Page 25 - Banking Finance August 2023

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When adjusted for inflation, the U.S. federal debt has steadily
increased since 2001. Without adjusting for inflation, the
U.S. federal debt has steadily increased since 1957. Another
way to view the federal debt over time is to look at the ratio
of federal debt related to GDP. This ratio has generally
increased since 1981.

Considering the pros and cons of fiscal deficit the debt
ceiling, or debt limit, is a restriction imposed by the U.S.
Congress in 1917 on the amount of outstanding national
debt that the federal government can have. The debt ceiling
is the amount that the Treasury can borrow to pay the bills
that have become due and pay for future investments. Once
the debt ceiling is reached, the federal government cannot
increase the amount of outstanding debt, losing the ability
to pay bills and fund programs and services. However, the
Treasury can use extraordinary measures authorized by
Congress to temporarily suspend certain intergovernmental
debt allowing it to borrow to fund programs or services for
a limited period of time after it has reached the ceiling.

The debt ceiling is different from a government shutdown.
Government shutdowns occur when annual funding for
Source: UStreasury.gov ongoing federal government operations expires, and
Congress does not renew it in time.
Comparing a country's debt to its gross domestic product
(GDP) reveals the country's ability to pay down its debt. This The U.S. government has created the Bureau of the Fiscal
ratio is considered a better indicator of a country's fiscal Service in 2012 (to be operated under the Department of
situation than just the national debt number because it the Treasury) to manage all federal payments and
shows the burden of debt relative to the country's total collections and provides government-wide accounting and
economic output and therefore its ability to repay it. The reporting services. A primary function of the Fiscal Service
U.S. debt to GDP ratio surpassed 100% in 2013 when both is to account for and report the national debt, as dictated
debt and GDP were approximately 16.7 trillion. by the U.S. Constitution, which states that "regular

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