The Debt Ceiling

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    Mellody Hobson explains the debt ceiling in today’s “Money Mondays” segment.

    Let’s start at the beginning. A common misperception is that the debt ceiling is the amount of money the government owes, and that raising the ceiling means increasing the federal debt. The federal debt is what it is…$16.76 trillion as of September 30th, according to the Treasury department. By contrast, the debt ceiling is the amount of money the government can borrow in order to pay that debt. That limit is currently $16.7 trillion, although technically the government already exceeded it in May. So the debt and the debt ceiling are different, but raising the amount the government is allowed to borrow will of course end up allowing the country to go deeper into debt, at least temporarily.

    How is that money “borrowed” by the government and from whom are they borrowing?
    You and me! And other people and countries all over the globe. Plus, in recent years, the Federal Reserve has emerged as a major buyer. The U.S. government borrows money by selling Treasury Bonds…and it uses the money it makes from selling those bonds to pay off existing debt and borrow additional money.

    Should the government just cut federal spending?
    That’s logical but could be disastrous right now because the economy is still recovering. According to the Congressional Research Service, cutting federal expenditures would mean discretionary spending would be drastically reduced—that includes defense, education and housing. Social Security would be threatened, taxes would need to rise and the economy would likely go into recession as a result. So a meaningful cut in spending is not a good option at this time.

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    2 thoughts on “The Debt Ceiling

    1. The minister was on yesterday (or the day before,) and he never said anything about it. I am a fan of the minister, but I believe he owed it to us as well as himself to mention his plan.
      I am also a fan of Mr. Joyner. Avid TJMS listeners know if he is “bought and paid for” and in that business, no one is exempt.

    2. October 20th is fast approaching and the Honorable Minister Louis Farrakhan will be announcing plans for a United Black treasury on this day to buy farms, build factories and make jobs for Black Americans. Yet still no mention from a website that even takes the time to report tabloid gossip. I am starting to wonder if Tom Joyner is not allowed to report this major event in history. Could it be that he is bought and paid for like Tavis Smiley suggested?

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