With Vice President Joseph R. Biden Jr. serving as referee today, Democrats and Republicans are looking for what they call “low hanging fruit” in an effort to agree on a plan to curb future federal spending before raising the nation's $14.3 trillion debt ceiling. Treasury Secretary Timothy Geithner estimates parts of the federal government may be forced to shut down on Aug. 2 unless Congress increases the ceiling.
The national debt is the sum of all loans taken out by the government—comparable to a federal credit limit. The government can't borrow more than Congress allows. When national borrowing approaches the ceiling, lawmakers must decide whether to increase the limit. The current ceiling was set in Feb. 2010—the 13th time it was raised since 1995.
If the ceiling is not raised, the government goes into default, which would mean investors who have Treasury bonds due would not be paid. Instead, ongoing tax receipts would be used to keep some government benefits flowing at minimal levels. Most government functions would be curtailed, if not shut down outright.
On May 31, the House overwhelmingly rejected increasing the ceiling without conditions. House Republicans are anxious to cut $2 trillion in spending and to manage budget caps over the next decade while refusing to consider tax increases of any kind, including closing tax loopholes. Across the aisle, Democrats argue that while long-term spending must be reduced, the nation's financial crisis requires an increase in revenues, too.
For the last week, BW has talked to citizens across the Treasure Valley, from students to retirees, who described the federal debt as “discouraging,” “out of control” and even “Armageddon.”
Read BW’s news feature in Wednesday’s paper covering the government’s money woes and what it means to individuals.