Submitted by reader ‘John’ .
The national debt in the US has been subject to the legal maximum and has topped the $14 trillion mark for the first time. As the debt ceiling has become a focal point of the debate of most financial experts, the Congressional leaders may try to raise the cap so as to avoid the US government to increase its defaults. The Treasury Department estimates that borrowing must be brought under control and the number of bank failures to repay debt that has been borrowed must also be taken care of.
The US Treasury Secretary Tim Geithner has already reported to the Congress that he will need to suspend all the investments in the federal retirement funds until the 2nd of August. If the debt ceiling is not raised by the stipulated time, the US may have to stop borrowing further money as this may alleviate the debt problems within the nation. Once the debt limit is increased, the funds will be made whole and the Federal retirees and the employees will remain unaffected by this decision.
The Treasury Secretary has urged Congress about raising the debt limit so that there is no ill impact on the markets. This will protect the full faith and the credit of the United States and help them avoid the catastrophic and financial consequences. Meanwhile, the Congress is not showing any signs of increasing the debt ceiling. There are many Republicans and some Democrats who believe that they will not take any step towards raising the debt ceiling unless Congress and the President Obama agree to significant spending cuts to curtail the growth of debt.
But Treasury Secretary Geithner feels that if the debt ceiling is not raised by August 2nd, the US government will fail to pay off its bills in full. This means that slashing off the spending limit will not be enough to get some positive results within the economy. The US Treasury has to make 80 million payments in a particular month and for this it has to borrow money ruthlessly. All this will come to a halt if the debt ceiling is not raised at the right time.
Whenever the debt limit is supposed to be raised, the lawmakers are forced to take stock of the country’s fiscal direction, which is a good thing. However, all the necessary steps must be taken in order to make sure that the US is not set to default on its loans.
Disclaimer: The views expressed in the above article are the author’s own. They should not be interpreted as reflecting any views held by Senator Barnaby Joyce, The Nationals, or by the barnabyisright.com blog author.
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