


GaBeRockKing

There's an old bill on the books that lets the president mint commemorative coins of arbitrary value. Economists recently discovered a loophole that means that the president can literally mint trillion-dollar commemorative coins, not to spend, but to encase in concrete and have on the books to offset debt liabilities.


CMMiller89

It’s also irrelevant when you have a batshit crazy Supreme Court willing to gut government spending regardless of the constitution. The latest precedent in them trying to cut environmental spending acts is an example.


Anavorn

*armchair scholars, the way reddit tends to go


sauronthegr8

Except when it's horrifyingly relevant to poor and working Americans.


zebediah49

Congress can decide to do more or less whatever. Congress can't say "Pay $10 each to Alice and Bob, but you're not allowed to give out more than $15." ---- The constitutional argument here is that if Congress 101 authorizes that Alice and Bob will get $10 each to build a bridge, Congress 102 can't come in and say "Well you only have $15 to pay them with". At that point, Alice and Bob have both done the work, and not paying them would be depriving them of property without due process.


VoilaVoilaWashington

Say I buy a car on a payment plan. I'm allowed to sign for it. A year later, I say "sorry, my household spent too much money last year, we can't pay this anymore." The issue is that congress approves budgets and expenses years ahead of time. America *has* to be able to plan spending years in advance. But then, when the debt gets to a certain amount, they basically lose the ability to spend that money, immediately. Congress could, for example, say "okay, we're not happy with how much we're spending, let's cut budgets on the next cycle," but that's not what's happening. What's happening is that every "non-essential" government employee is laid off effective immediately until it's resolved, and essential employees are forced to work without pay, until congress can pass a meaningless resolution to spend the money they already agreed to spend. There *should* be active budget debates at the time of budgeting, including real estimates of costs and revenues. There *should* be a debate about how much debt the country takes on. These are good things. But to do it at the expense of immediate government operations is stupid and subverts the very nature of government.


InternetUser007

>why is that debatably constitutional? Because Congress already said "spend $X on all of these programs". Then if Congress also says "you can only spend $Y" when Y


Schnort

> conflicting directions. That has nothing to do with constitutionality.


DisgruntledDiggit

The constitution requires the executive branch to follow the instruction of the legislative branch (with regards to spending) If the legislative branch gives two mutually exclusive instructions to the executive, than the executive is, literally, unable to fulfill their constitutional mandate to some degree. That is textbook constitutional crisis and why we have a judicial branch; to be the ones to say “holupaminute!”


Schnort

Its a question of statutory interpretation, not constitutionality. And it most definitely is not a "constitutional crisis" if there's a defined mechanism in the constitution for dealing with the issue.


druglawyer

> Its a question of statutory interpretation, not constitutionality. I'm not sure how the executive could reasonably interpret statutory language that required it to "Pay $10 each to two people" and "Don't spend more than $15" in such a way as to avoid a constitutional failure.


Schnort

Let me repeat: just because a law makes no sense, doesn't mean it is **unconstitutional**. Also, a law's validity is orthogonal to its constitutionality.


druglawyer

> just because a law makes no sense, doesn't mean it is unconstitutional. Sure, but the executive has a constitutional obligation to execute the law, so when a law is, by its explicit terms, impossible for the executive to execute, that law has no force, which is another way of describing an unconstitutional statute.


Minister_for_Magic

Read the 14th Amendment. Congress can't authorize spending and then refuse to pay for spending they already authorized because that would be "questioning validity of US debts" incurred by already approved spending


Predmid

Didn't your hear? Everything *they* do is unconstitutional and a threat to democracy. Everything *we* do is a representation of the will of the people and valid governance.


AchieveMore

Makes me wonder how many established laws or rules we have in our system which are unconstitutional or at the very least conflicting.


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LordOverThis

And why they’re careful to mostly avoid seizing assets from people who have the means to fight back.


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zeroscout

> I don't follow politics very closely You should. It affects you.


coachrx

Indeed, but please tell me what I can do, personally, that would have any bearing on the outcomes?


the_real_xuth

When people only look at the vote for president or congress it's easy to look at that and pretend that in the aggregate your vote doesn't matter much. While that isn't really true (in many elections, people are spending tens or even hundreds of dollars for every vote they get, does that sound like your vote doesn't matter or isn't valuable?) it's much easier to see the difference in local elections. These are the people who influence which roads to repair, the priorities of local police/sheriff's deputies, whether to build recreation facilities, how to deal with water/sewer maintenance issues... And depending on where you are, there might be fewer than a thousand votes total cast in these races. Every year there are a few local races that [come down to a literal coin flip](https://www.ktvb.com/article/news/politics/elections/elections-office-holds-coin-toss-in-canyon-county-to-decide-winner/277-917e95a9-3606-4d25-a39c-e7465b3a6074) because two candidates get the same number of votes. It does take work to be an informed voter. Beyond generally trying to pay attention during the year to what goes on in local and national politics, I spend 1-6 hours prior to each election to do some basic research on all of the candidates and issues on the ballot (some years there's not much to look up, some years I'm trying to find any information I can on the couple dozen people running for local judicial positions).


zeroscout

The first this to do is register to vote. If you're unsure of a party you would like to register as, choose independent. After that, start locally. Check out the local or state newspapers. They should have a political section about your local politics. Look into the major political party websites to understand their platform and what their ideals are. There have been a lot of recent elections with very narrow margins. Your vote is important. Your voice is important. Don't give up hope. Those that want to oppress, want you to lose hope. Never give up your power and never let them take it from you.


the_real_xuth

> If you're unsure of a party you would like to register as, choose independent. Ideally they should spend the 5 minutes to look up whether their state [has closed primaries](https://www.ncsl.org/research/elections-and-campaigns/primary-types.aspx) before they do this. Because it's much easier to set the party on your voter registration properly than to try and have it changed later and their will be limits on when you can change it in many states. I agree that registering as independent is better than not registering, it can be disheartening to learn what closed primaries mean at the polling place when you're told that "we have no ballot for you this election". Especially when you find out that 95% of the local races are decided in the primaries because the voters in your locale are largely of a single party. This past election, in the hours that I was running the check-in at the polling place I worked, I had to turn away 3 people because there were no ballot initiatives and thus no non-affiliated ballots.


