IMO, the debt ceiling statute should be abolished. It serves no useful purpose and only serves as a political weapon. This issue is NONPARTISAN. Just some more old legislation that once enacted never ever goes away.
We have enough issues without adding more that is totally meaningless.
No country can continue to increase debt forever, not even the USA. That’s not a political statement, it’s just a fact. At some point, those who are buying the debt will decide the risk of not being paid back exceeds the promised return.
The debt ceiling is a requirement for those representatives who are not concerned about the debt to negotiate with those who are. Citizens have varying understanding of the situation as do our representatives. The debt ceiling is supposed to be a periodic catalyst to achieve a compromise that all parties can agree to. It’s a point at which the issue has to be reassessed and readdressed instead of mindlessly continuing on the same course. We can choose to continue on the same course, but not mindlessly.
Because increased borrowing cannot continue forever, the situation is constantly evolving towards the “this time is different “ point. Will it be a specific point in time? Or gradual? Hard to say. The 2008 financial crisis seemed like a “this time is different” point. When US debt was downgraded, that was a specific, meaningful event that seemed like an inflection point. And we’ve had the debt ceiling issue multiple times. In all cases so far, investors shook it off and everything seems to have returned to normal, so those that took drastic action on their portfolios likely paid a price.
This time may be different. $31.5T is an incomprehensible number and our representatives have different reactions to it. If the “no negotiations” cohort and the “no further without commitment to budget cuts” cohorts both dig in, we will have a crisis of unknown duration. Or it may not different, the choice may be made to kick the can farther down the road.
We all need to ride it out. Which means we all need to estimate the duration and potential lasting effects. My crystal ball is cloudier than ever. Currently, I have taken no action because I don’t need any of my investments soon and if the wheels really come off, there is no safe place.
It causes some anxiety because of the consequences, but it’s out of my control. I’ve tried to influence it by writing to my Senators and Representative and encouraging others to do the same (very easy: web search for “contact {state} congressman “). Some day, the endless increase in deficit spending will have to come to an end. Is that day close? Take your best guess.