Obama Administration
As the Obama administration 's early August debt-deadline continues to approach, it has become near impossible to ignore all the coverage and chatter about the looming U.S. debt crisis. Headlines have been dominated by the constantly shifting story, while those with interests in the stock market have been nervously monitoring their assets.
Doomsayers have called it potentially one of the largest financial crises in history, while lawmakers have insisted the American government, with the "too big to fail" mentality, will not default. But amidst all the financial and political talk, the very basics of the issue can often be lost.
History
To understand what the debt crisis means, it 's important to understand where the problem actually started. The debt crisis in the U.S. certainly didn 't happen overnight. Technically the American government has held some sort of public debt since its inception in the late 1700s. The American government has been building up this significant debt since before 1980 and the Ronald Reagan years. Deficit spending from several American wars overseas combined with numerous economic downturns have all contributed to the growing debt.
Since then several extra expenditures like the Gulf War, nation-wide tax cuts and the wars in Afghanistan and Iraq have helped push the American government further into debt. With the debt now approaching $14.3 trillion, the Americans have reached what is known as their "debt ceiling." In other words, the government has pushed its debt as far as current legislation will allow.
So what does all this mean?
Most pressingly, the American government is in danger of running out of money, meaning they will no longer be able to pay their social obligations. This includes funding for government-sponsored programs like Medicare, Social Services and the U.S. defence services.
There is debate about when this will actually happen. The Obama administration says they 'll run out of money by Aug. 3, while
Doomsayers have called it potentially one of the largest financial crises in history, while lawmakers have insisted the American government, with the "too big to fail" mentality, will not default. But amidst all the financial and political talk, the very basics of the issue can often be lost.
History
To understand what the debt crisis means, it 's important to understand where the problem actually started. The debt crisis in the U.S. certainly didn 't happen overnight. Technically the American government has held some sort of public debt since its inception in the late 1700s. The American government has been building up this significant debt since before 1980 and the Ronald Reagan years. Deficit spending from several American wars overseas combined with numerous economic downturns have all contributed to the growing debt.
Since then several extra expenditures like the Gulf War, nation-wide tax cuts and the wars in Afghanistan and Iraq have helped push the American government further into debt. With the debt now approaching $14.3 trillion, the Americans have reached what is known as their "debt ceiling." In other words, the government has pushed its debt as far as current legislation will allow.
So what does all this mean?
Most pressingly, the American government is in danger of running out of money, meaning they will no longer be able to pay their social obligations. This includes funding for government-sponsored programs like Medicare, Social Services and the U.S. defence services.
There is debate about when this will actually happen. The Obama administration says they 'll run out of money by Aug. 3, while