The United States is on target to reach its statutory debt ceiling this October. Currently set at $8.965 trillion, the debt limit represents Congress’ total borrowing power and, without a congressionally approved increase, the U.S. government will exceed the limit and default on its bills this fall.
U.S. Treasury Secretary Henry Paulson recently sent a letter to Congress urging lawmakers to update the debt ceiling, which has been raised five times since President Bush took office in 2001 by a total of $3 trillion.
"At the beginning of this Congress, we recognized that the actions of prior Congresses meant that the limit would be reached sometime this year," said House Ways and Means Committee Chairman Charles Rangel (D-NY). "The House has already acted to raise the debt ceiling to ensure that the United States does not default on its debt. We must enact fiscally responsible policies that move our nation forward without a further surge in our national debt."
A government default on bill payments would have a severely negative effect on the economy and Congress is expected to raise the debt limit before this happens. As of August 1st, the total public debt was $8.913 trillion.
Source: Jacob Barron, NACM staff writer