If you are a busy person, like I, you might not always find time to turn on the news or pick up a newspaper. Others don’t want to hear long winded stories about the nation’s economy because they don’t think it affects them.
Or perhaps you are waiting for someone like me to give you the story short and straight to the point. The hot topic right now is a little something called debt ceiling. What is debt ceiling exactly? It’s a cap set by congress on the amount of debt the federal government can legally borrow. The ceiling is currently set at $14.294 trillion and we are currently at $14. 216 trillion just $81 billion shy of the cap.
Treasury Secretary, Timothy Geithner, told congressional leaders that they are likely to hit the debt ceiling “no later than May 16.” Some people wonder why Congress even bothers to set a debt limit. In theory, it’s supposed to help Congress control spending.
The debt ceiling has never been reached before. If the U.S hits the debt ceiling and lawmakers fail to raise it, Treasury would be prohibited from borrowing money. Government payments would be stopped, limited or delayed. Including military salaries and retirement benefits, Social Security and Medicare payments, interest on debt, unemployment benefits and tax refunds.
If the government doesn’t borrow close to $800 billion dollars or raise the debt ceiling the United States will default on some of its debt. This could cripple the world markets and slam the U.S economy. Is this it for the U.S Economy?
Check out the chart:
By J.L. Murray.