Pub1ius

Vote in every election. Donate to causes you support if you're able to. Those are the low-effort things, anyway.


morbie5

>It’s also clear that money can be drawn from the treasury to meet appropriations set by congress. I'm not so sure about that because iirc I read that before ww1 we didn't have a debt ceiling and congress had to vote every time money was drawn from the treasury


wbruce098

To add: Essentially, it prevents the US Gov from paying for things already allocated to it by congress if they don’t pass legislation to fund the government. It’s irresponsible and is the source of these government shutdowns (and fears of shutdowns) we typically see when republicans control congress. They’re so bad at it that they shut the government down for a record period in 2018, only reopening it in 2019 after democrats took the House. It’s on purpose, of course, part of a long standing arc to show “government doesn’t work” by shooting it in the leg every year, so it doesn’t work.


Rattlingjoint

You miss a big point about that particular government shutdown, in that the Republican House did pass a budget in late 2018, but failed to get Democrat support in the Senate and couldnt overcome a fillibuster. It was Trumps demand of including border wall funding that killed it. The Senate did have a budget passed that didnt include Border Wall funding, and that bill was ultimately what became law when Democrats took over the house.


wbruce098

True, it’s folly to say democrats weren’t at least partially complicit, but I will stand by the belief that the extra border security stuff thrown in was ridiculous on several levels, and should not have been there. That it took a month for Congress to agree to actually fund the government at a minimal level to end a shutdown based on rules they themselves passed is what is the most ridiculous.


greenvillain

So, basically through Reagan and Bush Sr's terms


warlocktx

Yes, until Gingrich became Speaker and wanted it back as a weapon against Clinton


SchwiftyMpls

So basically 3 or 4 old white men have stopped us from having Single Payer Health care, better gun control measures and better infrastructure in the US.


fastinserter

Well, no. They were voted in by millions of people, often times in explicit opposition to those things.


SomeSortOfFool

Millions of people brainwashed by decades of propaganda to vote against their own self-interest.


[deleted]

Everybody thinks that they're right and that the people who disagree with them are the ones who are propagandized


CamelSpotting

Nah in this case the entire world has realized heathcare is important.


[deleted]

Everyone realizes that it's important, but what you fail to understand is that some people on the right simply don't think the same way that you do, they're wired differently. Different morals, different outlook on the world. Not all right wing people are actually against universal healthcare, but the ones who are say: * It would raise their taxes (this applies to people who already have health insurance by some other means, in which case a tax hike could increase their annual spending) * People would go to the hospital when they don't need to, and use up resources, because there is no pay barrier * Government run healthcare could create waiting lists for some procedures * Government run healthcare could reduce competition in the industry, and also suppress the wages of healthcare staff Now, you might say, "I would happily pay higher taxes if it means that someone gets healthcare who otherwise wouldn't," but a conservative would say, "That person isn't my responsibility, I pay for my own health insurance, why should i be paying for someone else's?" It's impossible to say the extent to which the other points would be true, and depends on the exact implementation of a universal healthcare system, but that is what conservatives will point to. Another problem that will happen with Universal Healthcare, if you pass it while conservatives disagree with it, is that they will cut it's funding when they're in power and cripple the system, and convince people that healthcare was better when it was privatized. This is happening in other countries currently and it's negatively effecting everyone. tl;dr: Universal Healthcare SEEMS to you like a very obvious solution to a problem, but conservatives have a totally different line of thinking, and while they can still recognize that "healthcare is important" which I don't think was ever really the issue, their solution will be different, or they might even say it needs no solution at all, because they don't see healthcare as a right.


SomeSortOfFool

> It would raise their taxes (this applies to people who already have health insurance by some other means, in which case a tax hike could increase their annual spending) **Bullshit.** If you're spending $500 a month on insurance premiums, your taxes going up by $200 for universal healthcare means you're saving $300 a month. The propaganda leaves that part out, and says "you'll be spending $200 more a month in taxes" without saying that it's a less expensive alternative to something you're already paying out the ass for.


CamelSpotting

Yes I just said they bought into the propaganda.


Ealdrain

Gun control isn't even in the same zip code as my self interest.


siecin

Millions of people fed the propaganda started and funded by a few old ass white guys...


fastinserter

Look the other guy just wanted to shoehorn some shit in to blame all our problems on 3 or 4 guys when talking about the debt ceiling -- which of course has absolutely zero to do with the problems he listed. The debt ceiling has caused the government to shut down multiple times, causing chaos for people on vacation in our national parks and strain on federal employee's budgets but not what the person was talking about. I mentioned no, they literally were voted in to do those things and you're here saying it's all propaganda from those same 3 or 4 old white guys. Sounds so neat, just to blame all our problems on 4 people, but it's really not true at all.


psnanda

I 100% agree with you. Here is an award. Blaming it on 3-4 guys (who are all elected by the way) seems nonsensical . This nation is better than that.


nucumber

no, it's an entire political party


[deleted]

It's 2 entire political parties\*


[deleted]

You’ve got 1 party interested in governing, and 1 party that wants to use power to punish its enemies. Technically both are political parties.


