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A
recent Wall
Street Journal article discusses the federal debt ceiling. The
federal debt ceiling is a congressionally-imposed limit on how much
debt our government can have, thus preventing the government from
borrowing beyond the limits set by the debt ceiling. Right now the
debt ceiling is $12.1 trillion, or $12,100,000,000,000.00. That is
$40,333 for every person in our country. Since our government usually
runs at a deficit, the debt ceiling has to be raised periodically, so
that the government can continue to borrow more money. The article
goes on to say that
Treasury Secretary Timothy
Geithner told the Senate in a letter last month that the $12.1
trillion ceiling could be hit as early as mid-October, and said it
needs to be increased so the U.S. can continue funding operations and
making debt payments.
The
article states that right now, the United States government is
borrowing $30 billion a week. That works out to about $100 every week
for every man, woman, and child in our country. Because of the
government's high borrowing rate,
some economists say the
Treasury will need an increase of as much as $1.5 trillion if it
wants to avoid another request before the 2010 midterm elections. The
U.S. could default on its debt if Congress doesn't raise the debt
ceiling, but it is a remote scenario.
Most
interestingly, Americans are starting to take greater notice of the
growing national debt, and are getting worried about it.
In a Gallup Poll conducted
Aug. 31-Sept. 2, 9% of respondents overall and 10% of independents
now mention the deficit spontaneously as their biggest worry. That
compares with 2% of respondents and 3% of independents a year ago. It
is now in the top five among the public's concerns.
Worst
of all, if things continue unchecked, it does not look like things
will be getting better any time soon. The 2009 Social Security and
Medicare Trustees Report says that the unfunded liability of Social
Security and Medicare is $107 trillion.
The
Wall Street Journal reported in July that the
administration was forced to increase its estimates for what the
annual deficit would be this year from $1.75 trillion to $1.84
trillion. The administration estimates that the deficit in 2010 will
be $1.26 trillion and that it will be $929 billion in 2011. The
deficit in 2009 is predicted to be at least 13 percent of the gross
domestic product of the United States, which would be the biggest
since World War II. Reuters reports that current
projections are that the budget deficit over the next 10 years
will be $9.08 trillion. Much of our national debt is financed by
Asian governments and other foreign investors who buy our treasury
bonds. They have taken notice of our growing debt, and are getting
worried.
Treasury markets have been
worried all year about the mounting deficit. The United States relies
on large foreign buyers such as China and Japan to cheaply finance
its debt, and they may demand higher interest rates if they begin to
doubt that the government can control its deficits.
If
ever there was a time to adopt a balanced budget amendment, and force
members of Congress to act like responsible adults, it is now.
Tags: Balanced Budget Amendment | National Debt
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