Newspaper article The Christian Science Monitor

So Tell Me, Why Should I Care about the Debt Limit?

Newspaper article The Christian Science Monitor

So Tell Me, Why Should I Care about the Debt Limit?

Article excerpt

WHAT is the debt limit, anyway? Ask the average college student in Michigan or dentist in Oregon, and you're likely to get a blank stare.

Some of us may know Congress and the president have been fighting over it lately, but, well, it's a whole lot easier to flip on "Friends" in the evening than plow through another newspaper article with a headline like "Interim Measures Advance in House."

The debt-limit concept is actually not that complicated. The government has run up nearly a $4.9 trillion debt - a financial snowball brought on by years of spending more than it takes in.

Uncle Sam can't just print more money to pay for all this. He has to borrow from investors. The government also can't just rack up endless debt. By law, it must remain within a limit set by Congress. Every time we near that cap, Congress must vote for an increase or risk a default, in essence, a declaration of bankruptcy by the United States government. The impact would be enormous, and it would affect all of us.

The US is now getting close to its debt limit, so Congress is moving this week to raise the limit temporarily, enough to keep things humming through Dec. 12. If this move fails - for example, if President Clinton vetoes it - the government will hit its debt-ceiling on Nov. 15, and could be faced with a default on its debt. But for now, let's say Clinton and Congress get over this hurdle. They still face the December deadline. By then, maybe they will have agreed on a budget and can put in place a permanent hike in the debt ceiling.

But maybe not.... And that's what the ultimate battle is all about. The Republican-led Congress wants Clinton to pass its balanced-budget plan, but Clinton is resisting. He says it's too harsh. So the GOP has strapped the permanent debt-limit increase to the budget like a nuclear device, threatening to set it off if Clinton won't pass their budget. …

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