U.S. Debt Is About To Go Through The Roof

The Ceiling

Every credit limit must be controlled by a ceiling, a line that is drawn in the financial sand. As the new fiscal year began for the U.S. on October 1, 2009, there was a bit more than a $200 billion dollar cushion between the debts the country owed and the credit limit that had been imposed by lawmakers.

The U.S. Treasury Department continues to scurry for debt relief, trying to sell of debts. The self-imposed debt ceiling is $12.104 trillion dollars, and at this rate it is presumed that the debt will go through the roof by December.

Raising The Roof

The only problem with a self-imposed credit limit is that you can self-impose a new one. It is presumed, quite realistically, that U.S. lawmakers will do just that. Over the last seven decades, lawmakers have raised the debt ceiling on numerous occasions, 90 to be exact.

They have taken that path eight times in the past seven years. It is believed that they have no alternative but to do so, for the inevitable conclusion would result in a government shut down. As scary as that may sound, it actually occurred briefly as recently as 1995, and the country survived.

Exploring the Options

The lawmakers will certainly approve the raising of the debt ceiling to avoid any financial insecurity for those around the globe who invest heavily in U.S. stability. The absence of a renewed credit limit would lead to the decline in the credibility of U.S. Bonds, imposing financial instability for many. The ideal situation would be for the lawmakers to impose this credit limit prior to that line in the sand being crossed.

If an agreement cannot be reached prior to the debt going through the roof, the country does have some short-term options. These actions will ultimately buy only a short time frame of mobility. There are a few funds the government can tap for financial relief. One would be the 401K fund for federal employees that contains $113 billion. The Civil Service Retirement and Disability Fund offers the opportunity to borrow up to $3 billion a month but of course any money obtained from either of these resources would have to be replenished with additional interest.

The Future

The government does have options for short-term relief, but in the end a more responsible alternative must be achieved than raising the ceiling every few years. It is very possible that over the next decade the national debt will expand an additional $10 trillion dollars if the government proceeds with the existing agenda. U.S. lawmakers are faced with implementing a different course of action that will curve the looming debt cycle or be prepared to drift inevitably into an uncertain financial future.

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