The fatality of debt addiction

By Lu Feng
0 Comment(s)Print E-mail China Daily, October 16, 2013
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 [By Luo Jie/China Daily]

 [By Luo Jie/China Daily]

The stalemate between US President Barack Obama's administration and Republican- majority House of Representatives over raising America's debt ceiling has partly shut down the federal government since Oct 1. On Oct 10, Obama rejected Republicans' offer of increasing the debt ceiling for six weeks, aiming to push the negotiations' deadline to around Thanksgiving.

On Oct 13, members of the Senate, the upper house of Congress, did make some progress during their talks but they could not reach a deal. On Oct 17, the US government will hit the ceiling mandated by Congress on how much it can borrow to fulfill its financial commitments.

New York's Bryant Park has a giant electronic screen displaying the "national debt clock". The clock was designed and installed in 1989 by Seymour Durst, a New York real estate developer, who was worried about the rising national debt and shows the changes in the US' national debt over the years. According to the clock's reading the total US national debt was near $16.97 trillion on Oct 16, 2013, compared with $2.87 trillion in 1989.

Though the US has a law that puts a cap on the total amount of the government's public obligations, it has failed to prevent politicians from consistently passing expenditure bills breaching the legal borrowing limit. The US' debt ceiling has been raised 74 times since 1962, roughly once every eight months, with the issue often becoming the subject of a Democrat-Republican contest.

In 2011, a delay in passing a law to raise the national debt ceiling caused widespread panic and prompted a major global rating agency to downgrade America's AAA credit rating. The situation is getting even worse this year.

The US government's revenue is not enough to cover its expenditure. The deficit for the 2013 fiscal year (which ended on Sept 30) alone was $750 billion. Obama says he has managed to reduce the deficit by almost half, from $1.4 trillion in 2009. But the Republicans say the amount is still huge considering that the deficit was $458 billion in 2008, the year before Obama's first term, and $160 billion in 2007. The war of words continues.

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