Breakdown of the Debt Ceiling

Each and every day, the government spends more money that it takes in. The federal government makes up this difference by borrowing money. Due to this the national debt is increasing second by second. The debt is predicted to reach $14.3 trillion sometime next week.

There's a law on the books — first passed in 1917, updated many times since — that caps the federal debt at $14.3 trillion. This is the debt ceiling.
Some time very soon, the government either has to raise the debt ceiling or stop spending more than it takes in (in other words, balance the budget).

Balancing the budget would mean cutting spending by about 40 percent, raising taxes by a comparable amount, or enacting some combination of massive spending cuts and huge tax increases. (Context: Every penny of discretionary spending, including defense, amounts to about 40 percent of the budget.)

Balancing the budget immediately bears no resemblance to the budget and tax policies passed by Congress in the past few months. It would be a much bigger, much faster spending cut and/or tax hike than leaders of either party are proposing.

Trying to stay below the ceiling could also ultimately force the government to default on its debt, which has never happened in U.S. history. Because U.S. Treasury bonds are held around the world, and are considered nearly as safe as cash, a U.S. default would create economic chaos.

Congress has raised the debt ceiling
nine
10 times in the past decade, according to National Journal. And it seems likely that the current debate over the debt ceiling comes down to what sort of posturing, or negotiating, or whatever, will happen between now and whenever Congress votes to raise it again.


Here's a peek at the debt clock:

http://www.usdebtclock.org/index.html