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What is the debt limit and why do we have one?

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The Debt Limit

Total debt of the federal government can increase in two ways. First, debt

increases when the government sells debt to the public to finance budget deficits and

acquire the financial resources needed to meet its obligations. This increases debt

held by the public. Second, debt increases when the federal government issues debt

to certain government accounts, such as the Social Security, Medicare, and

Transportation trust funds, in exchange for their reported surpluses. This increases

debt held by government accounts. The sum of debt held by the public and debt held

by government accounts is the total federal debt.

Surpluses generally reduce debt held by the public, while deficits raise it. The

government’s surpluses during FY1998-FY2001 reduced debt held by the public by

$448 billion. The debt holdings of government accounts grew by $853 billion over

the same period. The total net change raised total federal debt by $405 billion.

A statutory limit has restricted total federal debt since 1917 when Congress

passed the Second Liberty Bond Act. Congress has raised the debt limit five times

since 2001.

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The quantity of gold held, was once the debt limit. However, they couldn't print gold as easily as paper, so that was the end of the gold standard for the spenders.

Without some sort of debt limit, we will need wheelbarrows to carry 'bread money' as has happened before.

When interest payments become more than the the original, debt, one is in real trouble, and when the interest is more than income, it is all over.

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The quantity of gold held, was once the debt limit. However, they couldn't print gold as easily as paper, so that was the end of the gold standard for the spenders.

Without some sort of debt limit, we will need wheelbarrows to carry 'bread money' as has happened before.

When interest payments become more than the the original, debt, one is in real trouble, and when the interest is more than income, it is all over.

Those are not really the reasons for a debt limit cited in the article. Some of the reasons sounded good, but some sounded dangerous.

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If that is the level of the discussion on CNN, I'm glad I watch Fox News.

I am sure CNN has someone who is intelligent. (Said in a sarcastic voice)

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