Jan. 22, 2013
President Obama and congressional Republicans have both drawn a line in the sand over the upcoming series of budget battles, the first of which is whether Congress will raise the country's debt limit - which is expected to hit as early as Feb. 15...
The primer: Barring congressional passage of a debt ceiling increase, the $16.4 trillion debt limit is expected to be hit between mid-February and early March. It is a discretionary number set by Congress on the amount the Treasury is allowed to borrow to pay bills already incurred. (After difficult negotiations, Congress raised it in 2011 by $2 trillion.) Republicans want at least one dollar of spending cuts for every dollar the debt ceiling is lifted. Mr. Obama, however, argues that spending cuts are a separate discussion, since the debt limit has nothing to do with future spending. He recently described it this way: "You don't go out to dinner, then eat all you want and then leave without paying the check."
The impact: The Treasury would be able to pay only the amount that comes into the Treasury each day from tax receipts, fees and market transactions. Steve Bell with the Bipartisan Policy Center said the in the month of February, the Treasury would be expected to pay out $175 billion more worth of expenses than it takes in. That means a lot of bills - 12 percent of the Gross Domestic Product - won't be able to be paid.
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Economic Policy Project