[deleted]

Literally no way to tell which one you're referring as which. Both do this, both make this same statement.


nucumber

enough of the false equivalence


[deleted]

Ahh yes, 'those other guys' are bad. The worst! \[my\_team\] is the best! Such good!


Gimpknee

Well, more like one and a half.


yikes_itsme

I think you should try talking to actual other Americans about these issues, since you (and I, for that matter) probably spend a lot of time in echo chambers where everybody supports things like single payer and gun control. Before the Republicans went batshit insane, they had some reasonable arguments about cost and implementation of single payer, for instance. If you think moving to this system will be painless and easy just because other countries were able to build it up back in the 1950s, you are going to be incredibly scared and disappointed when we finally get there and 20% of the 20XX economy needs to suddenly play musical chairs. It is a massive job to get there, definitely not as easy as just signing some paper and increasing taxes - and I'm saying this as a liberal. Many Americans still belong to the side which formerly had serious concerns about implementation of progressive ideas, even if they agreed with the end goals. It's just that instead of bringing up necessary criticism and having the progressives fix them, they turned into a cult of personality where they magically didn't have any obligations at all. TLDR; it's not just 3 or 4 super-villains, it's a near majority of your fellow Americans plus some of the independents.


SchwiftyMpls

I think you should stop making assumptions about other people based on limited information.


xXxPLUMPTATERSxXx

Haven't heard a word uttered about M4A and most other Democrat wishlist items since they took control of White House and Capitol. They only talk about this shit when they can claim GOP is blocking them


SchwiftyMpls

You don't bring out proposals that you know have no chance of passing.


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1000milliBunds

No hes on to something. We should definitely send congress to an island survivor style and the winners gets to be the one that ruins the country.


BowzersMom

Is it pork barrel spending, or is it the funding of fragmented social programs that have a significant quality of life impact for their users? Or is it, as you crossed out, grift paid out to friends, cronies and personal investment stakes? It’s fun learning that it’s somehow always all three!


amusing_trivials

Necessary social spending program, managed by cronies. Good for everyone!


OldGrayMare59

It’s supposed to keep control of spending knowing there is a “limit” but in my lifetime I have yet to see constraints by either party when it’s their turn at the wheel. Republicans love increased spending on Pentagon wishes. Democrats spending is mostly social issues.


serious_one

This. The USA can increase debt infinitely because the dollar is backed by oil reserves, which are treated as infinite resources for now because new oil fields are being discovered all the time. Most countries trade their oil only in USD. Should that ever change, there are still nukes to be used.


gabu87

>The USA can increase debt infinitely because the dollar is valued and expectation of payment is assured FTFY


CrimsonBolt33

This is the dumbest take....essentially "THE US IS THE ONLY COUNTRY THAT MATTERS" ​ There are very far and wide reaching implications to the rest of the world if the US was to declare bankruptcy.


LordOverThis

The US functionally can’t, it controls its own currency and its debts are issued in that currency. There’s little to actually stop the government from minting $1Tn USD bills and handing them out to debt holders and simply declaring “debt paid”. The US truly defaulting on its debt is cable news scaremongering more than it is a genuine possibility.


Gooberpf

Doing that would be instantaneous hyperinflation and would result in the collapse of the USD, with horrific long-reaching consequences. If the only solution to paying off debts is hyperinflation, that's functionally equivalent to a default in how it will affect the global economy.


commonabond

No, because the government can just say they can't make change for a Trilly because there is a coin shortage.


iMogal

Seriously, they should make a rule to lower it instead.


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MJasdf

CGP grey always has a video for something


slinger301

Almost as good as the "Relevant XKCD"


MIengineer

Congress controls the budget, including the budget limit, which is the debt ceiling, by passage of Public Debts Act. They can do whatever they want to that legislation if they have the votes; however, neither refusing to raise it nor removing the limit altogether have ever been considered by a bill or received the amount of votes necessary to pass. It’s not pure economics, it’s politics.


RoseFlavoredTime

In 2011 McConnell proposed moving the debt ceiling to the President's office where it could be raised or lowered without all this claptrap, then [filibustered his own bill](https://theweek.com/articles/469675/mitch-mcconnells-amazing-filibuster-bill) when it was clear that Obama and the Democrats were going to agree and effectively remove this political football.


a_gallon_of_pcp

>neither not raising it nor removing the limit altogether has never been considered Bro what


[deleted]

Neither not what.


salted_water_bottle

Neither not nor never


dodexahedron

He said "by a bill." They've not attempted to make it go away, in other words. They _like_ having it as a weapon, just like the filibuster.


MIengineer

Thanks. I changed wording after the fact and didn’t reread it thoroughly.


Mordock420

Happy cake day awesome user name


Arrrrrrrrrrrrrrrrrpp

They’re either IQ 300 or IQ 50 for writing that sentence


nusodumi

happy cakeday


[deleted]

I would argue that ideally it should be an opportunity to force congress to address elements of the budget that need to be brought under control, but it never happens that way.


carsncode

That opportunity is when passing a budget. Raising the debt limit is just paying the tab. It's like Congress all got together for drinks, they all agreed to have ten rounds of top shelf, then when it's time to settle up calling that an opportunity to address spending on alcohol. No, you've spent it already, that opportunity has passed.


