One of the most important issues that occupy the world agenda at certain times every year is the USA Debt Ceiling crisis undoubtedly. The same question mark is now in everyone’s minds about the debt limit, which was very busy on the world agenda in May and June 2023 and was finally resolved. USA Debt Limit 2024 crisis issue which is likely to be used by both sides in the elections, again be a crisis in 2024. It is obvious that we all know that unfortunately that ceiling or limit is exceeded almost every year 😊
In the face of this subject, there will be some who would say that it would be good if the USA only defaulted on its own, but things change when the USA is the backbone of the world economy. Let’s not forget how the Debt Crisis that started with the 2008 Sub-prime Mortgage Crisis turned into a Global Financial Crisis. By the way in order to read 2024 Global Recession Article please click here! Remember, knowing such current economic problems and definitions is very important both for career development and personal vision. It is vital to have information about such issues for both those who are new to work and those who want to advance in their careers.
What is Debt Ceiling?
That name is the upper limit of the borrowing of the United States Treasury, in other words, the State. According to the constitutional provisions, the power of borrowing in the USA belongs to the Congress, and the congress consists of the Senate and the House of Representatives. Since 1917, the American Congress has been authorizing the American Treasury to borrow up to a certain upper limit. Accordingly, this upper limit is called the Debt Ceiling. When this limit is reached, the US Government of the time comes and gets approval from the American Congress, first the House of Representatives and then the US Senate, and increases the limit.
This is where the USA Debt Ceiling 2024 possible crisis issue comes into play. It is very obvious that The Limit, which has been routinely increased over the years, has recently become a very contentious issue due to the increasingly heated political atmosphere in the United States and the polarization of the public. In fact, in 2011, under Obama, the debt limit was approved just two days before the end of the government shutdown, causing serious fluctuations in the economy at that time.
We have said that the political atmosphere has a great impact on the this subject/limit becoming a problematic issue recently. For example, let’s take the Biden limit issue, which caused great controversy and passed the congress in June/2023, albeit difficult, after months of negotiations. As we mentioned earlier, the US Congress consists of the House of Representatives and the Senate. Currently, the opposition, that is, the Republicans, is in the majority in the House of Representatives. This means that President Biden need to persuade Republicans in the House of Representatives to raise the Debt Ceiling. Of course, this is very difficult.
Debt Limit and US!
Similarly, the USA Debt Ceiling possible crisis issue will on the world’s agenda again in 2024 also. (Do not forget 2024 is presidential election year in USA!) Since President Biden’s party, the Democrats, is in the majority in the Senate, it is easy for the resolution passed by the House of Representatives to pass the Senate. Of course, the opposite situation is also possible in a tense political environment. Former American President Trump faced similar problems during his presidency when the House of Representatives was in the hands of Democrats. He had the Senate, but it was not easy for him to convince the House of Representatives in the hands of the Democrats for the issue 😊
On the other hand, economic problems have always been the subject of political material. Regardless of which party has the upper hand and power in the Presidency and the American Congress, it primarily considers pushing its opponent on the debt ceiling issue before national interests. Even if they eventually resolve this situation, both the public and the financial markets go through a very tense period. After the 47th presidential election, no matter which party wins the election, they will continue to use this issue as political material.
If Debt Ceiling not raised?
The shortest answer to this question would be very bad for the whole world 😊 If the debt limit cannot be increased, the US Government will automatically not be able to provide the necessary source for spending and payments. In other words, if the American State defaults, it is natural that the default situation of such an economy, which constitutes the backbone of the world economy, will spread in crisis waves. Considering that the Chinese government has a large amount of US government bonds, it would not be wrong to think that the US default will affect them the most after the USA. Along with China, almost all countries in Europe, Asia, the Far East and globally will get their share from this economic fluctuation and instability.
The good news, however, is that throughout history the USA Debt limit has always been raised and America has never been in default. In other words, no one has taken this risk, whether Republican or Democrat, and it seems unlikely that no one will ever take it in the near future. This means that even though the USA Debt Limit issue will cause a political crisis in 2024, there will probably be a deal eventually and the US will not default. Finally, The USA Debt Ceiling, which was 31 trillion Dollars, was last increased in June 2023 by the Biden government. He deserves a “welldone” for his succes about the subject 🙂
