Understanding the Debt Limit Showdown

Thursday, October 03, 2013

The National Debt Clock. December 2, 2009 (Nick Webb/flickr)

Tune into CNN, and it's hard to miss the giant clock at the bottom of the screen keeping tabs on just how long the government shutdown will go, right down to the last second.

But just around the corner an even bigger national fiscal catastrophe is looming. In September the U.S. Treasury warned Congress that if the nation's debt limit is not raised by October 17th the U.S. will run out of cash to pay off its debts.

According to the Congressional Budget Office, the U.S. will have $30 billion of cash on hand come mid-October. On any given day, its net payments can reach as high as $60 billion. Meanwhile, the United States will hit its borrowing limit of $16.7 trillion on May 19.

Amid the back drop of the current government shutdown and the slowly recovering economy, many are concerned about the consequences of not increasing the debt limit for the first time in U.S. history. There is also a question of what impact this may have on an increasingly intertwined global economy, which is in it's own phase of financial recovery.

What exactly is a debt ceiling? And why will so much be at stake in this next political fight? James Surowiecki, a financial columnist for The New Yorker, joins The Takeaway to explain this latest chapter in Washington's political battleground.

Guests:

James Surowiecki

Hosted by:

Todd Zwillich

Produced by:

Mythili Rao

Editors:

T.J. Raphael

Comments [2]

Larry Fisher from Brooklyn, N.Y.

I would say to the politicians: I looked into the abyss of the debt ceiling and the abyss of the debt ceiling looked into you, and neither one of us liked what we saw.

Oct. 03 2013 02:29 PM
Terry Simpson from Seattle

The Republicans are being moderately successful at pointing their side as "compromising" and re-working their proposal to seem as if they are the ones who are flexible. They are making the Democrats look intransigent. So they get the "political high ground" in this cesspool as the ones who want to bring this to a Senate/House Conference Committee. And the Dems are hiding from that: because, like arbitration or mediation, that committee will have no choice but to negotiate to the middle of the 2 bills, meaning partially de-funding ACA/Obamacare (which they justify by saying that polls show Americans want to stop or defund ACA). And the Red Team wins-- because the Democrats are putting forward a "clean CR" and have nothing to trade.  

So, here's another plan: The Senate should re-pass the CR, attach a Gun-Control measure or gun tax to pay for mental health screening, (because 90% of Americans say they want something like that, including a majority of NRA members). Then, they can call a Conference, strip out the partisan measures from both sides and Obama can sign a Clean CR and put people back to work before the economy goes down the tube. Debt Ceiling? Same strategy. Level the tactical playing field.

Oct. 03 2013 01:57 PM

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