As the debate over raising the debt ceiling continues to rage, it is clear that the U.S. Government is now facing a stand off of sorts. Pushing up the debt ceiling would, no doubt, make a good ‘placebo’ for the immediate problem of unmanageable borrowings.
But, many critics fear that it will also serve to eliminate the sense of urgency that should hopefully push Obama’s boys into undertaking some effective spending cuts. Given these fears, there is no doubt that any move by the government to increase the debt ceiling will spark off heated discussions at every level within the country.
The debt ceiling represents the limit up to which the U.S. Treasury can borrow funds. If the borrowings grow beyond manageable levels, then Government may be forced to default on its repayments. If this does happen, the world financial markets will lose faith in the creditworthiness of the U.S. and this will have some far reaching consequences for the nation’s economy, none of them positive.
The U.S. government has carefully preserved its position as the ‘world’s safest borrower’ for over two centuries with timely repayments on all its debts. The current debt ceiling stands at $14.3 trillion, a massive figure indeed.
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