On Monday, the US reached its legal debt limit of $18 trillion, more than the country’s entire GDP. Lawmakers will either have to again lift it, or attempt to cap spending.
As of March 12, the US Treasury reported federal debt at $18,114,324,000,000.00 in its daily treasury statement. This figure is above the statutory debt limit, which was extended by Congress through March 15 this year.
Treasury Secretary Jack Lew told Congress that the limit would be reached on March 16, and he also requested lawmakers raise the debt ceiling “as soon as possible,” in a letter written in early March.
Under current arrangements, the US government can keep running until October using so-called extraordinary measures, or accounting tricks to keep money flowing into government programs, according to the Congressional Budget Office.
Now that a new zenith has been passed, a fresh showdown between lawmakers and the President about America’s spending habits can be expected.
The US raised the debt ceiling to $17.2 trillion in February 2014, keeping the economy a safe distance from the so-called ‘fiscal cliff’. Before striking a deal, Republicans shut down the government in October 2014, which put many federal employees out of work for two weeks, and cost the economy an estimated $24 billion.
The US government is again left with the decision to raise its debt ceiling- the maximum amount of money it can borrow. If it isn’t raised, the country in theory could default. The debt ceiling, which has been around since 1917, has been raised over 100 times to accommodate the world’s largest economy’s ballooning budget.
Republicans and Democrats have long been viciously divided over how to fund the budget, and which programs the government can afford to fund.
The debt, largely foreign-held, is worrisome not only for the world’s largest economy, but for global markets, which are always put on edge when the debate comes up.
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