{"id":105517,"date":"2023-06-15T12:36:00","date_gmt":"2023-06-15T16:36:00","guid":{"rendered":"https:\/\/www.shortform.com\/blog\/?p=105517"},"modified":"2023-06-16T12:36:51","modified_gmt":"2023-06-16T16:36:51","slug":"abolish-the-debt-ceiling","status":"publish","type":"post","link":"https:\/\/www.shortform.com\/blog\/abolish-the-debt-ceiling\/","title":{"rendered":"Can and Should the US Abolish the Debt Ceiling?"},"content":{"rendered":"\n

What purpose does the debt ceiling<\/a> serve? What are its pros and cons? Is abolishing the debt ceiling feasible?<\/p>\n\n\n\n

Many Americans agree that Congress\u2019s increasingly chaotic debt ceiling negotiations have become a distracting and dangerous spectacle. But to date, calls to abolish the ceiling have fizzled.\u00a0<\/p>\n\n\n\n

We’ll examine why the US has a debt ceiling and what it would mean to abolish it.<\/p>\n\n\n\n\n\n\n\n

Debt Ceiling Origins and Purpose<\/strong><\/h2>\n\n\n\n

Should the US abolish the debt ceiling? Let’s take a look at the history of the debt ceiling and the pros and cons of abolishing it.<\/p>\n\n\n\n

Congress implemented the debt ceiling in 1917 during World War I to <\/strong>simplify and streamline the debt issuance process<\/strong><\/a> and increase borrowing flexibility.<\/strong> Doing so enabled the Treasury to issue bonds up to a predetermined dollar amount so it didn\u2019t have to seek Congress\u2019s approval each time it needed money. This made it easier to finance war mobilization efforts<\/a>.\u00a0<\/p>\n\n\n\n

But as the US engaged in more wars in the decades that followed, the US accumulated more debt. The debt ceiling today is more than $31 trillion<\/a>.<\/p>\n\n\n\n

When the country hits its debt limit it runs out of cash, can\u2019t pay its obligations, and must wait for Congress to raise or suspend the ceiling. But an increasingly divided Congress has turned the once simple process into a game of brinksmanship and increased the country\u2019s risk of <\/strong>defaulting<\/strong><\/a>.<\/strong> <\/p>\n\n\n\n

Default Consequences<\/strong><\/h3>\n\n\n\n

Analysts say the country will experience <\/strong>severe economic consequences<\/strong><\/a> if the US defaults on its debt<\/strong>, including:<\/p>\n\n\n\n