{"id":101236,"date":"2023-05-04T13:32:00","date_gmt":"2023-05-04T17:32:00","guid":{"rendered":"https:\/\/www.shortform.com\/blog\/?p=101236"},"modified":"2023-05-04T16:08:31","modified_gmt":"2023-05-04T20:08:31","slug":"raise-the-debt-ceiling","status":"publish","type":"post","link":"https:\/\/www.shortform.com\/blog\/raise-the-debt-ceiling\/","title":{"rendered":"Will the US Raise the Debt Ceiling? What You Need to Know"},"content":{"rendered":"\n

What is the debt ceiling<\/a>? Why is defaulting on the country\u2019s debt so bad? Will Congress and the White House reach a deal to raise the debt ceiling by June?<\/p>\n\n\n\n

Analysts say that Congress and the White House must reach a deal to raise the $31.4 trillion debt ceiling by June to prevent the US government from defaulting on its debt. With the clock ticking and Democrats and Republicans both refusing to budge on their positions, there\u2019s no deal in sight.<\/p>\n\n\n\n

Keep reading to learn why the debt ceiling is so important and why Congress and the White House are disagreeing over it.<\/p>\n\n\n\n\n\n\n\n

The Race to Raise the Debt Ceiling<\/h2>\n\n\n\n

Early June. That\u2019s the \u201cX-date\u201d<\/a> by which some analysts say that Congress and the White House must reach a deal to raise the $31.4 trillion debt ceiling to prevent the US government from defaulting on its debt and sending the economy into freefall. But with the clock ticking, a greater-than-ever Democrat-Republican divide, and basic negotiations seemingly out of reach, there\u2019s no deal in sight.<\/p>\n\n\n\n

What Is the Debt Ceiling? <\/strong><\/h3>\n\n\n\n

The debt ceiling is <\/strong>the limit on how much money the US government can borrow<\/strong><\/a>. Congress implemented the measure during World War I to give the Treasury Department unfettered authority to borrow money up to a predetermined amount. Legislators have raised the debt ceiling 78 times since 1960\u2014usually without fuss. But an increasingly divided Congress has turned the once routine process into a tortured one.<\/p>\n\n\n\n

Wall Street\u2019s Role in Debt Ceiling Negotiations <\/strong><\/h3>\n\n\n\n

Wall Street\u2019s confidence in Congress\u2019s ability to reach a debt ceiling deal is an important driver for legislators to come to an agreement, because Wall Street finances the country\u2019s debt<\/strong><\/a> by buying Treasury <\/strong>securities<\/strong><\/a> that fund the government<\/strong>. As a result, Democrats and Republicans are keeping a close eye on investors\u2019 reactions to the current debt ceiling standoff\u2014a perhaps challenging task given contradictory reports that investors either <\/strong>aren\u2019t batting an eye<\/strong><\/a> or are <\/strong>deeply concerned<\/strong><\/a> <\/strong>about <\/strong>the standoff. Still, each party hopes that Wall Street\u2019s fear of the worst will push the other toward its preferred outcome:\u00a0<\/p>\n\n\n\n