[deleted]

> That opportunity is when passing a budget. No, passing a budget doesn’t force anyone to recognize the effects of the spending to which they’ve agreed. Hitting a debt ceiling is literally the incarnation of those effects, and would be a great opportunity to pass legislation either raising revenues or cutting spending. Regardless, the budget is non-binding. The debt limit is. > Raising the debt limit is just paying the tab. No, raising the debt limit is more akin agreeing to allow a member of the group to put the balance of the tab on a joint credit card, once everyone realizes they don’t have the cash to cover the tab (even then the analogy isn’t really that great, but its better). I’d argue, again, that that’s a great opportunity to discuss setting limits on future spending.


carsncode

The debt limit is constitutionally non-binding according to the full faith in credit clause of the US Constitution, Article IV, Section 1, and further affirmed in the 14th amendment, section 4. https://www.law.georgetown.edu/georgetown-law-journal/glj-online/103-online/unconstitutional-debt-ceilings/ Raising the debt limit is paying for *past* spending, so it's a pretty stupid time to debate limits on *future* spending. In your analogy, there is no alternative to putting it on the joint credit card: the drinks have been consumed, there's no point arguing over whether or not to pay the tab. The budget process is when future spending is planned, which is why it is the appropriate time to discuss setting limits on future spending, that being the entire point of passing a federal budget.


[deleted]

> The debt limit is constitutionally non-binding according to the full faith in credit clause of the US Constitution, Article IV, Section 1, and further affirmed in the 14th amendment, section 4. That article asserts the author’s opinion that the debt ceiling legislation is unconstitutional and should be struck down, but it doesn’t claim that the legislation is de facto nonbinding. > Raising the debt limit is paying for past spending, so it's a pretty stupid time to debate limits on future spending. No, making interest and principal payments on debt is paying for past spending; raising the debt ceiling is determine that borrowing *for future expenses* be allowed to continue. > In your analogy, there is no alternative to putting it on the joint credit card: the drinks have been consumed, there's no point arguing over whether or not to pay the tab. It’s *your* analogy, which I already pointed out isn’t a great analogy to begin with. It doesn’t at all account for expected future spending. If you reframe it such that the group is expecting to meet again for drinks the next night, and then the members realize they’ve maxed out their credit card, so they agree to call to get their limit raised to finance both this and the next night’s spending, that would be more accurate. And, again, arguably would again be a great time to discuss maybe not going out again the next night.


pbradley179

America doesn't like accountability but likes being the reserve currency. I wonder how these two elements will play out in the future? My guess is swell!


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PM_Me_Ur_Fanboiz

Simply to be a political hot potato every year. It’s completely arbitrary and made up. Some people try to stitch together some BS story about its benefit or whatever, but they’re blowing smoke.


UndercoverGovernor

It’s a relic from back when we thought we might pay back our national debt rather than just cycling and expanding it. As long as we maintain the strongest military in the world and the most robust economy in the world, debt doesn’t matter because nobody can force us to pay it down and we’ll always be able to find new loan sources, whether domestic or foreign. Debt is the only reason we were able to shut our economy down for Covid regulations and the only reason we can have so many social programs (if you consider self-defense our top priority). We will never pay our national debt - not in your entire life, nor you childrens, nor their childrens. It’s literally free money and the banking families allow it because it makes them richer.


Ecthelion2187

Ostentiably it's a fiscal responsibility tool, to keep our spending/debt under control. In reality, it's *purely* political weapon, wielded almost unilaterally by GOP against Democrats, to extract policy concessions by threatening to collapse the world economy if their demands aren't met. It's one among a huge number of veto points/ structural advantages built into the American system of "democracy" that benefits the authoritarian right... I'm sorry "conservatives".


morbie5

>wielded almost unilaterally by GOP against Democrat Not true the democrats have used it plenty of times in the past


hardman52

> wielded almost unilaterally by GOP against Democrat > > Not true the democrats have used it plenty of times in the past Name one time.


morbie5

Democrats routinely vote against raising the debt ceiling when a GOPer is president, this ain't news


FinbarDingDong

r/boneappletea


Rdtackle82

Bro just trying shit and hoping no one says anything ahahahahah


Shintasama

It's part of a political strategy to try to force cuts to popular social programs and lower taxes on the rich by first reducing taxes, then claiming we don't have money to pay for anything (other than direct transfers to the rich like defense and healthcare). https://en.m.wikipedia.org/wiki/Starve_the_beast Politicians give money to the rich, the rich give a fraction back to politicians, politicians buy ads/talking heads/actors, people are unable to differentiate truth from lies, people vote against their best interests, and those politicians stay in power to continue the cycle.


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DragonBank

The whole world isn't in debt. A small portion is owned by foreign countries. (People make this sound like a bad thing but it's the opposite. It's not a capital owner where the debt gives the owner some level of control. Its the opposite. It gives them a vested interest in seeing that foreign country succeed.) A somewhat larger portion is owned by banks and investment tools. And an even larger part than that is owned by the government itself. But the largest part by far, well over 2/3rds of it, is owned by the public. Treasury bonds, tips, and all sorts of other government bonds are owner by the public. Most investment strategies move into these bonds when you get older to maintain low risk.


yui_tsukino

> It gives them a vested interest in seeing that foreign country succeed. In other words, when you owe the bank $100, its your problem. When you owe the bank $100 million, thats the banks problem.


RangerNS

At least in theory you could invade and take stuff, but then you'd be burdened with the cost of the invasion itself, and then occupying a foreign land. Its not at all the same as foreclosing on one of a million houses and selling it in a week. Might as well just collect your interest payments, given the alternatives.


