American President Joe Biden again asked Congress to lift the United States debt limit after a meeting Wednesday with the nation’s business leaders. The White House Council of Economic Advisors warned before the meeting that the United States government will default on its obligations if Congress does not raise the debt limit by October 18. A default is a failure to meet the legal obligations of a loan. The council said millions of Americans might not receive their payments from Social Security and government healthcare. A default could also affect national defense and pandemic services. Since many countries depend on the U.S. monetary policy, it said a default “would likely cause credit markets worldwide to freeze up and stock markets to plunge. Employers around the world would likely have to begin laying off workers.” Like some of us, governments sometimes spend more money than they receive from taxes. So, they have to borrow money by issuing bonds, or debts, to be repaid later. In the U.S., Congress has the power to set a debt limit. It is “the maximum amount of debt that the Department of the Treasury can issue to the public or to other federal agencies.” Since 1960, Congress has changed the debt limit 78 times under both Republican and Democratic administrations to pay for government operations. Raising the debt limit does not mean that Treasury has more money to spend. It only permits the U.S. government to “finance existing legal obligations.” When the limit is reached, the Treasury cannot issue more debt or borrow more money
