Why America should stop increasing debt ceiling every time as a policy

Introduction

A statute called the debt ceiling, commonly referred to as the debt limit, sets a cap on the total amount of money that the government can borrow to cover its obligations. This covers funding for government personnel, the armed forces, Social Security and Medicare, as well as debt-interest payments and tax refunds. The US Congress votes to increase or suspend the ceiling periodically so that it can borrow more money. The maximum is now around $31.4 trillion. When that cap was exceeded in January 2023, the Treasury Department took "extraordinary measures" to provide the government access to more funds. Now American Government and American political parties should find other solutions and options than just increasing debt cap each time. Such policy is having more negative impact on American economy and American peoples. In this article all such negative impacts will be evaluated and discussed.

Negative impact of debt ceiling rise on American economy and American peoples    

Increased Interest Payments: An increase in the debt ceiling means the American government has more money to spend, but it also means that the government will have to pay more interest on the increased debt. The annual budget for year 2023 is $5.8 trillion but the national debt of the United States is over $31.4 trillion. In financial year 2022 American taxpayers spent $475 billion in interest expenses on the national debt. But in financial year 2022 the Food Stamp program costs $119.5 billion. This indicates that American peoples are paying more money in interest payment than for food stamp program of the American peoples.

Reduced Confidence in Governance: An increase in the debt ceiling can also lead to reduced confidence in the government's ability to manage the economy. This decreases people’s confidence in government as they think their government is unable to handle the economy efficiently.

Devaluation of Currency: Currency value decreases if debt is taken regularly as government artificially pumps the money in the system. Due to this price of products and services increases. American citizens may have good purchasing power with $2000 per month earnings expenditure in other countries but it will be financially difficult to live in America itself.     

Credit Rating Downgrade: If the debt ceiling increase is for taking more debt, it could lead to a credit rating downgrade. This would make it more expensive for the government to borrow money in the future, which could lead to higher interest rates and reduced economic growth.

Inflation: An increase in the debt ceiling can also lead to inflation. If the government spends more money taking debt, it can increase the demand for goods and services, which can lead to higher prices. This may cause government induced inflation in economy. This can reduce the purchasing power of consumers and lead to a decrease in economic growth.

Long-Term Debt Burden: An increase in the debt ceiling becoming a long-term debt burden problem. If the American government continues to borrow money, it can lead to a situation where future generations are burdened with high levels of debt. This can reduce economic growth in the long term and make it more difficult for the government to respond to future economic crises as is started to happening now.

Reduced Fiscal Flexibility: An increase in the debt ceiling is reducing the government's fiscal flexibility. The government is already carrying a high level of debt not have the ability to respond to future economic or crises. This is leading to reduced economic growth and increased vulnerability to external shocks.

Reduced International Standing: An increase in the debt ceiling can also reduce the international standing of the United States. If the government is seen as unable to manage its debt, it can lead to a loss of confidence from international investors and other countries. This can lead to reduced investment in the United States and a decline in economic growth.

Reduced Investment in Education and Infrastructure: If the government is forced to spend more money on interest payments, it may not have the ability to invest in important areas that can drive economic growth in the long term.

Reduced Consumer Confidence: An increase in the debt ceiling also leads to reduced consumer confidence. If consumers are worried about the government's ability to manage its debt, they may be less likely to spend money and invest in the economy. This can lead to reduced economic growth and increased vulnerability to external shocks.

Increased Income Inequality: An increase in the debt ceiling can also lead to increased income inequality. If the government is forced to cut spending on social programs, it can lead to reduced support for low-income families and individuals. This can exacerbate income inequality and lead to reduced economic growth in the long term which is happening in America.

Reduced Economic Competitiveness: An increase in the debt ceiling can also lead to reduced economic competitiveness. If the government is carrying a high level of debt, it may not have the ability to invest in important areas such as research and development, education, and infrastructure. This can make the United States less competitive in the global economy and lead to reduced economic growth. This is happening and China is becoming more competitive.

Conclusions

Above work clearly illustrates the negative impact of debt and increasing debt ceiling in America and American economy and peoples. Due to such wrong debt ceiling policy Americans are now paying about $475 billion in interest expenses of their national debt. Now with prevailing 5.25% interest rates, due to interest rate hikes by US Federal Reserve, the cost of debt borrowing will increase and interest payments will increase further. Whereas Americans are paying only $119.5 billion in food stamp programs of their tax expenses which are not a good sign for any economy. But American government and political parties thinks such expenses on food stamps are a burden on economy. So the American government needs to increase their source of income. The source of income should be also not simply taxing American peoples but new way of generating income. Due to such wrong policies American economy is losing competitiveness against Chinese and other economy.