January 14, 2013
The US debt ceiling became involved in the fiscal cliff debate when Treasury Secretary Timothy Geithner introduced the President's authority to raise the country's borrowing limit as a part of his first formal proposal. Although not strictly part of the fiscal cliff, the current debt-ceiling will also expire around the end of the year, unless "extraordinary measures" are used.
On December 26, 2012, Geithner announced that the federal government would exceed the current debt ceiling on December 31, 2012. Therefore, a number of measures would be put into place to delay this from happening, starting with suspending issuance of State and Local bonds on December 28 and investing in two government pension plans. These and other measures would normally delay reaching the debt ceiling for about two months but, because of debate over the fiscal cliff, this might be extended if there is no change in the current laws.
The United States debt-ceiling crisis was a political debate in the United States Congress about increasing the debt ceiling that resulted in a financial crisis. The crisis ended when a complex deal was reached that raised the debt ceiling and reduced proposed increases to future government spending, although similar debates are possible for future budgets. As part of the aftermath, the crisis had a major political impact in the United States, in which public support for Congress fell dramatically. President Barack Obama and Speaker of the House John Boehner announced on July 31 that an agreement had been achieved. After the legislation was passed by both the House and Senate, President Obama signed the Budget Control Act of 2011 into law on August 2, the date estimated by the department of the Treasury that the borrowing authority of the US would be exhausted.
Four days later, on August 5, the credit-rating agency Standard & Poor's downgraded the credit rating of US government bond for the first time in the country's history. Markets around the world as well as the three major indexes in the US then experienced their most volatile week since the 2008 financial crisis with the Dow Jones Industrial Average plunging for 635 points (or 5.6%) in one day. Yields on US Treasuries, however, dropped as investors, anxious over the dismal prospects of the US economic future and the ongoing European sovereign-debt crisis, fled into the safety of US government bonds and bonds of other safe haven economies. Moody's and Fitch, however, have retained America's credit rating at AAA. The Government Accountability Office (GAO) estimated that the delay in raising the debt ceiling increased government borrowing costs by $1.3 billion in 2011 and also pointed to unestimated higher costs in later years. The Bipartisan Policy Center extended the GAO's estimates and found that delays in raising the debt ceiling would raise borrowing costs by $18.9 billion.
http://en.wikipedia.org/wiki/United_S...
America Is Not a Deadbeat Nation: U.S. Debt, Investment, Education - Obama Press Conference | |
| 15 Likes | 15 Dislikes |
| 11,656 views views | 2,475 followers |
| Education | Upload TimePublished on 14 Jan 2013 |
No comments:
Post a Comment