The United States hit the debt ceiling on Monday, surpassing $14.3 trillion in debt owed to pay for super important things like the stimulus that was going to keep unemployment from going over 8 percent. It’s totally cool though, because Treasury Secretary Tim Geithner suspended investments in federal retirement funds to buy us a few months to figure out what the heck to do.
Congress has until August 2 to raise the debt ceiling (think of this as a credit card limit -- there’s only so much you’re allowed to borrow) or balance the budget.
This has happened numerous times since 1917, when the first limit was set. The idea was a good one: Congress could only borrow so much money before it had to figure out a way to balance the budget and pay back the debt. In theory, it works as a permission slip to borrow and spend, because Congress gets to decide whether or not to increase the limit.
Congress spends to the max, runs out of money, votes for borrowing even more money, spends that money plus more, and the cycle is endlessly repeated until the government is borrowing money from China to study crack monkeys.
No one knows at this point what exactly will happen. Both Republicans and Democrats on the Hill have said they won’t vote for a spending increase without significant cuts on the table. But how each party, let alone each person, defines “significant” can vary significantly.
The United States borrows 40 cents of every dollar that it spends. It’s obvious that something has to give. It’s all well and nice to want to provide for everyone, but there’s only a certain amount of money to go around. We can’t pay for everyone to go to college, plus everyone’s medical bills, plus new cars that get more than 8 miles per gallon. It’s just not possible.
Something has to go. We need to balance the budget, and with federal spending at an historic high, there’s a plethora of things to choose from. Even former Speaker of the House Nancy Pelosi says Medicare cuts are on the table.
Whoa, what? That actually happened?
Yes it did. Maybe the politicians are actually serious this time about cutting spending and getting our economic wheels spinning again.
One can hope.
Image via jeffk/Flickr