Why is there a debt ceiling? (2025)

Why is there a debt ceiling?

It simply allows the government to finance existing legal obligations that Congresses and presidents of both parties have made in the past. Failing to increase the debt limit

debt limit
Previously, in December 2021, the debt ceiling was raised when it was increased by $2.5 trillion, to $31.381463 trillion, which lasted until January 2023. After the 2024 United States presidential election, Donald Trump supported eliminating the debt ceiling.
https://en.wikipedia.org › wiki › United_States_debt_ceiling
would have catastrophic economic consequences.

(Video) What Is The Debt Ceiling? | January 7, 2025
(CNN 10)
Who owns over 70% of the US debt?

Who Owns All that Debt? At the end of 2023, the nation's gross debt had reached nearly $34 trillion. Of that amount, about $27 trillion, or 79 percent, was debt held by the public — representing cash borrowed from domestic and foreign investors.

(Video) The Debt Ceiling Explained: Why You Should Care
(The Wall Street Journal)
What would happen if the debt ceiling isn't raised?

If the U.S. can't pay those bills, then it defaults on the national debt. This is where catastrophe strikes. Economists say consequences of a default on the national debt could include higher interest rates, a stock market crash, a recession and massive job losses.

(Video) US Debt Ceiling Explained: Why It Matters to Markets
(Bloomberg Quicktake)
Who does the US owe its debt to?

Public debt, which accounts for roughly 80% of the total, is owed to investors. Those investors include foreign governments, mutual funds, pension funds, and individuals among others. The Federal Reserve owns part of this public debt. Intragovernmental debt accounts for the other 20%.

(Video) Why the US is always hitting a "debt ceiling"
(Vox)
Why is the US in so much debt?

Today, our deficits are caused mainly by predictable structural factors: our aging baby-boom generation, rising healthcare costs, and a tax system that does not bring in enough money to pay for what the government has promised its citizens. And the more we borrow, the more we pay in interest on that debt.

(Video) Trump & New Congress on Debt Ceiling, Reconciliation Bill
(Bloomberg Television)
What would happen if China called in U.S. debt?

The U.S. dollar would depreciate and the yuan would appreciate if China called in all its U.S. holdings, making Chinese goods more expensive.

(Video) What Happens if the U.S. Debt Ceiling Is Hit? | WSJ
(The Wall Street Journal)
What countries does the US owe the most money to?

Japan and China have been the largest foreign holders of US debt for the last two decades. From 2000 to 2023, annual totals are based on data from December, while the 2024 data is updated through April.

(Video) What the US 'Debt Ceiling' Means
(VOA Learning English)
Will the US ever get out of debt?

Eliminating the U.S. government's debt is a Herculean task that could take decades. In addition to obvious steps, such as hiking taxes and slashing spending, the government could take a number of other approaches, some of them unorthodox and even controversial.

(Video) Why there's a debt ceiling
(Associated Press)
Which country is the most in debt?

Currently, China's total debt stands at around $47.5 trillion, which is less than the US's near $70 trillion. Notably, China holds the largest share of non-financial corporate debt globally, at 28%. Both China and the U.S. are among the countries with the highest debt-to-GDP ratios.

(Video) The Debt Ceiling, Explained
(The New York Times)
What would happen if the US paid off its debt?

Answer and Explanation:

If the U.S. was to pay off their debt ultimately, there is not much that would happen. Paying off the debt implies that the government will now focus on using the revenue collected primarily from taxes to fund its activities.

(Video) The Debt Limit Explained
(CGP Grey)

How much debt is Russia in?

Russia National Government Debt reached 253.4 USD bn in Nov 2024, compared with 274.8 USD bn in the previous month. Russia National Government Debt data is updated monthly, available from May 2009 to Nov 2024. The data reached an all-time high of 384.2 USD bn in Jun 2022 and a record low of 86.1 USD bn in May 2009.

(Video) What is the debt ceiling? Why is it important? What if debt hits the ceiling? Debt Ceiling Explained
(FINANCE MARK)
Which countries are not in debt?

