The debt ceiling was suspended on Wednesday to $17.2 trillion by a 67-31 vote by the Senate that will stay in effect until March 15, 2015. The previous debt ceiling suspension expired in early February, forcing lawmakers to take action.
The debt ceiling was ultimately suspended to keep the government from running out of funding and defaulting on its debt. While this move will secure the U.S. in the short run, not everyone is thrilled about the potential long-term effects.
“This is wrong, and it’s irresponsible,” said Sen. Ted Cruz, R-Texas. “Our parents didn’t do this to us, and we shouldn’t do it to our kids and our grandkids.”
Instead of raising the debt ceiling, many state representatives believe that we missed an opportunity to work on the U.S. budget and reduce the national debt.
“I think most Americans are with us in the idea, ‘Don’t raise the debt ceiling without a plan to eventually get us out of debt,’” said Sen. Lindsey Graham, R-S.C.
The most recent suspension of the debt ceiling is the fifth effective increase to the debt ceiling since August 1, 2011. At that time, the debt ceiling was at $14.3 trillion.
With the debt ceiling increasing steadily over the past couple of years, many financial experts see it as “pointless” or “a flawed concept”. Raising the national debt while passing policies for increased spending and taxes will only lead to the Treasury borrowing more money in the future.
With both parties understanding the impact of Wednesday’s vote, both Republicans and Democrats were on edge during the proceedings. While the Democratic representatives were in support of the debt ceiling suspension, many Republican representatives were on the fence, if not against the suspension entirely.
“Republicans in the Senate and House should stand united,” said Cruz. “Stop digging the debt-hole deeper and deeper.”
The vote itself was a procedural vote of cloture, a quickened procedure that required a three-fifths majority vote from both Republicans and Democrats. With Democrats as the main supporter of this bill, they needed five Republican votes to reach their three-fifths requirement. They received twelve.
After the approval of the Senate, the House passed the bill 221-201, meaning it should now be passed on to President Obama. While many disagree on the outcome of this vote, those who supported the increase say that it was a necessary measure to pay for past U.S. spending.
“It is simply not necessarily a pleasant responsibility but one that Congress has to own, and that Republicans in Congress have to accept,” said White House Press Secretary Jay Carney. “They appropriate, they pass bills that require funding, they need to pay those bills. And that’s what raising the debt ceiling is about.”
While past performance is not an indication of future results, many gold investors view the increased debt ceiling as a signal that gold values may continue to rise over time. The debt ceiling has been raised 15 times since 2000 and the latest increase shows a failure to break that trend. If you’d like to learn more about how the increased debt ceiling can affect long-term gold values or your options for gold ownership, call American Bullion at 1-800-326-9598 to speak with a gold specialist today.