The US government could start to run out of money within weeks unless it allows itself to borrow more. So how did we get to this point?
This includes paying for federal employees, the military, Social Security and Medicare, as well as interest on the national debt and tax refunds.The cap currently stands at roughly $31.4tn . That limit was breached in January, but the Treasury Department used "extraordinary measures" to provide the government with more cash while it figured out what to do.Usually it's a formality for Congress to raise the limit as needed but this time it can't seem to agree on the terms.
National parks and other agencies would shut down, while companies and charities that count on government funds would be in peril. Over the long term, if investors start to see US debt as risky they will charge the US more to borrow money. And since government borrowing helps determine interest rates more widely, the impact would trickle out to the rest of the economy, making borrowing money for a home or a car more expensive for everyone.
The White House has said the deal forces "middle class and working families to bear the burden of tax cuts for the wealthiest" and has "no chance" of becoming law.Many analysts expect a short-term extension to give Congress more time to reach a deal. Others are floating more radical ideas, like minting a $1tn coin to pay debt or urging the president to declare that respecting government debt is a constitutional requirement.
While debt-limit brinksmanship is a relatively new strategy for the party, many Republicans believe it is necessary because the nation's current course will ultimately lead to economic and social ruin.