Explaining The Debt Limit And Why Congress Will Likely Raise It Again

The video explains the concept of the US debt ceiling, a limit set by Congress on how much the government can borrow. It highlights the potential global financial crisis if the ceiling is not raised, as the US would default on its obligations. The current debt ceiling is $28.5 trillion, and political disagreements, particularly from Senate Minority Leader Mitch McConnell, complicate the situation. The video clarifies that the debt limit concerns paying for past spending, not future expenditures. It also discusses possible reforms, such as tying the limit to the national economy or eliminating it altogether.

What is the primary function of the debt ceiling in the United States?

• To regulate the budget deficit

• To cap the total amount of debt the government can incur

• To limit the amount of money the government can spend annually

• To control the interest rates on government bonds

What could happen if the US fails to raise the debt ceiling?

• The government would automatically balance its budget

• The Federal Reserve would print more money

• The stock market would crash immediately

• The US would default on its financial obligations

What action did Treasury Secretary Janet Yellen take to prevent a default?

• She increased taxes

• She cut government spending

• She implemented extraordinary measures

• She proposed a new budget plan

What is a common misconception about the debt ceiling?

• It is a recent policy introduced by the current administration

• It determines the government's annual budget

• It is a tool for managing inflation

• It stops Congress from spending more money

Which of the following is a proposed reform for the debt ceiling?

• Linking it to the national economy's size

• Reducing it by 10% annually

• Setting it permanently at $28.5 trillion

• Making it adjustable based on inflation