Should federal government raise debt ceiling? Local economists say 'no'
Mon, 09 May 2011 20:00:24 GMT —
This month the federal government could reach its debt limit also known as the debt ceiling.
It's the highest debt allowed by law, $14.3 trillion.
Secretary of the Treasury Tim Geithner says the U.S. should be allowed to borrow more, but many economists and republicans say it's a bad idea.
The federal government has been running trillion dollar deficits for the last few years.
Congressman Dave Camp from Midland says it has to stop soon. "Our debt is so great. Our debt equals our entire economy."
The country's gross domestic product in 2010 was more than $14-trillion.
The national debt was just under $14-trillion dollars, meaning the debt made up more than 93% of what America made.
Now, the U.S. is approaching its $14.3 trillion debt limit.
The U.S. spent $414 billion on interest for the national debt in 2010, not even touching the principle.
"There are a number of countries that are ahead of us, but unfortunately in terms of being the most formidable economy in the world, the rest of the world is worried what's going on in the United States," says Northwood University professor of economics Tim Nash about the raising debt.
The secretary of the treasury is recommending raising the debt limit an additional $2-trillion to cover future deficits.
Republicans say the spending needs to get under control before the country borrows any more money.
That spending, they say, is mostly in medicare and social security, which NPR says is unsustainable in its current state.
Experts say medicare could go bankrupt by 2020.
"Just counting existing medicare and social security, the federal government has a commitment over the next 75 years of an unfunded liability of somewhere between $75 to $100 trillion, that's with a 'T'," says Ebeling.
Economics professors at Northwood University say the voting public needs to bite the bullet and realize they won't be getting what they've been promised.
Congressman Camp says tax loopholes need to be closed to help fix the deficit issue.
Democrats are mixed on the issue.