Pemeliza, the government is always racking up debt then sometimes paying it down but they must always pay interest on that debt, via our IRS receipts they hand over to the Fed/foreign gov’ts/etc., just as you pay interest on a credit card. In a historically low interest rate environment they can afford the cost of interest on increasing the debt ceiling but if interest rates go up then boom! Debt service would swallow up a majority of the Federal budget and you’d have increases in spending stop almost immediately and likely cut entitlements such as Medicare and SS (sorry again grandma and grandpa!).
Imagine nice big round unpaid balance on your credit card is such that at 9% interest you have no problem making the minimum payments. Now jack that interest rate to 15-18% and you’ll see that your taste for acquiring more debt on the card rapidly fades as the payments eat into your monthly entertainment, food or savings budget. You’ll be cutting back real quick on acquiring anymore of that debt as it is already eating into your bottom line. At the same time the guido you pay your interest to issues the currency and he doesn’t want to get paid in devalued Benjamins. You’ll get laughed to the bank at asking Guido to issue more money but the juice is still flowing on the debt and you still have to pay.
