If the debt ceiling is basically available credit, does the government need to pay this before requesting more credit? Why or why not?
Please no political answers.
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No, and basically any comparison between personal credit debt and government debt is nonsensical.
First the limit is from an older law that says there’s a limit, there’s some debate over whether or not it’s actually legally valid but no one wants to bring it to the courts to find out in case they decide it is. Either way, it’s completely arbitrary and up to congress.
Second, US debt is borrowed and repaid in the form of bonds. They last a certain amount of time and then you get paid some percentage for having them. We always pay those off, from revenues or more debt. How much can fluctuate, but there’s no real hard numbers that are good or bad, that depends on the next part:
Government debt can also be thought of as national investment. We borrow money to pay for stuff, that stuff in turn contributes to the growth of our economy, more like a business loan than credit card debt. If we spend on things that grow our economy more than the interest, payout, it’s a good investment, if it grows less than that, it’s a bad one. As long as good investments outweigh the bad ones, the debt is worth having.
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