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From VOA Learning English, |
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this is the Economics Report. |
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There has been a lot of talk |
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about the debt ceiling in the United States. |
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The debt ceiling is a legal limit |
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on the amount of money |
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the federal government can borrow. |
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Political disputes over that amount |
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have concerned investors in recent weeks. |
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Alexander Gelber is an assistant professor |
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of public policy at the University |
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of California in Berkeley. |
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He says American lawmakers must negotiate |
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a new debt ceiling everytime the federal debt |
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reaches that legal limit. |
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"The debt ceiling is a limit |
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on the amount that US Treasury can borrow, |
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and that limit needs to be raised by congress periodically." |
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National debt is necessary when a government |
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spends more money than it has available. |
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Governments offer bonds and other investments |
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to raise money to pay for the spending. |
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In return, the government promises |
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to repay investors who buy the securities. |
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The financial demands of World War I |
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led American lawmakers to establish a total debt limit. |
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In 1917, congress agreed that the president |
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could borrow up to a set amount |
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without seeking congressional approval. |
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Congress has agreed to change the debt limit |
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10 times since 2001. |
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But the major parties have yet to agree on spending levels |
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or on the need to borrow to pay for government operations. |
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Other nations buy United States Treasury department securities |
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because they are considered the safest investment in the world. |
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The partial shutdown of the federal government |
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led to worldwide concern about the safety of these investments. |
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The debt ceiling was supposed to reach the legal limit last week. |
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Without power to borrow more, |
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the government would have been unable to pay investors |
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who owned Treasury department securities. |
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Professor Gelber says the possibility of the United States |
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failing to pay its debts caused concern around the world. |
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In recent years, disputes over spending and debt limits |
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have led to delays in congressional approval of a budget |
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and in raising the debt ceiling. |
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Last week, only 1 day before borrowing reach the legal limit, |
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congress agreed to re-open the government |
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without enforcing the debt ceiling. |
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Lawmakers agreed to let the president decide |
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what the Treasury department could borrow |
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through February 7th. |
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Congress approved a budget |
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to operate the government through January 15th. |
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The president and congress must now negotiate a new spending plan |
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and another debt limit in order to avoid another crisis. |
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And that's the Economics Report from VOA Learning English, |
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I'm Mario Ritter. |
