The 2nd of August will be a historic day for the US . The American Congress will vote about the increasing of the debt ceiling in USA to avoid a US government default. The US Treasury has warned the government will run out of money to pay all its bills unless a $14.3tn (£8.7tn) borrowing limit is increased by 2 August. [photo livemag.eu]
Some Republicans – including Tea Party supporters who won House seats in 2010 and oppose raising the debt limit under any circumstance – feel the bill did not cut enough from the US budget.
Meanwhile, International Monetary Fund chief Christine Lagarde warned that if the debt ceiling was not increased there could be an impact on the US dollar.
President Barack Obama supports another plan by top Senate Democrat Harry Reid, which would cut $2.2tn from deficits, and raise the debt ceiling by $2.7tn. What is the debt ceiling? It was adopted in US by the president during 1917 as economic instrument to control the expenditure at the time of the war. Since its inception, the debt ceiling was raised nearly 100 times. In just 10 years (from the 80s to the 90s) has been increased from 1,000 to 6,000 billion.
The U.S. debt ceiling is currently set at 14.3 trillion dollars.The conservative party aims to reduce state expenditure whereas the Democratics , currently in the minority in Congress , prefers to raise the ceiling of 2700 billion. In July, President Obama pushed for a sweeping $4 trillion deficit-reduction deal that would include reductions in Social Security, Medicare and Medicaid as well as changes to plug tax loopholes.
The House Republican leader, Speaker John A. Boehner, expressed interest, but quickly backtracked in the face of protests from conservatives opposed to tax increases. If the current $14.29 trillion debt ceiling is not raised, the Obama administration says the government would ultimately have to default on its debt; without borrowing, it would not be able to pay both the government’s daily bills and the investors whose bonds have come due: next Tuesday will be decisive.