KSNF/KODE— With the U.S. less than a week away from hitting its debt limit, lawmakers have to decide whether to raise the debt ceiling (the total amount of money that the United States government is authorized to borrow to meet its existing legal obligations) or risk defaulting–which happens when a country’s government cannot pay its debt or is unwilling to pay it.
The national debt is the total amount the U.S. has accumulated over the entirety of the nation’s history. It sits at just over $31,300,000,000,000. That’s $31 TRILLION dollars. Imagine getting paid $1 million every single day for 3,000 years—that equals $1 trillion. Now imagine that 31 more times—it’s colossal and hard to imagine. Needless to say, tackling that kind of debt is a long and complicated road.
According to the U.S. Treasury and Federal Reserve, over 36 countries own part of the national debt. According to the U.S Treasury and Statista, the top 10 major foreign holders of the U.S. Treasury Securities are as follows:
- United Kingdom
- Cayman Islands
You can view the full reports at the links highlighted above.
Needless to say, it’s complicated and involves a whole lot of zeros. But officials are taking steps to get ahead of a potential disaster. Secretary of Treasury Janet Yellen wrote a letter informing and urging lawmakers of the situation at hand. You can read it here.
When financial experts talk about the “global economy” they understand what that definition means with respect to this debt. Every country depends on the other to keep the world’s economies churning.
According to the White House, a default would profoundly and detrimentally impact the American people. Public health agencies, social security, and other federal payments that benefit tens of millions of Americans such as veterans, disabled, families, etc., would be at risk of not having their needs met. Mortgages and other loans’ interest rates would rise higher than before and would be difficult to come by, stocks would fall, and the American dollar would weaken.
Besides crashing world economies, a default would downgrade the U.S. credit rating, and be excluded from future credits in the international market. In addition, assets overseas could be seized.
Each political party blames the other every time this issue resurfaces. There are different steps the government can take to prevent default, which are not limited to but include negotiating with debtors, raising taxes, cutting spending, and raising the debt ceiling. Lawmakers say that raising the debt ceiling is only a temporary fix to a giant long-term issue. It kicks the proverbial can down the road for future generations, and according to this Harvard Youth Poll, the youth are not confident the government is able to meet the challenges our country is facing.