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What is the Debt Ceiling?

There's been lots of debate in the United States about hitting the Debt Ceiling and the consquences of what that will mean? What is the Debt Ceiling and why does it matter?
May 16, 2011


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Debt ceiling refers to the maximum amount of debt a government can take on. The aim of this ceiling is to limit the government's spending. In the United States it is 12.2 trillion dollars at the time being. The problem is that the current debt of the country is very close to this limit, therefore the government will not be able to take on any more debt soon. The ceiling can only be raised by the Congress, it has already raised it several times. Now Democrats want to raise it but Republicans do not.

Government services will be uninterrupted, but the existing spend and planned investments need to be redeemed, if the ceiling is not raised. Another solution is to increase government revenue collections.

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