The United States will soon hit the $14.294 trillion debt ceiling, compelling Congress to vote on again raising the debt limit. But Congressional Republicans have threatened resistance if the vote doesn’t contain spending budget cuts and long-term debt reduction. If a solution is not reached by August, it will create an unheard of crisis which will affect every consumer. Resource for this article – The debt ceiling affects us all by MoneyBlogNewz.

Debt borrowing

There is a debt ceiling the government has to work with. It is the amount the country is allowed to borrow to pay off other debts. Congress always wants the limit elevated.

If the issue is not settled by August, military employees and dependents may see severe income losses. Several will miss out. This involves those on Social Security. The loss of Medicare could drive healthcare expenditures to amounts beyond the reach of a lot of people. This would increase credit and interest rates. It would also increase taxes.

Paying tax only gets 60 percent paid for

Qorvis Communications partner Stan Collender said, “Given that the government currently only raises taxes to cover 60 percent of what it spends, being able to borrow means that the services people depend on from the government continue.” Congress needs to increase the limit for taxes to stay low. This will even protect services.

T-bills sold

The government in the U.S. will borrow money for a small investment. These are in the form of Treasury Bonds, or T-bills, being sold. The purchasers have to experience like they are safe in the loans. Then, small returns could be made. However, if national loans are defaulted on, the global marketplace will lose faith in the dollar, causing foreign goods to become more costly. The marketplace would reflect that lack of confidence by an urgent increase in cost of fuel, electronics and many other items dependent on overseas suppliers.

Possible job loss

Those in the government and in the private sector would have to worry about job loss. “We don’t know what will happen because this hasn’t happened before,” states Collender. “But if the debt ceiling isn’t raised and the government runs out of cash, at some point the president may decide he has to stop doing certain things, like paying government contractors, for example. That may not sound like such a big deal, but it is if someone in your family, or someone you know, is working for that contractor, or for the supplier of that contractor, or if that contractor is a big employer in your neighborhood or your state.”

Wall Street good outcomes

The government debt limit debate has not changed the market much lately. Rates of interest are very low right now while banks are still lending money. The stock market is doing surprisingly well too.

Citations

Daily Finance

dailyfinance.com/2011/06/04/how-the-debt-ceiling-issue-will-hit-ordinary-americans-in-the-wa/

CBS

boston.cbslocal.com/2011/06/06/how-the-debt-ceiling-affects-you/

Huffington Post

huffingtonpost.com/2011/05/24/debt-ceiling-what-happens_n_865016.html#s280962&title=Interest_And_Credit

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