Commentary
Every time the United States reaches its debt limit, we read that it’s important to reach an agreement to lift it. The narrative is that the debt ceiling must be raised, or the U.S. economy will suffer a severe contraction. There’s even an episode of a TV series, “Designated Survivor,” where the character played by Kiefer Sutherland places lifting the debt ceiling as the priority to get the U.S. economy on track. The debt ceiling is viewed as an evil and anachronistic burden on growth. It isn’t.
Analysts all over the world consider the debt ceiling a non-event because Congress always agrees to increase it. As such, markets don’t even care. Congress has raised the debt ceiling on time on over 80 occasions since 1960, according to S&P Global. The rating agency points out that Congress has passed legislation to raise or suspend the debt ceiling seven times in the last 12 years (in 2011, 2013, 2017, 2018, 2019, and twice in 2021)….