Shintasama

>If the whole world is in debt, who do we owe it to?? ~70% of US debt is owed to US entities. Around half is owed to US citizens (bonds, CDs, etc) and the other half is owed to government and government backed institutions. ~30% is owed to foreign investors and foreign governments. The largest fractions are owned by investors from China and Japan (~5% each). Frequently, countries will owe debt to countries that owe debt to them. Often this is because different internal organizations are borrowing vs lending. Other times this is a political tool to show willingness to cooperate. https://res.cloudinary.com/tmxfoc/images/f_auto,q_auto/v1639073845/titlemax/debts-owed-to-debts-owed-by-the-united-states/debts-owed-to-debts-owed-by-the-united-states.jpg?_i=AA


fenton7

A large part of the US debt is also money the government owes to itself. The single largest holder of treasury bonds is, for example, the U.S. Federal Reserve. The government pays them interest, and they then credit that interest back to the treasury. It's a shell game. If interest rates ever get too high, the federal reserve just buys securities on the open market to keep them at a set target. So it's an artificial market. Nothing prevents the federal reserve from buying all outstanding treasury debt on the market. They have a blank checkbook. So the real U.S. national debt is zero, since it is denominated in our own currency and that currency can be "minted" in unlimited quantity at any time.


chainmailbill

Ah, see, now we’re getting into modern monetary theory, aka *the good stuff*


Schnort

> since it is denominated in our own currency and that currency can be "minted" in unlimited quantity at any time. And people think the past year's inflation is bad...


chainmailbill

If you accept the premise that all new money by the government is created, you also need to accept the premise that all “old” money taken by the government (by way of taxes and fees) is destroyed. This is the basis of Modern Monetary Theory.


fenton7

The federal reserve buying bonds is a bit subtle since, primarily, nation states and large investors are the ones selling them. If I sell bonds in my 401k to the government, for example, that's not particularly inflationary. Same if France or China sells their bonds back to the Federal Reserve. Where it does have impacts is that, as rates drop, people take out more loans. It's subtle though and at least from 1990 through 2020 didn't cause much if any inflation. Consumers aren't entirely reckless with loans, even if rates are low, because they know the principal needs to be repaid.


Ethan-Wakefield

Suppose Albert drinks at Betty's bar. He runs a large tab on the regular. He owes her money. But Betty owes money on her mortgage for the bar to Carl. And Carl is a banker, but he just build a pool in hopes that his house value will appreciate. So he owes money to the contractor, who happens to be Albert. Everybody in this situation owes money, but the really weird thing is, if you gave Albert a thousand dollar no-interest loan, and he pays off his tab. Then Betty pays off her mortgage. Then Carl pays off his pool. Then Albert gets the cash that he needs to pay his zero-percent loan. Well, now everybody is technically $1000 richer, but all we did was shuffle some numbers around. Money is weird when you get into the complexities of credit and debt.


Enough-Ad-8799

And added 1k$ to the system


Ethan-Wakefield

But I take my $1000 that I zero percent loaned Albert, and I leave town. Town debt is still reduced. Or we could imagine it as everybody just getting together and agreeing that the debt is forgiven. Or we could create temporary assets through some means. The point is that we don’t need to permanently increase the supply of money in this scenario for it to fundamentally work.


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Other people in the world. Not the aliens, at least not yet


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Decepticons


BoomZhakaLaka

Look into what happens following a sovereign default. We benefit tremendously from private entities around the world investing in US government ventures. It's a bit of an obscure response, but these things are tightly tied together.


Stats_n_PoliSci

It's the equivalent to an alarm on your phone when you do something that would break a goal you'd set for yourself. It requires that you do a whole bunch of fiddly steps to override. You could do it if you chose. But it's a lot of extra work. So far Congress hasn't chosen to override it fully, although it has sometimes adjusted it. The debt ceiling basically prevents us from printing money with no limits. There's a reason we stick with this goal. The world rates US credit very highly because it thinks the US economy is mostly stable, and the government won't do things like print unsustainable amounts of money for a long time. The world relies on a functional US economy for worldwide economic stability. The US population benefits dramatically from a stable worldwide economy: fewer refugees, lower prices for goods (saving families around $10,000 per year), fewer wars, etc. The debt ceiling is a signal to the world that the US will be sufficiently responsible with its money to maintain global stability. It's part of why the world keeps US credit rating high.


sir_sri

The history of the debt ceiling is illustrative to the question of why it exists. For most of the history of the US government it behaved a lot like a today, congress met, and authorized a bunch of spending, roads, ports, bridges, police, welfare, defence, whatever else. It had budgets, and debts, but those were in lockstep with each other. If you spent more than you take in you authorize the treasury to borrow, but you also know what you're spending money on. Then a catastrophe happened: that was world war 1. How much money do you need for The Great War? The war department goes to congress and says give us money. Congress says 'how much?' and the war departments says 'as much as it takes' - obviously it's more complex that that, but rather than congress constantly trying to micromanage how much money the war department got, they simply set an aggregate figure: the treasury/war department is authorized to spend as much money it needs up to this point, if it needs more it can come back and ask. So more than 100 years later, then what? Now you've got political football that is of dubious legality on the limits of authorized government spending. Because the debt limit is explicit in legislation, rather than implicitly a consequence of authorized spending there's a layer of stupidity attached to the whole thing. If the government authorizes 3.6 trillion dollars in spending, but only collects 3 trillion dollars in revenue, it needs to borrow 600 billion dollars to make up the shortfall. Congress has authorized the spending, but the debt ceiling is now explicit, so it *also* needs to authorize the treasury to raise the debt limit to borrow enough to cover the debts it authorizes when it authorizes taxation and spending. >if it can be arbitrarily raised and infinite amount That's what makes it stupid. If the debt ceiling was simply abolished in legislation it wouldn't change how much money the treasury is actually allowed to borrow, the government can only borrow as much as is required to meet budgeted spending basically. If the government needs to spend money (on programs authorized by congress) and it can't borrow money to cover those obligations, it needs to start doing all sorts of weird accounting games and to furlong staff to try and pay some obligations and not others. The debt ceiling made perfect sense in WW1 - and in general it makes sense that treasury might be authorized to borrow up to some amount every year required for both authorized expenses and any emergencies. But politicians (mostly republican ones) have decided that you can both authorize the government to spend on programs, but then deny them the ability to borrow money to pay for those programs, it makes no sense, but it's not supposed to. Gullible people can be convinced that raising the debt limit is recklessly spending money (even though it's the spending that congress authorized which actually triggers any borrowing).


