Libertarian presidential candidate Gary Johnson, a former governor of New Mexico, promised during the third-party candidate's debate in Chicago today that he would propose a balanced federal budget immediately upon entering office should he win the 2012 election. He argued that "we're bankrupt," referring to the United States.
This is an exaggeration, even though government debt held by the public currently stands at more than $11 trillion. The term "bankrupt" generally implies insolvency or an inability to pay debts that are owed. But that's not the case with the federal government, which to this day has little trouble borrowing funds and can also print money.
Much of the government's ability to borrow money relates to its credit ratings. All of the top agencies that provide such scores still have considerable confidence that the federal government can meet its financial obligations. For instance, Moody's and Fitch have both given the U.S. their highest ratings.
Among the top credit-rating agencies, Standard & Poor's has given the U.S. it's lowest score, dropping the U.S. rating in August 2011, during the debt-ceiling debates. But the agency has still given the U.S. its second-higest rating of AA+, noting that the federal government has a “very strong capacity to meet its financial commitments.”