How The Debt Ceiling Affects You
BOSTON (CBS) - There's been quite a bit of talk about the debt ceiling these days. But do you know what it is and how it affects you?
The debt ceiling is set by Congress. It's the amount of money the federal government can legally borrow to pay for things like Social Securtiy and Medicare.
On August 2nd we'll reach the debt ceiling. It's $14.3 trillion.
If the ceiling isn't raised, the U.S. government will not be able to pay its bills and operate as it needs to.
If we default on our loans, the country's credit rating will be damaged in the global markets.
The president and Congress are debating what to do next.
Both agree the ceiling needs to be raised. But, Republicans want to make reductions in the federal budget first.
Lisa van der Pool of the Boston Business Journal reports.
So what happens to consumers if they do raise it?
There's lots of confusion. A recent survey found 48-percent of Americans think that raising the debt ceiling would lead to more government spending and higher debt.
Also, inflation could rise. So things like car loans and mortgages will be more expensive.
It could also damage consumer confidence if it appears the U.S. is just racking up debt.
However, if the debt ceiling isn't raised, interest rates will likely go up.
