In 2020, the federal debt ceiling reached an all-time high of $26.9 billion. The debt ceiling is how much the federal government is allowed to borrow.  Currently, Congress is trying to decide whether to increase the debt ceiling or suspend borrowing. However, if Congress increases the debt ceiling this could cause a major shift in the economy and exponentially increase government debt. 

From 2010 to 2020 the debt ceiling increased by 99.2 percent, meaning Congress continued to increase the debt ceiling. This percentage represents a constant increase in government debt ever since 2010. We can expect that Congress will most likely increase the debt ceiling again.

Let’s break this down to a personal level to help explain what increasing the debt ceiling means. Let’s say when George reaches his credit card limit he takes money out of his children’s college savings accounts to pay for his expenses. Once the credit card company increases his limit, he takes out a cash advance and pays back his children’s college savings accounts.  As a result, his credit card balance significantly increases.