Debt Ceiling and SP Downgrade of US Credit Rating

The Debt Ceiling

In Debt Ceiling made easy, Ali Velshi summarizes the basics of the United States debt pileus. Velshi compares the debt ceiling to be like the reference work limit on a credit card. The U.S. borrows money to fund our economy. Government programs such as Medicaid, hearty Security, Disability, and other similar programs are funded based of the U.S. debt ceiling. One whoremaster think of the debt ceiling as the credit limit for the governments crack loan. Once the national debt level has reached the debt ceiling, the United States can no longer continue to borrow money unless the debt ceiling is raised. In order for the debt ceiling to rise, Congress must vote in favor of the increase. This procedure is different from most countries, where countries go away entirely continue borrowing money without a legislative approval. shortly the debt level of the United States is at 14.3 trillion dollars. This level represents the debt ceiling approved by Congress, thus in order to uphold solvent, the debt ceiling must be raised.

After gaining approval from Congress, the United States will raise gravid by issuing bonds. Bonds are essentially a division of debt, hence the reason why the ceiling must be continuously raised.



The United States treasury bond was initially vox populi to be a safe investment backed by a top credit rating from S& adenylic acid;P and Moodys. As we now know that credit ratings pitch been downgraded, investing in a U.S. treasury bond has blend more risky. Velshi states that the government will become insolvent if the ceiling is not raised by August 2^nd, 2011. Republicans favor the design to raise the debt ceiling under the condition that several cuts will be made in order to shrink the compute deficit. Federal spending cuts are heavily opposed by democrats, citing...

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