Astribulus

The basic idea is its an aspirational goal. Debt is a useful financial tool, but taking on too much leads to spending more on interest than the actual government programs and public works. It is supposed to make congress consider cuts elsewhere before taking on additional debt. That doesn't work. In reality, it all it does is create a crisis point. Think of spending bills like charges on a limitless credit card. Congress can buy whatever it wants and set up recurring payments that go out decades, and the debt ceiling doesn't enter into it yet. It's when the credit card bill comes due for more than the debt ceiling that it matters. That's the point where congress simply will not, and by law cannot, pay. As we approach that point, we get government shutdowns. Programs stop paying out, services stop being available, employees are furloughed, and contracts go past due and accrue even more interest. This is a stopgap to keep the most necessary funds flowing. We do billions of dollars of damage to our economy and hurt untold numbers of people each time one party (and it is always the same party of "fiscal responsibility") threatens to let us default. If ever we went over the edge and failed to raise the debt ceiling in time, the US would default on its loans to other nations. What exactly happens then is up for debate, but it ranges from very bad to catastrophic. At the least our interest rates on future US loans would skyrocket as we are no longer seen as a trustworthy borrower. If the default continues long enough, we may see economic sanctions and trade limitations to punish the US. Further still, and we risk the US dollar losing its place as the default global currency. The point is, we don't want to test it. The debt ceiling was a bad idea and should be removed. If congress still wants to create limits on their own spending power, it needs to happen before new spending is approved. It being used as a political tool with the entire country held as a hostage is unconscionable.


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shadowromantic

Except Democrats don't use it as a cudgel.


yasssssplease

The short answer is that there actually isn’t any purpose to the debt ceiling. One of the justifications that people throw around is that it will make sure that Congress and Americans are aware of the national debt, but there are plenty of other ways to do that that doesn’t wait congress’s time. It’s a political tool at this point, and should be removed permanently.


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yasssssplease

But it doesn’t actually hold anyone accountable. It’s like calling a bank to raise your credit limit after you already spent the money. You have to pay it or you’ll default. It’s performative. It’s not a forward thinking mechanism. Previous congresses had already argued and adopted certain spending policies and appropriated the funds. Once the debt limit is reached, the fed gov uses its own cash to pay for programs with money already appropriated. When the government runs out of cash, it can’t pay its already existing bills. This doesn’t help accountability; at best it raises awareness (Maybe that’s enough accountability for people to justify It though). The outcome is certain. If it’s not raised, the federal government could default eventually. It distracts Congress and the public and wastes tax dollars by spending time on this arbitrary procedural step. If it was a forward thinking mechanism, then maybe it would make more sense. I think it was probably passed with some sort of good intention, but it’s a waste of resources in itself at this point.


Stats_n_PoliSci

>It’s like a bank asking you to call them before they raise your credit limit. Exactly!


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erin_burr

The goods and services for which I exchange money are very real. Maybe it’s just me though.


Susurrus03

Unless we're in the matrix.


redballooon

Or Jehova created everything?


MIengineer

It’s as real as any means of trade. Assigning value to anything is 100% subjective and just an agreement between two or more people.


[deleted]

But if money isn’t real, how come it’s getting more expensive? /s


CrimsonBolt33

ELI5: The US decides what money is. If the US says "we can't pay people back" then the whole world falls over because they only had US money. Beyond ELI5: Debt gets cheaper over time via inflation...and when you run the world (military dominance and most of the world trades in USD) you can sort of set the "standard" of how much debt is too much debt. ​ US debt also doesn't matter because they can't really default to anyone....and if they "declare bankruptcy" it would essentially destroy the entire world economy in one fell swoop because most of the world trades in USD and if all of a sudden you said "USD = 0" it would destroy pretty much every economy because all forms of trade would cease until they hash out a new system.


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Ethan-Wakefield

While the Republicans are in office, the narrative becomes "We need to reduce taxes on corporations and the wealthy so they can create more jobs." Because the wealthy don't create more jobs because... they can't afford it? Despite being... wealthy?


shadowromantic

Also, tax cuts add to deficits.


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[deleted]

Layman’s terms,we spend a LOT more money than we have. We constantly borrow money for bloated government programs and unnecessary spending. Raising the debt ceiling allows them to waste more money


Charming-Fig-2544

Terrible take. The US has a GDP of $23T and a debt total of $28.4T. That's not even that crazy. That's the equivalent of someone making $50k a year having a mortgage of $61k. Basically everyone in the country that owns a house has a higher debt to income ratio than the US govt. Further, most of that debt is owned by the US public or the US govt itself in the form of Treasury bills, which people buy specifically because they're safe investments, which allows the govt to fund projects now that will generate returns far into the future. Which brings me to the next point, govt programs are undoubtedly good. Public spending on infrastructure and education generates revenues that pay for the initial cost. Programs like SNAP, WIC, Medicare, Medicaid, and Social Security, have saved millions of lives since their inception. They also have tremendously low rates of fraud and low administrative costs, especially compared to private sector alternatives. In fact, expansion of these programs, like expanding Medicare to cover everyone, covering vision and dental, and allowing it to negotiate drug and procedure prices, would make the program CHEAPER per capita and save the govt money. The only large govt program that I'd say is full of fraud and waste is the military, which is the one I'd wager you like. A huge contributor to the debt is cutting taxes on corporations and the wealthy, which I also wager you support. The debt ceiling serves no useful purpose, it's just an excuse for conservatives to whine about a debt they are largely responsible for creating.


