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As many of us know, regularly spending more than you earn is an easy way to jeopardize your financial health by amassing too much debt. So, it can be hard to watch the national debt grow at a rate that those who spend prudently might consider irresponsible. That said, the U.S. government is not an individual and, for better or worse, sometimes lives by different rules.
Congress, like many households, has been known to squabble over finances, just with higher stakes. It’s worth recalling that the current showdown over raising the national debt limit is well-trodden territory:
A quick refresher on the debt ceiling:
Congressional skirmishes over raising the debt ceiling often center on the size of the national debt. So, how high is U.S. public debt? And how does it stack up to that of other developed markets?
How did markets perform during the 2011 and 2013 debt-ceiling crises?
Despite equity and debt markets’ ability to largely brush off these skirmishes, there are indeed potentially dire consequences for not raising the debt ceiling. What happens if Congress doesn’t raise the debt ceiling — or delays further?
Many economists have warned that failing to raise the debt ceiling would have dire economic consequences. As ominous as that sounds, we should remember that we’ve been down this road before. As Yellen pointed out in her op-ed, “the U.S. has always paid its bills on time.” While debt-ceiling showdowns can contribute to market volatility, history has also shown that markets tend to look past these skirmishes.
The opinions expressed in this commentary are those of the author and may not necessarily reflect those held by Kestra Advisor Services Holdings C, Inc., d/b/a Kestra Holdings, and its subsidiaries, including, but not limited to, Kestra Advisory Services, LLC, Kestra Private Wealth Services, LLC, Kestra Investment Services, LLC, Bluespring Wealth Partners, LLC, and Grove Point Financial, LLC. The material is for informational purposes only. It represents an assessment of the market environment at a specific point in time and is not intended to be a forecast of future events, or a guarantee of future results. It is not guaranteed by any entity for accuracy, does not purport to be complete and is not intended to be used as a primary basis for investment decisions. It should also not be construed as advice meeting the particular investment needs of any investor. Neither the information presented nor any opinion expressed constitutes a solicitation for the purchase or sale of any security. This material was created to provide accurate and reliable information on the subjects covered but should not be regarded as a complete analysis of these subjects. It is not intended to provide specific legal, tax or other professional advice. The services of an appropriate professional should be sought regarding your individual situation. Kestra Advisor Services Holdings C, Inc., d/b/a Kestra Holdings, and its subsidiaries, including, but not limited to, Kestra Advisory Services, LLC, Kestra Private Wealth Services, LLC, Kestra Investment Services, LLC, Bluespring Wealth Partners, LLC, and Grove Point Financial, LLC does not offer tax or legal advice.