By Don Davis
The federal debt has built up over the years because Congress and presidents of both parties tend to spend more money than the government raises in taxes and other revenues.
2013 federal revenue: $2.9 trillion
2013 federal spending: $3.8 trillion
(The above figures are from an Obama administration budget proposal, but the current government shutdown began because Congress has not passed a budget.)
Debt built up over the years: $16.7 trillion
Debt per American: nearly $53,000
As the federal debt (or deficit) rises, the government borrows money by selling bonds to make up the difference between revenue and spending. Ten times in the past decade, Congress and the president have increased the amount of debt the federal government is allowed to have. The government this week reaches the $16.7 trillion limit federal officials have placed on how much debt the country may carry.
Nearly half of the bonds have been sold to foreign investors, with China buying a large percentage. Private American investors hold nearly a third of the debt, with state and local governments and the Federal Reserve holding the rest.
Congress and the president must agree on a new debt limit, allowing the government to borrow more money. Otherwise, the government could not pay all of its bills and probably would go into default, which would hurt the country’s credit rating and increase the cost of borrowing.
It appears any temporary debt deal will be tied to a short-term budget fix. The federal budget ended at the first of the month, prompting a partial government shutdown. Many federal programs are using leftover money, which is beginning to run out.