What does raising the debt ceiling mean? Can I call my credit card company and raise my debt ceiling?
Spaced Frehley asked:
By raisilng the “debt ceiling” is that the same as saying “we’re not in debt’ until we reach X amount of debt? What does China and the other countries think of America raising the “debt ceiling”? Is raising the “debt ceiling” a way of putting off the American debt until the next Presidential election? Bush raised the “debt ceiling 7-8 times” and we still inherited a huge debt.
By raisilng the “debt ceiling” is that the same as saying “we’re not in debt’ until we reach X amount of debt? What does China and the other countries think of America raising the “debt ceiling”? Is raising the “debt ceiling” a way of putting off the American debt until the next Presidential election? Bush raised the “debt ceiling 7-8 times” and we still inherited a huge debt.
June 15th, 2011 at 11:41 pm
The debt ceiling is self-imposed. It’s more like telling yourself that you won’t accumulate more than $500 on your credit card than it is like your actual credit limit.
Our actual credit is limited by our ability to pay our creditors’ interest back (our creditors, incidentally, aren’t some kind of world bank, but instead are millions of individual investors who buy bonds). Countries have credit ratings, as do currencies – if we started defaulting on our debt, investors worldwide would no longer consider it wise to buy bonds and currency from the United States, and we would no longer be able to spend into the deficit, since we would have nowhere to get credible money. (Deficit spending, contrary to what some incredibly idiotic pundits would have you believe, has nothing to do with ‘printing money’ in the United States.)
There’s no set numerical limit at which point the United States’ credit rating suddenly collapses – it’s a matter of whether we can make good on our interest, not a matter of whether we have $10 trillion in our pockets (just like your mortgage – not having your house’s value in cash on hand doesn’t hurt your credit rating; falling behind on your payments would). The only concrete and immediate drawback is that the more we borrow, the more we have to pay in interest. Currently interest consumes about 7% of the federal budget.
June 17th, 2011 at 3:38 am
Credit card companies can extend more credit, but it means you are more likely to become bankrupt.
June 19th, 2011 at 8:59 am
It’s a fallacy to compare your personal financial situation to that of an entire nation’s.
June 22nd, 2011 at 12:32 am
“Bush raised the “debt ceiling 7-8 times” and we still inherited a huge debt.”
Yeah, and Obama has raised it in two years by a larger amount than Bush did in eight years.
June 23rd, 2011 at 8:32 pm
as the other guy said, it is a self check. And yes, you CAN call your credit card company and get your limit raised, if you have good credit and income that fits the new limt. Really, if the limit is not raised, we will not have money to pay the loans as they come due and we will default, which is worse than raising the limit. The economic crap will really hit the fan then.
June 26th, 2011 at 11:28 am
Yes if you have a good credit rating you can, in fact call your credit card company and have your limit raised.
Raising the debt ceiling does mean we can raise the amount we owe, but it doesn’t put off anything at all, just allows us to function, our debts still get paid.
We inherited the debt from Bush because he borrowed money at the same time he gave the wealthy a tax reduction, so we spent more than we were taking in.
We need to both reduce excess expenditures and increase income by raising taxes, just one side of that equation isn’t going to work, in the meantime raising the debt ceiling gives us some room to find and work out a solution.
June 26th, 2011 at 4:45 pm
Yes, you can call your credit card company and ask for your credit limit to be raised. The only difference is that you are responsible for paying the bill. The government obligates us for ever increasing amounts of debt without out permission by increasing their credit limit and borrowing more money in our names. Kind of like legal identity theft. You pay for the spending of someone else.
June 29th, 2011 at 6:49 am
Raising the debt ceiling is like raising the credit limit on your credit card. If you go over the limit there are penalties. If, the dept ceiling is not raised for the US government there will be penalties and catastrophic consequences down the road.