What’s the difference between the debt ceiling and deficit?

It seems like talk about Congress raising the debt ceiling is reaching a climax.  Apparently, our government has less than a week to decide whether it will raise the debt ceiling or we, as a country, risk not being able to pay our federal bills.  However, when hearing all of this, it seems that our debt ceiling and the federal deficit become interchangeable in some conversations when they are actually two different terms that are related but not the same.

What is the debt ceiling?

Our debt ceiling is the maximum borrowing power of the government, which is currently $14.3 trillion.

What is the federal deficit?

The deficit is the amount that our spending exceeds our revenues and is estimated to be about $14 trillion dollars.

Although the numbers are the same, the difference is in the definition.  The debt ceiling limits how much money we can go somewhere and get (in simple terms) while the deficit is how much we already owe.  This is important because our government, much like its citizens, lives on credit.  We borrow money from other countries and through the sale of bonds to pay our bills.

If we don’t raise the debt ceiling then the government won’t be able to sell bonds or borrow enough money to pay our bills. Although it is uncertain what will happen if the government fails to raise the debt ceiling because it has never happened before, we are at risk of having our federal credit down graded and having to cut approximately 40% of the federal budget.

I find this especially ironic because the average American has been battling with this issue, on a smaller scale obviously, for years.  There isn’t enough money to pay your bills, you’re living on credit but eventually the bill comes due and you have to make some tough decisions.  In some instances, you are able to borrow some money to get you by but eventually, you have to pay that money back also.  So what do you?  What should our government do?

The struggle,  for the consumer and the government alike, becomes what do you cut?  How do you prioritize what’s most important?  Do you allow the stellar credit that you have built all of your life to become compromised or do you make some tough decisions?  Is it wise to continue borrowing and disregard the effect that it will have on your future?

I am not educated enough on the intricacies of our government but I have three suggestions:

  1. Prioritize  – our Congressmen need to decide what is most important and work to preserve those things.  I wish I knew what those things are but it seems that if this is their full-time job then they should have the answers or a method of finding the answers.  Just as with paying your household bills, you know that making sure your rent/mortgage is more important than cable.  At some point, the American people may have to realize that some of the perks that we have long enjoyed may no longer be feasible to continue as a federal program.
  2. Compromise – I am constantly irritated by the lack of sincere conversation among politicians.  It seems that they spend so much time speaking to the media and trying to put “their” message out that they are not having genuine conversations with one another about solutions to our problems.  See Who Won The Argument?
  3. Get Educated – there are some people who don’t know how much they owe, they have a general idea but can’t really put their finger on an exact number.  I think, just based on human nature, that there are some Congressmen that don’t really understand what is going on with this issue nor do they get what is at stake.  They are buying into the same political rhetoric that scares the average American.  It is vitally essential that everyone who has a vote on this issue make sure they are educated, outside of their party stance, about the financial severity of this issue.

4 thoughts on “What’s the difference between the debt ceiling and deficit?

  1. Excellent post, LaKesha. I admit I was embarrassed by my lack of knowledge as it related to the budget and debt ceiling talks. You broke it down and made it all so simple. Now I feel like I can talk about it with some kind of confidence.


  2. Suga Hill says:

    I to have to admit that I haven’t looked into the difference between the two. Reading your post Lakesha makes it very clear and we should all make it a point to know what is really going with our government and how their choices affect us. Thank you 🙂


    • I’m looking forward to writing more about what’s happening in our government and following the upcoming elections. I hope you all enjoy the content. I think we definitely need to start dialoging and so we can make some informed decisions during the next election cycle.


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