Will President Obama Raise the Ceiling?

Posted on July 16, 2011

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The debt ceiling is a term used to refer to America’s debt, which can be increased to get more money, or kept at the current level, which is estimated to be around $125 billion per month. If the debt ceiling is not raised the Treasurer will not be able to borrow money to make up for the gap between the revenue and spending. What does this mean for us? Without the adequate funds the government will not be able to pay its bills and issues government checks such as Social Security, Medicare, and Medicaid.

Republicans and Democrats are debating over whether they should raise the ceiling debt or not. Right now they are engaged in the “grand bargain”, which is basically both sides trying to work towards a compromise to direct more money towards the government. It is estimated to save 4 trillion over the next decade. Republicans would agree to pose higher taxes on the wealthy, and Democrats would agree to cuts in Social Security benefits and other sacrifices; however House Republicans rejected this bargain. Without Republicans in agreement, the Democrats are not willing to create cuts in Social Security, Medicare, and Medicaid.

External economic analysts believe that it will be hard to save trillions of dollars without resorting to cut backs from Social Security which would increase over time. An individual retiring at 65 would expect a 3.7% less in benefits at 75, and 6.5% less at 85, and 9.2% less at 95.

Decisions will be made in early August, and hopefully no cuts will be made to government programs.

To read more on this topic, here is a detailed New York Times article.

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