[00:00.10]From VOA Learning English,
[00:02.52]this is the Economics Report.
[00:05.54]There has been a lot of talk
[00:07.84]about the debt ceiling in the United States.
[00:11.50]The debt ceiling is a legal limit
[00:14.57]on the amount of money
[00:15.97]the federal government can borrow.
[00:18.94]Political disputes over that amount
[00:22.25]have concerned investors in recent weeks.
[00:26.21]Alexander Gelber is an assistant professor
[00:30.13]of public policy at the University
[00:33.14]of California in Berkeley.
[00:35.60]He says American lawmakers must negotiate
[00:39.77]a new debt ceiling everytime the federal debt
[00:43.33]reaches that legal limit.
[00:45.74]"The debt ceiling is a limit
[00:48.36]on the amount that US Treasury can borrow,
[00:51.61]and that limit needs to be raised by congress periodically."
[00:57.60]National debt is necessary when a government
[01:01.37]spends more money than it has available.
[01:04.49]Governments offer bonds and other investments
[01:08.66]to raise money to pay for the spending.
[01:12.30]In return, the government promises
[01:15.56]to repay investors who buy the securities.
[01:19.73]The financial demands of World War I
[01:23.55]led American lawmakers to establish a total debt limit.
[01:28.83]In 1917, congress agreed that the president
[01:33.92]could borrow up to a set amount
[01:35.87]without seeking congressional approval.
[01:39.47]Congress has agreed to change the debt limit
[01:43.39]10 times since 2001.
[01:46.59]But the major parties have yet to agree on spending levels
[01:51.62]or on the need to borrow to pay for government operations.
[01:56.85]Other nations buy United States Treasury department securities
[02:02.28]because they are considered the safest investment in the world.
[02:07.45]The partial shutdown of the federal government
[02:10.21]led to worldwide concern about the safety of these investments.
[02:15.18]The debt ceiling was supposed to reach the legal limit last week.
[02:20.80]Without power to borrow more,
[02:23.57]the government would have been unable to pay investors
[02:27.44]who owned Treasury department securities.
[02:31.11]Professor Gelber says the possibility of the United States
[02:35.27]failing to pay its debts caused concern around the world.
[02:40.55]In recent years, disputes over spending and debt limits
[02:45.32]have led to delays in congressional approval of a budget
[02:49.86]and in raising the debt ceiling.
[02:52.81]Last week, only 1 day before borrowing reach the legal limit,
[02:58.61]congress agreed to re-open the government
[03:01.48]without enforcing the debt ceiling.
[03:04.55]Lawmakers agreed to let the president decide
[03:08.21]what the Treasury department could borrow
[03:11.07]through February 7th.
[03:14.09]Congress approved a budget
[03:16.34]to operate the government through January 15th.
[03:20.61]The president and congress must now negotiate a new spending plan
[03:26.53]and another debt limit in order to avoid another crisis.
[03:31.45]And that's the Economics Report from VOA Learning English,
[03:37.54]I'm Mario Ritter.