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One of the most important issues that occupy the world agenda at certain times every year is the U.S. 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 2025 again. US Debt Limit issue which was to be used by both democrats and republicans in the elections, again be a crisis in 2025 probably. It is obvious that we all know that unfortunately that ceiling or limit is exceeded almost every year.
In 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 we accept that the US 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 we suggest you to read 2025 possibility of Global Recession article. 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 and History of Limit in the U.S.
This name is the upper limit of the United States Treasury Department, that is, the State’s borrowing. According to constitutional provisions, the authority to borrow in the United States belongs to Congress. The American Congress consists of the Senate and the House of Representatives.
Since 1917, Congress has given the Treasury Department the authority to borrow up to a certain upper limit. Accordingly, this upper limit is called the Debt Ceiling. When this limit is reached, the American Government of the period comes and gets approval from the US Congress, first the House of Representatives and then the US Senate, and increases the limit.
This is where the Debt Ceiling 2025 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 limit problem. Of course, this is very difficult.
How the Debt Ceiling Affects Government Operations
Similarly, the possible crisis issue will not be on the world’s agenda again in 2025. Since former President Biden’s party, the Democrats, is not in the majority in the Senate anymore, it is easy for the resolution passed by the House of Representatives to pass the Senate by Republicans. Of course, the opposite situation is also possible in a tense political environment. Former and the new 47th 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 in years between 2016-2020. Considering that he won both houses of parliament in the November 2024 elections, he will have an easier time in this regard during this period.
On the other hand, economic problems have always been the subject of political material. No matter which party has the upper hand and power in the presidency and the American Congress, they will first think of pressuring their opponent on the debt ceiling before national interests. Even if they eventually solve this situation, both the public and the financial markets will go through a very tense period. Since Trump will be in power very strongly between 2025-2029, he will overcome this problem more easily.
The Risks of Reaching the Debt Ceiling
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.
But the good news is that throughout history, the US Debt Ceiling has always been raised, and America has never defaulted. In other words, no one, Republican or Democrat, has ever taken that risk, and it seems unlikely that no one will in the near future. Although the limit issue will likely cause a minor political crisis in 2025, it is almost certain that there will eventually be a deal and the US will default. Finally, the US Debt limit, which is $31 trillion, was last raised by the Biden administration in June 2023. He deserves a “well done” for his success on the issue.