Countries with the Lowest National Debt
  • Brunei. 3.2%
  • Afghanistan. 7.8%
  • Kuwait. 11.5%
  • Democratic Republic of Congo. 15.2%
  • Eswatini. 15.5%
  • Palestine. 16.4%
  • Russia. 17.8%

Why is there a debt ceiling? (2025)
Can the U.S. borrow money forever?

The US will borrow money as long as the US exists. Foreign governments will buy US Treasury Bonds as long as such purchases are in their interest. Currently they buy bonds to hold as reserves because US Treasuries are unlikely to lose value.

What happens if the U.S. cannot pay its debt?

A U.S. default could erode their value, with massive geopolitical consequences. Source: International Monetary Fund. Many U.S. exporters could benefit from dollar depreciation because it would increase foreign demand for their goods by effectively making them cheaper.

How much is China's debt?

China: National debt from 2019 to 2029 (in billion U.S. dollars)
CharacteristicNational debt in billion U.S. dollars
202314,903.61
202213,066.2
202111,553.86
202010,102.36
7 more rows
Oct 25, 2024

Why do we owe China so much money?

But the most important reason is that China receives a surplus of U.S. dollars due to the trade imbalance between the two countries, as China exports more to the U.S. than it imports. But, Chinese companies and their workers need to be paid in China's local currency.

Who does America borrow money from?

Federal Borrowing

The federal government borrows money from the public by issuing securities—bills, notes, and bonds—through the Treasury. Treasury securities are attractive to investors because they are: Backed by the full faith and credit of the United States government. Offered in a wide range of maturities.

Who is the world's largest buyer of U.S. debt isn't going away?

For all the focus on China, Japan is actually the top holder of U.S. sovereign debt, with a total of $1.1 trillion.

Why does the US owe so much money?

One of the main culprits is consistently overspending. When the federal government spends more than its budget, it creates a deficit. In the fiscal year of 2023, it spent about $381 billion more than it collected in revenues. To pay that deficit, the government borrows money.

What country owns most of the United States?

Which countries own the most land in the U.S.?
  • CANADA. 31%
  • Other. 28%
  • NETHERLANDS. 12%
  • ITALY. 7%
  • UNITED KINGDOM. 6%
  • GERMANY. 6%
  • PORTUGAL. 3.6%
  • FRANCE. 3.2%
Mar 29, 2024

What is the most indebted country in the world?

At 54.44 percent of GDP, China's national debt has more than doubled since 2014, when it stood at 41.54 percent of GDP. With a $5 trillion dollar (about $38 trillion) national debt, China is the world's most indebted country.

How much debt does Donald Trump have?

Trump and his family reported more than $500 million of income in mid-2018 financial disclosure forms. In September 2020, The New York Times noted that Trump "is personally responsible for loans and other debts totaling $421 million, with most of it coming due within four years" and no obvious way to repay them.

How bad is America in debt?

At just under $36 trillion, or over $270,000 per household, the national debt has become America's second mortgage. Though often mistakenly viewed as simply a burden on future generations, the debt is both an echo of damage done to the economy and of damage to come.

Which US states are not in debt?

The lowest-liability states—Arizona, Idaho, Nebraska, Tennessee, Utah, Wisconsin, and Wyoming—owe less than 3 percent of GDP.

Which person has the most debt?

Former financial arbitrage trader Jerome Kerviel is the most indebted man on the planet, owing his former employer $6.3 billion. The amount Kerviel owes to French bank Societe Generale for fraudulent trades made in 2007 and 2008 would make Kerviel one of the 50 richest people in America if those debts were assets.

Popular posts
Latest Posts
Recommended Articles
Article information

Author: Lakeisha Bayer VM

Last Updated: 02/14/2025

Views: 6394

Rating: 4.9 / 5 (49 voted)

Reviews: 80% of readers found this page helpful

Author information

Name: Lakeisha Bayer VM

Birthday: 1997-10-17

Address: Suite 835 34136 Adrian Mountains, Floydton, UT 81036

Phone: +3571527672278

Job: Manufacturing Agent

Hobby: Skimboarding, Photography, Roller skating, Knife making, Paintball, Embroidery, Gunsmithing

Introduction: My name is Lakeisha Bayer VM, I am a brainy, kind, enchanting, healthy, lovely, clean, witty person who loves writing and wants to share my knowledge and understanding with you.