News / USA

    Understanding the Scope of the US Debt Ceiling

    No discussion on the fiscal cliff would be complete without first taking a look at the U.S. debt. But for many - talk of U.S. debt and the debt ceiling is often abstract because it lacks scale.

    It's not some architectural feature unique to Washington. The debt ceiling is a borrowing limit - passed by Congress in 1917 to fund the war effort. Back then, the ceiling was slightly more than $11 billion.
     
    Economist Richard Rahn, a senior fellow at the CATO Institute, said the idea was to enforce discipline on government spending.
     
    "It's really redundant when you have a budget, but ironically it has turned out to be somewhat useful because it forces the debate occasionally about how much we're spending and how we're spending," he said.

    U.S. fiscal cliff repercussionsU.S. fiscal cliff repercussions
    x
    U.S. fiscal cliff repercussions
    U.S. fiscal cliff repercussions
    Until recently, Congress routinely approved higher limits. But that changed in 2011 when a Republican-led Congress stalled on extending the ceiling, resulting in the first ratings downgrade of U.S. debt.
     
    Today the ceiling is $16.4 trillion - a limit the U.S. is likely to exceed by February.
     
    "I think it's beyond the human mind to be able to grasp numbers that big," said Rahn.
     
    Just how big is the U.S. debt? It's easier to visualize if we start with a hundred dollars. A hundred of these makes ten thousand.
     
    If we multiply that ten thousand by one hundred - now you have a million dollars. Enough to fit in a shopping bag. A hundred million - looks more impressive - shown here on top of a shipping pallet. Make that 10 pallets - and you have a billion.
     
    But now it gets interesting.

    Multiply these 10 pallets - one thousand times and you have a trillion - one, followed by 12 zeroes. Enough money to cover an entire soccer field - two pallets high.
     
    So to imagine the size of the U.S. debt - multiply that double-stacked football field 16 times.
     
    "We owe money to everybody. Of course foreigners have about 40 percent of our federal debt, not Americans. The biggest single holder are the Chinese," said Rahn.
     
    Japan also owns a sizeable amount, as does Europe, along with private investors around the world.
     
    Many conservative politicians want to cut the debt sharply, and some say the debt limit should not be raised without more spending cuts.
     
    The Congressional Budget Office said the so-called fiscal cliff - automatic tax increases on January 1, along with spending cuts mandated by Congress to force negotiations on the debt ceiling - would cut next year's deficit in half.

    But doing so all at once poses serious risks, said fiscal responsibility advocate, Robert Bixby.

    "They’ve been pretty clear, the non-partisan Congressional Budget Office, that if we go over the fiscal cliff, their projection is that it would cause a recession and I’ve seen private sector forecasts that are even more adamant," said Bixby.
     
    Some in Congress would like to see a higher debt ceiling as part of negotiations. For now, many economists say avoiding the shock that could come from higher taxes and government cutbacks is far more critical to the world's largest economy. Experts say any missteps could have big ramifications domestically and abroad, just when the global recovery appears to be losing momentum.

    You May Like

    Video As Refugees Perish, Greek Graveyards Fill

    Before burial at overflowing cemeteries, unidentified dead being swapped for DNA, in case some day relatives come to learn their fate

    Russian Opposition Leader Sues Putin for Conflict of Interest

    Alexei Navalny tells VOA in exclusive interview why transfer of $2 billion from country’s wealth fund to company with ties to President Putin’s son-in-law triggered lawsuit

    How Diversity Has Changed America

    Over the past four decades, the level of diversity in the United States has increased most in these four states

    This forum has been closed.
    Comment Sorting
    Comments
         
    by: Redcliff from: Aus
    December 05, 2012 11:04 PM
    This is an indictment of poor economic policy by successive governments and uncontrolled spending beyond its mean.

    Featured Videos

    Your JavaScript is turned off or you have an old version of Adobe's Flash Player. Get the latest Flash player.
    As Refugees Perish, Greek Graveyards Filli
    X
    Hamada Elsaram
    February 11, 2016 8:01 PM
    Aid workers on the Greek island of Lesbos say they are struggling to bury the increasing number of bodies of refugees that have been recovered or washed up ashore in recent months.  The graveyards are all full, they say, yet as tens of thousands of people clamor to get out of Syria, it is clear refugees will still be coming in record numbers. For VOA, Hamada Elrasam reports from Lesbos, Greece.
    Video

    Video As Refugees Perish, Greek Graveyards Fill

    Aid workers on the Greek island of Lesbos say they are struggling to bury the increasing number of bodies of refugees that have been recovered or washed up ashore in recent months.  The graveyards are all full, they say, yet as tens of thousands of people clamor to get out of Syria, it is clear refugees will still be coming in record numbers. For VOA, Hamada Elrasam reports from Lesbos, Greece.
    Video

