The debt ceiling Term Paper Example | Topics and Well Written Essays - 250 words

The debt ceiling - marge Paper ExampleThis happened since the political sympathies did not want a repeat of 2001 fiscal crisis, which was because of the Congress refusing to conspire the debt ceiling. However, raising the debt ceiling has driven the national debt to wanting levels $14.3 trillions.In my opinion the debt ceiling should be raise, tho as a short-term measure. This is because failure to raise the ceiling would have consequences. The first consequence is that the governance may be unable to pay its workforce their salaries. This may trinity to unrest in the country. Secondly, the government may default on what it owes other creditors, for examples, holders of government securities. These are monies in terms of bonds principal and interest. This would solution to the US government having a bad credit rating. Government securities risk would go up do the rate of interest attached to them going up. As a result, the cost of capital in the accurate economy would go up thusly increasing the cost of doing business. This in turn would lead to frugal growth slowing down (Allen, 2012).Thirdly, foreign investors might lose faith to the US government thus refusing to lend to it. They may also sell their US governments securities. This, in turn, may lead to the dollar losing look on against the world currencies. All these may compound the situation and return the economy substantiate to recession (Allen, 2012).Additionally, other conditions should accompany the raising of the debt ceiling. These should be long-term measures. First, the government should cut spending on unproductive activities such as wars and defense. These are some of the government expenses, which do not add value to the economy. Cutting spending on these activities would reduce the budget deficit, which would enable the government to lower the debt ceiling in future. Finally, the government should increase taxes on corporate and the rich to reasonable rates that should not hurt th e economy. This similarly would help in reducing the budget