Debt Ceiling: A Bottomless Pit?

Imagine your credit card has a limit of 5,000 dollars, but for some reason, the company allows expenditures of 6,000 dollars. When you inquire if the limit has been raised, the answer is: "No, but we will consider it." Nonetheless, there is a demand for immediate payment of the full amount. A similar balancing act seems to take place between the U.S. government's debt ceiling, impending shutdowns, and political conflicts every few months. The U.S. Treasury Department bridges the funding gap by issuing bonds that are placed on the investor market. Since the introduction of the debt ceiling in 1939 at 45 billion dollars, the debt level has risen to an impressive 36 trillion dollars. This is not about approving new expenditures, but about settling existing bills. Experts like Kathleen Day from the Johns Hopkins Carey Business School criticize that the debt ceiling is often misused to achieve political goals that have failed in the budget process. She warns that not raising this limit could jeopardize the country's creditworthiness, leading to an economic disaster and a massive increase in interest rates. The U.S. Government Accountability Office recommends a simultaneous decision on debts, expenses, and revenues—not short-term right before the need arises. Prominent voices, including presidents in recent years, have even suggested abolishing the debt ceiling. The political deadlock has already led to short-term solution constructs such as the "continuing resolution," which only provide temporary relief. The biggest challenge lies not only in action-oriented budget management but also in the international distribution of debt, where Japan plays the largest role. Thus, "responsible" management of national finances remains key, as Day emphasizes. Debts should be used profitably to stimulate economic growth and not miss the mark.