    Video To Fight Zika, Scientists Target Mosquitoes

    Mosquitoes strike again. The Zika virus outbreak is just the latest headline-grabbing epidemic carried by these biting pests, but researchers are fighting back with new ways to control them. VOA's Steve Baragona takes a look.
    Video

    Video Mosul Refugees Talk About Life Under IS

    A top U.S. intelligence official told Congress this week that a planned Iraqi-led operation to re-take the city of Mosul from Islamic State militants is unlikely to take place this year. IS took over the city in June 2014, and for the past year and a half, Mosul residents have been held captive under its rule. VOA's Zana Omar talked to some families who managed to escape. Bronwyn Benito narrates his report.
    Video

    Video Scientists Make Progress Toward Better Diabetes Treatment, Cure

    Scientists at two of the top U.S. universities say they have made significant advances in their quest to find a more efficient treatment for diabetes and eventually a cure. According to the International Diabetes Federation, the disease affects more than 370 million people worldwide. VOA’s George Putic reports.
    Video

    Video NATO to Target Migrant Smugglers

    NATO has announced plans to send warships to the Aegean Sea to target migrant smugglers in the alliance's most direct intervention so far since a wave of people began trying to reach European shores.
    Video

    Video Russia's Catholics, Orthodox Hopeful on Historic Pope-Patriarch Meeting

    Russia's Catholic minority has welcomed an historic first meeting Friday in Cuba between the Pope and the Patriarch of Russia's dominant Orthodox Church. The Orthodox Church split with Rome in 1054 and analysts say politics, both church and state, have been driving the relationship in the centuries since. VOA's Daniel Schearf reports from Moscow.
    Video

    Video Used Books Get a New Life on the Streets of Lagos

    Used booksellers are importing books from abroad and selling them on the streets of Africa's largest city. What‘s popular with readers may surprise you. Chris Stein reports from Lagos.
    Video

    Video After NH Primaries All Eyes on South Carolina

    After Tuesday's primary in New Hampshire, US presidential candidates swiftly turned to the next election coming up in South Carolina. The so-called “first-in-the-South” poll may help further narrow down the field of candidates. Zlatica Hoke reports.
    Video

    Video US Co-ed Selective Service Plan Stirs Controversy

    Young women may soon be required to register with the U.S. Selective Service System, the U.S. government agency charged with implementing a draft in a national emergency. Top Army and Marine Corps commanders told the Senate Armed Services Committee recently that women should register, and a bill has been introduced in Congress requiring eligible women to sign up for the military draft. The issue is stirring some controversy, as VOA’s Bernard Shusman reports from New York.
    Video

    Video Lessons Learned From Ebola Might Help Fight Zika

    Now that the Ebola epidemic has ended in West Africa, Zika has the world's focus. And, as Carol Pearson reports, health experts and governments are applying some of the lessons learned during the Ebola crisis in Africa to fight the Zika virus in Latin America and the Caribbean.
    Video

    Video Smartphone Helps Grow Vegetables

    One day, you may be using your smartphone to grow your vegetables. A Taipei-based company has developed a farm cube — a small, enclosed ecosystem designed to grow plants indoors. The environment inside is automatically adjusted by the cube, but it can also be controlled through an app. VOA's Deborah Block has more on the gardening system.
    Video

    Video Illinois Voters Have Mixed Emotions on Obama’s Return to Springfield

    On the ninth anniversary of the launch of his quest for national office, President Barack Obama returned to Springfield, Illinois, to speak to the Illinois General Assembly, where he once served as state senator. His visit was met with mixed emotions by those with a front-row seat on his journey to the White House. VOA's Kane Farabaugh reports.
    Video

    Video Exhibit Turns da Vinci’s Drawings Into Real Objects

    In addition to being a successful artist, Renaissance genius Leonardo da Vinci designed many practical machines, some of which are still in use today, although in different forms. But a number of his projects were never realized — until today. VOA’s George Putic reports.
    Video

    Video Heated Immigration Debate Limits Britain’s Refugee Response

    Compared to many other European states, Britain has agreed to accept a relatively small number of Syrian refugees. Just over a thousand have arrived so far -- and some are being resettled in remote corners of the country. Henry Ridgwell reports on why Britain’s response has lagged behind its neighbors.
    Video

    Video Russia's Car Sales Shrink Overall, But Luxury and Economy Models See Growth

    Car sales in Russia dropped by more than a third in 2015 because of the country's economic woes. But, at the extreme ends of the car market, luxury vehicles and some economy brands are actually experiencing growth. VOA's Daniel Schearf reports from Moscow.