When the U.S. government spends more than it collects in revenue, it creates a “deficit,” which the Treasury Department covers by borrowing money when it issues new debt through government securities, according to U.S. Government Accountability Office ( tinyurl.com/2p8prcpj).
There is a limit to what the Treasury can borrow, known as the “debt ceiling” (or “debt limit”), and that’s the problem that we’re facing today. We reached that limit ($31.4 trillion) on Jan. 19 of this year, according to the Congressional Budget Office ( tinyurl.com/ysxwfpw8).
Six days earlier, Treasury Secretary Janet Yellen wrote to congressional leaders ( tinyurl.com/4r62asj3) that the Treasury Department “will need to start taking certain extraordinary measures to prevent the United States from defaulting on its obligations.”
While it’s not possible to predict an exact date, Yellen anticipates that a potential default (the “X-date”) might occur next month. On May 1, she told congressional leaders: “[O]ur best estimate is that we will be unable to continue to satisfy all of the government’s obligations by early June, and potentially as early as June 1, if Congress does not raise or suspend the debt limit before that time” ( tinyurl.com/7aav54vf).
If the debt ceiling is not raised before the X-date, “the government may also have to prioritize its principal and interest payments on Treasury securities to head off a default, and delay payments to U.S. households. That could affect Social Security, military salaries, tax refunds, food stamp benefits and unemployment insurance, among other programs,” explained...
from News https://www.ctpost.com/news/article/julie-jason-deficits-debt-ceilings-and-you-18082523.php
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