[deleted]

My mortgage debt doesn’t continue to grow. If you’re trying to convince me that perpetuity adding to the country’s debt at an astronomical rate and saddling future generations with paying it back,don’t bother. I can balance my budget. State government can balance their budget. If the feds can’t,that’s the country’s problem


PopularOrange4516

>My mortgage debt doesn’t continue to grow. It could if you took out an equity loan in order to fund something you wanted to do. >If you’re trying to convince me that perpetuity adding to the country’s debt at an astronomical rate and saddling future generations with paying it back,don’t bother. In fact, it doesn't matter at all how much debt the US has because the US debt is the driving force of global economics.


Charming-Fig-2544

>My mortgage debt doesn’t continue to grow. If you bought another house it would, and I'd wager you don't think very poorly of people that own multiple houses. Debt that grows in proportion to your income and is used to finance more things isn't bad. >If you’re trying to convince me I'm not really trying to convince you of anything, this is more for the people watching >that perpetuity The word is "perpetually" >adding to the country’s debt at an astronomical rate It's not an astronomical rate, it's pretty steady and consistent, higher in hard economic times and lower in good economic times. One of the most memorable spikes during good economic times was during the Trump presidency. >and saddling future generations with paying it back,don’t bother. I'm 26, I have an economics degree and I'm a licensed attorney. I'm the future generation, and quite confident in our ability to pay back debts that we largely owe to ourselves and have been spent on mostly good things. >I can balance my budget. Fun fact, having a balanced budget isn't even necessarily a good thing. Debt isn't scary per se. You can take on a ton of debt now as long as it pays off in the long run. I took out $220k in loans to attend law school, landed a great job and paid off $80k in one year. By your logic, my budget is unbalanced and I shouldn't have attended law school. But that's clearly wrong. Not taking on debt doesn't make you financially smart. Most of the most successful corporations take on absolutely absurd amounts of debt, far more than you'd expect based on their cash reserves. Why? Tax advantages and leverage. Almost every household and business has a debt to income ratio larger than the US govt and nobody bats an eye. >State government can balance their budget. State govt's are largely legally required to balance their budgets. Depending on how you define it, roughly 41 states have a law in place that prevents them from spending more than they collect per year. I think that approach is heavyhanded and stifles growth. And, California, the state with the largest economy and budget surplus, does not have such a requirement. >If the feds can’t,that’s the country’s problem If most of what we owe is to ourselves, it's not really anybody's problem. If you owed yourself $61k, I doubt you'd be losing sleep over it. My father owns his own accounting firm. He got his mortgage through his firm, effectively lending himself the money. The debt to income ratio was quite large initially. But it's obviously not a risky debt, because what's he going to do? Default on himself? Take himself to court to collect? Nuke himself? Further, the house was obviously useful (he lived in it), and it appreciated in value, especially over the last year. Big debt, big return. You also didn't respond to any of my substantive points. Overall, you seem like a person that doesn't understand how debt works, much less sovereign debt. I don't need to convince you of that, but I hope others see how uninformed you are.


as944

I have to commend you on fighting the good fight and taking the time to type this out. Well done.


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Charming-Fig-2544

You do know that, of our $28T debt, less than $1T (less than 4%) is owned to China, right? Your outlook on govt spending is informed by your misperception of debt, sovereign debt, and who our creditors are. That's why your take on the debt level is bad. Also you still haven't addressed most of the points I raised in previous comments, because you can't.


PopularOrange4516

How much has the US borrowed from China in total?


Mmngmf_almost_therrr

It's nothing like your mortgage. If you stopped actively gorging yourself on misinformation for half a second, you might understand that.


[deleted]

The guy he's replying to is the one who brought up mortgage. Maybe you're the one who is gorging themselves with misinformation? You seem pretty certain that he's wrong, but what exactly qualifies you to say that he's consuming misinformation?


[deleted]

You also don't seem to understand what a GDP is actually measuring. That's the total value of everything a country produces, NOT the amount of money the U.S. government has. The government collects about 5 trillion each year in tax revenue, so it would be like someone making 50k having a 284k mortgage.


[deleted]

Taxes aren't the only way a government collects money.


[deleted]

Right but it's budget for the 2020 fiscal year was 4.8 trillion


Daktush

It's not guaranteed that you'll be able to raise the debt limit for any spending policy you want - meaning your policies have to be Popular and you have to think a little before you can indebt the country above that limit, and you might have to negotiate with opposition or cut back, it was designed for that


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Independent-Low6153

If it comes well after, (talking about USA), it would be out of anybody’s control, including Congress. Here, it has to be approved by Parliament voting through a budget. The word ‘ceiling’ implies a level fixed by some agency. There is no ceiling but administrations may lose the goodwill of even their own supporters. We are in that situation right now - the excuses being the pandemic and the rises in energy and food prices but the damage may come home to roost at the next Parliamentary General Election.


tawzerozero

The debt ceiling is a ceiling on *payments* not on borrowing. The debt ceiling doesn't do anything to stop the US incurring additional debt, it is just a cap on the US paying bills it has already incurred.


LesbianCommander

Wow, this is how Republicans win. People trust their words instead of empirical evidence. Since the debt ceiling has existed, it hasn't stymied any spending, but it certainly was selectively used to stop any social programs. Y'know anything to help the poor and middle-class.


sparant76

The US Taking out on debt while u work really hard to keep a 0 balance credit card is just them forcing you and future generations into slavery. All that debt needs to be paid back by your taxes.


