US National Debt: One to watch in 2011

LDF

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In early 2011 the US national debt will reach $14.3 trillion. $14.3 trillion is the ceiling imposed by law and it will take a vote by Congress to extend the US Treasury's borrowing requirement.

Following the Mid-term election results the US Congress is deeply divided. When the borrowing requirement was last extended (Feb 2010) not one Republican voted in favour of the extension. Throw in the dozens of Tea Party candidates elected in the recent mid-terms and the chances of an agreement on extending the borrowing limit become a little slimmer. Many Tea Party candidates were elected on the promise to deal with the deficit. The same candidates also want tax cuts and an end to Washington deal-making. It will be difficult to keep all of those promises on this issue.

If Congress fails to vote in favour of extending the borrowing requirement the US will be facing debt default. I don't think that will happen but the politics will be very interesting to watch.
 


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