U.S. Debt and Deficit USA TODAY I 11/11/2012. How much does the USA owe? Approx. 16 trillion USD 16,000,000,000,000 USD 320,000,000,000,000 CZK Approx.

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Presentation transcript:

U.S. Debt and Deficit USA TODAY I 11/11/2012

How much does the USA owe? Approx. 16 trillion USD 16,000,000,000,000 USD 320,000,000,000,000 CZK Approx. $51,631 per citizen Approx. $41,000 every second, $10 million per each passing minute Already exceeds the US GDP (15.3T USD)

US Debt Visualized in $100 Bills

US debt-ceiling  Established in 1917 during WW1 to provide more flexibility to finance the US involvement in war  What is the debt ceiling? - The debt ceiling is the total amount of money that the United States government is authorized to borrow to meet its existing legal obligations, including Social Security and Medicare benefits, military salaries, interest on the national debt, tax refunds, etc.  What is going to happen if it won‘t be raised? - Failing to increase the debt ceiling would cause the government to default on its legal obligations, threaten the jobs and savings of everyday Americans

Congressional debate Congress has raised debt ceiling for 78 times, so why is it the problem now? Republicans want a commitment from the White House for more spending cuts. Obama administration has resisted the idea because ensuring the government’s solvency is too important to be held hostage to other issues.

The United States “Fiscal Cliff” Refers to the convergence of two elements: 1.) expiration of tax cuts and 2.) reduction in government spending – both scheduled for December 31 Will help the U.S. deficit in short- term Analysts argue that GDP will drop and unemployment will rise Is debt reduction and boosting of economy mutually exclusive? Will the Congress extend the Bush tax cuts? Will it repeal the Budget Control Act?

The United State’s Debt – Obama’s „solution“ Actual debt 16,261 Trillion equals about $1.101 trillion deficit (requested) $1.327 trillion (enacted) Most dramatic moment wast the debt ceiling crisis of 2011 Resulted into Budget Control Act of 2011 – signed August 2 Contains: Debt Ceiling was increased by $400 billion immediately The President could request a further increase of $500 billion Spending was reduced more than the increase in the debt limit Possible another increase of 1.2 – 1.5 TRI, depending on various circumstances, among other things “Balanced Budget Amendment” Obama’s 10 years plan specified 917 Bill dollars cuts during the following 10 years 21 Bill applied in the FY Joint Select Committee Suggestions should be immune from amendments or filibuster The program should cut mainly security spending but some non-security as well

The United State’s Debt – Obama’s „solution“ John Boehner’s fiscal Budget proposal Should balance the budget within the next 30 years Latest Projections U.S. seems to hit the 16,394 T of federal borrowing in January (later than projected) Partly because of the Sept surplus X Months after the Government spend more than it revenues again After Obama’s Victory Announced a different strategy of how to accumulate support for his budget cuts and tax increase for the wealthy