On January 19th, 2023, the US officially hit its debt ceiling of 31 trillion dollars. This is forcing the government to take extraordinary measures. Once those measures are exhausted and the government runs out of money, it cannot repay any debt or take on new debt. That means the US will have to default on its debt payments. 

The debt ceiling was first created in 1917 and was set at a mere 11.5 billion dollars. In 1939 in the midst of World War II, the US raised the limit to about 45 million dollars, which was 10 percent over the debt at the time. Since the end of World War II, the debt ceiling has been modified over 100 times. The most recent time was in December of 2021 when the limit was increased to about 31 trillion dollars, an amount the United States has now surpassed. 

Congress has to decide on a plan of action, whether that means suspending the debt limit, raising it, or eliminating it. Congress can spend months debating which road to take; meanwhile, extraordinary measures are being used.

These measures include suspending contributions to certain government pension funds, as well as suspending state government securities, and borrowing money set aside to manage exchange rate changes. These extraordinary measures were first implemented in 1985 and have only been used six times as of March 2021. 

One of the most vital pieces of information given to congress is the “X Date.” The “X Date” predicts when the US will run out of money. Experts on the debt limit hope that congress will come to a decision by this  “X Date” because if they don’t, the results will have catastrophic effects not only on the US economy but on a global scale.

 If the US runs out of money before a decision on the debt ceiling is made, it will have to default on its debt. Defaulting on the US debt would mean that the Treasury would have to stop paying for government salaries, medicare tax refunds, and interest on the national debt. If the US defaults and can not pay back loan holders and bondholders, it will send a message that the US is unreliable.

If the US debt were labeled unreliable, it would cause many changes. First, the credit rating would be downgraded for all Americans, and the interest rates would increase. Second, products like auto loans and mortgages would be more expensive for people who need to pay interest. Third, on a global scale, the US stock markets would crash and decrease the value of the American dollar used worldwide, and the effects would be felt everywhere. 

With the US hitting its debt limit, lawmakers and congress are being pushed to make a decision on it. This decision could affect millions of Americans and the entire US  economy itself. At this time, congress is still debating on the topic, and an”X Date” has still not been issued, leaving all of America in suspense and, for some people leaving them afraid.