What's the Deal with the Debt Ceiling?

Lots of news is being made about the looming debt ceiling deadline on June 1. That is the date that the U.S. Treasury estimates that it will no longer be able to pay all of its obligations with the funds it has on hand. At that point, it will need to borrow more money to pay the bills, but first Congress will have to allow it by raising the debt ceiling.

While the media makes this sound like impending doom, this happens every year or two. Since President Eisenhower in 1959, every President has increased the debt ceiling multiple times for a total of 89 times. We expect number 90 very soon.

If they did not resolve it, the Treasury would prioritize paying its bond holders back over everything else. The consequences of not doing so would be significant harm to our economy and the global financial system – all of which would be self-inflicted and avoidable. That is something nobody wants.

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