New Delhi: America’s Joe Biden government is somehow trying to increase the loan limit. If this does not happen in the next 1 week, then the government will not be able to take more loans and it will not be able to pay its bills. In this struggle, President Biden had a long conversation with House Speaker Kevin McCarthy on Monday. Their conversation remained inconclusive. Please tell me that Kevin McCarthy is the top leader of the Republican Party. Whereas, Joe Biden comes from the Democratic Party.
The US government raises debt by selling bonds. Due to the excellent economic image of the country, people from all over the world invest in American bonds. Instead, the government gives them interest money every year. Also, whenever the bondholder wishes, he can withdraw the full amount of the bond by selling it. The money received from the loan is used by the US government to meet its needs. This is happening in America for the last 50-60 years. There will be a question in your mind what does the US government do with the money received from other sources of revenue like tax etc., which it has to take a loan?
Cause of such a situation
The government collects revenue through income tax, social security, Medicare tax, corporate tax, customs duty, and some other means. These are the source of its earning. Similarly, it spends on salary, pension, social security, healthcare, national security, and many other things. The reason why America is in this situation is spending more than earning. In the financial year 2021, America earned Rs 334 lakh crore and spent Rs 564 lakh crore. This additional amount is compensated by the money received by selling the bond. America collects debt from all over the world by showing the dominance of its economic power here.
Now what is the problem with taking a loan?
In America, in 1917, a law was made that the government cannot borrow more than a limit. It has been changed 78 times so far. Irrespective of which party the government is, this limit has been increasing. For this, the permission of the Parliament has to be taken. At present, the limit for taking a loan is 31.4 trillion dollars. But once again the liabilities of the government have exceeded the earnings. Along with this, this liability has also crossed the limit of debt. Now if the Biden government could not increase the debt ceiling from the Parliament, then it would become a defaulter. US Finance Minister Janet Yellen has said that the government has time till July 1.
