The least popular thing Congress does is voting to raise the debt ceiling. However, Congress is required by law to authorize the government to borrow money to pay for programs that Congress has passed.
In the 2010 elections the Republicans took control of the house, while the Democrats maintained control of the Senate. In 2011 the main disagreement between the House Republicans and President Obama and Senate Democrats was over the debt ceiling. This was all because in May of 2011 America's debt limit had been reached and the government could only keep functioning until August 2 without borrowing. In Bipartisan negotiations progress was made toward outlining 1-2 trillion dollars in possible savings. The talks fell apart in June due to a lack of compromise by both the Republicans and Democrats.
By late July the Federal Reserve was preparing for a Federal government default as the August 2 deadline approached. If no deal was reached by August 2 it would essentially mean the world's biggest economy would run out of money. With 3 days left the White House and Congressional Leaders came to an agreement to raise the debt ceiling. As a result of all the turmoil, S. &P. downgraded the credit rating of the U.S. for the first time.
In January of 2013, they will have to do it all over again. That's right, a 2nd Round of the National Debt Fight. Another credit rating downgrade can and most likely will be avoided but if there is more of the same it could raise all kind of consumer fears which could be bad for the economy.
No comments:
Post a Comment