What is debt ceiling?

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Debt ceiling refers to some kind of limit imposed by the US Congress for its own government.  The limit or ceiling on US debt is basically set to prevent the government from exhausting all its resources and engage in overspending.  Putting a limit on how the US government spends or borrows is one direct way by Congress for the entire government to become more financially responsible in terms of spending or borrowing money.

The actual debt ceiling of the US national government is currently imposed and administered by the Treasury department.  All activities relating to government standing still must pass through the approval of the US Congress and after which, the US Treasury will be the one to allow the spending or not.  With the debt ceiling in place, the US Treasury is basically restricted by Congress to fund for certain projects and activities of the US government.  Without approval from Congress, no government money will be disbursed or released for any project if the national debt has already reached its debt ceiling.  Only extra-ordinary measures may force the Treasury to allow the release of money for debt purposes.  Priority is still given in terms of funding for existing obligations of the US national government.

The imposition of debt ceiling first came into law back in 1917.  Back then, the US Government was in the middle of financing its efforts and contribution to World War I.  Military expenses became a priority in those times and with concerns over the national budget, the debt ceiling was imposed in order for national officials to become more financially responsible.  Before the debt ceiling was imposed, previous presidents of the US basically had all the power to control the expenditures of the government.  With the imposition of the debt ceiling, all expenditures will then be approved by Congress and all borrowings will be set with a corresponding limit through the debt ceiling act.

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