U.S. debt tops $14 trillion, nears ceiling
The United States just passed a dubious milestone: Government debt surged to an all-time high, passing $14 trillion - $45,300 for every person in the country.
That means Congress soon will have to lift the legal debt ceiling to give the almost maxed-out government an even higher credit limit or dramatically cut spending to stay under the current cap. Either way, a fight is ahead on Capitol Hill, inflamed by the passions of tea party activists and deficit hawks.
Each side is blaming the other for an approaching economic train wreck as Washington wrestles with how to keep the government in business and avoid defaulting on global financial obligations.
Bills that would increase the debt limit are among the most unpopular in Congress, serving as pawns for decades in high-stakes bargaining. Until now, the ending has been the same: We go to the brink before raising the ceiling.
All bets may be off, however, in this charged political environment, despite some signs that the partisan rhetoric is softening after the recent shootings in Arizona.
Treasury Secretary Timothy F. Geithner says that not increasing the nation's borrowing authority would be "a catastrophe," perhaps rivaling the financial meltdown of 2008-2009.
Congressional Republicans, flexing their muscle after November's midterm victories, say that the election results show that people are weary of big government and deficit spending, and that it's time to draw the line against more borrowing.
Defeating a new increase in the debt limit has become a priority for the tea party movement and other small-government conservatives.
So far, the new GOP majority has proved accommodating. Republicans are moving to make good on their promise to cut $100 billion from domestic spending this year. They adopted a rules change by House Speaker John A. Boehner (Ohio) that should make it easier to block a debt-limit increase.
The national debt is the accumulation of years of deficit spending dating to the days of George Washington. The debt usually advances in times of war and retreats in times of peace.
Remarkably, about half of today's national debt was run up in the past six years. It soared from $7.6 trillion in January 2005 as President George W. Bush began his second term to $10.6 trillion the day President Obama was inaugurated and to $14.02 trillion now. The period has seen two major wars and the deepest economic downturn since the 1930s.
With a $1.7 trillion deficit in fiscal 2010 alone, and the government on track to spend $1.3 trillion more than it takes in this year, annual budget deficits are adding about $4 billion a day to the national debt. Put another way, the government is borrowing 41 cents for every dollar it spends.