Economy: Debt Limit

May 11, 2023, 10:57 am EDT

Debt Limit

What would you do when your credit card balance gets closer to its limit? Is it a good idea to adjust the limit higher if you can do it yourself?

This is the question that the US congressman needs to answer tomorrow when the US debt limit is getting to its limit again. We all know the answer before tomorrow is to adjust the debt limit higher as they did numerous times because it is the easiest thing to do. 

There are two significant problems ahead when adjusting the limit higher. First, the interest payment would get heavier. Second, the reckless spending pattern would stay because there are more rooms for the debt to expand. 

As shown in the featured chart of US debt where it accumulated to $31.4 trillion today. It grew much faster during 2020 from $23 trillion during the Biden administration. 

Although it seemed easy to solve the problem by raising the limit, the negative outcome would come in the future. 

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