U.S. Government Debt, Global Threat

American government debts will cross their limit by the beginning of August. If the Democrat-controlled White House and the Republican Party opposition do not agree to increase the authorized limit, the U.S. government will be practically bankrupt.

According to the rules, the United States government is allowed to be in debt to a maximum of $14.3 trillion. In less than three weeks Barack Obama’s government is expected to go beyond this limit.

In such a condition, the government cannot handle its financial obligations. An increase of the debt ceiling needs to be approved by Congress, and a majority of the Congress currently belongs to the Republicans.

Threat to the Global Economy

A few weeks ago, negotiations began between the U.S. Democratic and Republican representatives in Congress regarding raising the government’s authorized debt credit limit; so far, these talks have brought about no result. The latest rounds of these talks were held on Wednesday morning, July 13. Apparently the Republicans are trying to make use of the existing crisis to impose some of their programs on Barack Obama’s government. The White House, in order to curb debt, proposed an increase on the most prosperous American tax bracket, while Republicans demanded a reduced budget for social services.

Timothy Geithner, the secretary of the Treasury of the United States, said, “If Congress doesn’t agree with raising the debt limit, America’s economy will suffer severe damage that could have a destructive impact on the global economy.”* Experts called such a situation a “disaster.”

Millions of Dollars of Debt in a Decade

The determination of a limit for government debt dates back to 1917. Since 1962, this limit has been increased 70 times, with the highest occurrences of increase in the past decade. According to the official statistics the debt limit authorized in 2001 was slightly less than $6 trillion, which the government didn’t need to use.

There is an enormous debt that Barack Obama’s government budget faces, while in 1998 the financial balance of this country was positive. Bill Clinton, president at the time, said, “The last three decades have never seen such a low rate of inflation and America’s economy has never been so powerful.”* That situation continued until 2001.

The Cost in Iraq and Afghanistan: $119 Billion a Year

One of the questions that economic analysts have been asked is how this debt accumulated during the last decade as a burden on the government’s budget. One of the causes of America’s current economic crisis is known to be the staggering increase in the military budget following the Sept. 11 terrorist attacks on the World Trade Center towers in New York.

The military attack on Iraq, the establishment of American forces in Afghanistan and the increase of security costs caused America to increase its debt year after year. The cost of the U.S. military presence in these two countries in the current year has been estimated at close to $120 billion.

Despite this, apparently the military budget contains no program to help the economy. On July 9, the U.S. Congress approved a budget of over $649 billion for the Department of Defense — the biggest defense budget in the history of the United States. This figure is more than double that of 2001.

*Editor’s note: Quotes, while accurately translated, could not be verified.