New GOP House of Representatives Faces First Crisis

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The US debt limit is expected to hit $31.4 trillion in January. While the Treasury Department is planning to use “extraordinary measures” to prevent a default, a failure to raise the borrowing limit could have catastrophic consequences for the country and its economy.

The debt limit is the ceiling on government borrowing, and Congress is tasked with raising it. It has raised the cap 78 times since 1960. A failure to increase the limit could cause the US to default on sovereign debt, which would lead to a credit rating downgrade and other severe economic consequences.

There’s no doubt that the debate over the debt limit will be a heated one, especially in the new, divided Congress. Republicans have taken control of the House, but Democrats retain control of the Senate.

Some Republican moderates have suggested that they would side with Democrats on a debt limit rollback plan. Others have talked about ways to cut federal spending, such as changes to Social Security or Medicare.

Despite these suggestions, there’s no guarantee that the debt limit will be raised. Congressional leaders are expected to make a decision on how to raise the debt limit soon.

Debt limit legislation will require approval by both chambers of Congress, and the president’s signature. It’s not a difficult task, but it’s also not something that will be easy to accomplish.

Moreover, a failure to raise the debt limit will be the first default in US history. This would have massive economic consequences for the country, and global financial stability would take a hit.