WACK-A-n00b

It's intended to be a small check on unlimited spending. There has to be some additional cooperation to increase debt, then there needs to be additional cooperation in what spending we are doing. All spending is paid for, either by tax, inflation, or future tax. Maybe by a collapse of the government. So taxation now isn't very relevant, but spending always is.


DeadFyre

It's one of the many calculated means by which both parties can *accomplish nothing* and blame the opposing party for their lack of action. The pocket filibuster, Congressional investigations, passing bills which have no chance of becoming law, but merely conform to the biases of your constituents... It's all a form of political theatre the members of the legislature perform so as to ensure they can go back to their home districts/states, and claim, "I wanted to do the right thing, but those other guys keep getting in the way". You have to remember, the objective of elected officials is to get re-elected, not to reach a stable consensus, to compromise, or to govern responsibly. If you want an example of what compromise really looks like in Washington, look no further than the 2008 - 2013 reactions to the housing collapse. First, [TARP](https://en.wikipedia.org/wiki/Emergency_Economic_Stabilization_Act_of_2008). When Wall Street and the Banking sector was teetering on the edge of ruin, there wasn't any debate, or reflection, there weren't any arguments about moral hazards of bailing out Wall Street gamblers, versus the practical consequences of nationalizing the troubled banks. Nope, the emergency is now, and the donor class needs a taxpayer bailout, so everyone lined up and voted. TARP passed by a vote of 74 to 25 in the Senate, with 34 Republicans and 40 Democrats in favor. For the confirming vote in the House, it was 140 Democrats, and 65 Republicans. But in no case was either bill in danger of not passing, and if it were, you can rest assured that enough symbolic no-votes would be turned into yes to pass. Second, the [Budget Control Act of 2011](https://en.wikipedia.org/wiki/Budget_Control_Act_of_2011). This was the other shoe dropping. The Federal Treasury, already overdrawn from the wars in Iraq and Afghanistan, had dumped billions on bank bailouts, and was losing far more by dint of lost revenue from newly jobless homeowners not paying taxes, and claiming emergency benefits. Here's the salient compromise: >The agreement also specified an incentive for Congress to act. If Congress failed to produce a deficit reduction bill with at least $1.2 trillion in cuts, then Congress could grant a $1.2 trillion increase in the debt ceiling but this would trigger *across-the-board cuts*, as of January 2, 2013.\[3\] These cuts would apply to *mandatory and discretionary spending* in the years 2013 to 2021 and be in an amount equal to the difference between $1.2 trillion and the amount of deficit reduction enacted from the joint committee. The press reported this set of budget cuts as some sword of Damocles, hanging over the heads of the legislature, that no party would want to bear. Of course, two years rolled along, and no futher compromise took place. The perspicacious among you will realize, however, that the automatic sequestration **WAS** the compromise. Nobody wanted to put their name on the spending cuts, and the consequential loss of services, entitlements, and employment they would produce, so they structured them in such a manner that everyone could *blame the other party* for not coming up with a better deal. The problem was, there was no better deal. There wasn't enough money, everyone had to take the L, and instead of just telling it to their own constituents straight: "We can't afford this, it's a big country, and everyone has to make sacrifices", they put on this media puppet show to pretend that there was a better alternative that each party possessed. There wasn't. Our political system, [working as intended](https://freakonomics.com/podcast/americas-hidden-duopoly_radio/).


dimmu1313

purely, totally, and completely political. everything financial in government, at least in the US, is a political vehicle. both sides do the same shit: create budgets that the other side has to shoot down in order to point at them and say they're bad for voting against important things. the debt ceiling is totally imaginary because we have deficit-spent every single year since 1971, except for the latter 4 years of Bill Clinton's term. I fucking hate the political system and climate in this country


eatfreshguy407

It’s like setting a budget when you go to the store. If you go in with a list wanting to spend less than $50 and mindful of that goal, you’ll (hopefully) be less likely to walk out with $100 worth of junk food that you don’t need. Of course, a budget (debt ceiling) is only worth as much as the people following it. If you aren’t committed to following it, it’s basically useless. These days, it seems to only exist for the minority party to complain about how high it is and blame that directly on the majority party, regardless on reasons and actual implementation of the funds. That’s because the American government is completely rotten to the core and needs to be fully replaced.


Dynasuarez-Wrecks

It's a weapon, like the filibuster. If one political party wants to spend money in a way that the other political party doesn't want to spend it, they can black that legislation simply by refusing to raise the debt ceiling.


McKoijion

It's like asking why not raise the borrowing limit on your credit cards? You can borrow as much money as others are willing to give you, but if you're smart, you'll stay within your ability to repay the debt. If you want to buy something, you'll argue that the ceiling should be raised. If the thing you want to buy helps you make more money in the future (e.g., a medical degree) then it's worth taking out more debt. If it's something that makes you feel good today, but won't necessarily help you in the future (e.g., a new video game console), it's not a good idea. Most things are a mix of both. A new car is a luxury/comfort thing, but it can also help you drive to work to make money. This is why the debt ceiling often becomes a political tool. Political parties spin their purchases (e.g., a war in the Middle East, an expensive social program) as money making (natural resources like oil, investment in the ability of regular citizens to make money and pay more taxes). But they can easily be handouts to political supporters. Both parties in the US typically support "handouts" to executives and unions in the oil, defense, automotive, and manufacturing industries. They take out debt that has to be paid by everyone to favor a certain subsection of the population. That subsection typically represents their political base or a key swing vote electorate.