| The clock is ticking for President Biden and Republicans in Congress to come to an agreement on the debt ceiling. The Department of Treasury has been taking what it calls “extraordinary measures” to pay the government’s bills. Here’s how we got into this mess: 💰 There’s only been a handful of years in the past half-century where the nation hasn’t spent more than it collected in taxes. The government must borrow to cover the overspending, creating the national debt. 💰 Lifting the debt ceiling — a limit on total government borrowing — has been a fairly routine vote. It’s been raised 78 times since 1960. But there’s been a growing partisan divide in recent years. 💰 Social Security and Medicare, the defense budget and interest on the debt are the biggest contributors to growing debt. The Fed’s upping of interest rates means the government is paying more on the debt, leaving less money for spending. 💰 A default would be disastrous: Government workers and Social Security recipients would go unpaid. It would be more difficult to borrow money, and a recession would be all but certain. 💰 But paying down the debt could also mess with the domestic and global economies, due to their reliance on investments in U.S. treasuries. |
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