Debt Ceiling Discussion Dominates Headlines

On Tuesday, Aug. 2, the United States government has to pay some bills. This however, may be a problem.

Right now, the bills for August exceed the revenue. To cover the missing money analysts say the United States needs to make up $134 billion; the government needs to borrow more money and add to the federal deficit.

The problem: the United States has reached it's debt ceiling—the maximum amount of debt the country can take on.

President Barack Obama has asked the U.S. Congress to raise the debt ceiling so the nation doesn't default on any bills and doesn't see it's credit rating drop, but there is resistance.

Just what exactly is going on? We'll try and help you figure it all out.

What is the debt ceiling?

The debt ceiling is a manufactured limit, set by Congress, the tells the federal government how much it can legally borrow. In simple terms, it's a cap on spending. 

The ceiling is currently set at $14.294 trillion. The country's accrued debt hit that mark on the morning of May 16. The pending August bills will push the debt past that number, thus creating the problem.

How flexible is the debt ceiling?

Very. Since being enacted in 1917, the ceiling has been raised 102 times. In the last 49 years, the ceiling has been raised 67 times. The ceiling has been raised 10 times since 2001. 

What happens if ceiling is not raised?

There are basically two outcomes. The first: Congress agrees to balance the ledger. By either raising taxes, cutting spending or a mixture of both, Congress can try and even things up so the US won't approach the ceiling. 

Outcome two: Default. The United States would have to pick and choose what bills get paid. Some groups, like social security recipients, might not see money they are expecting. 

What's being discussed?

Both sides of Congress are trying to figure out a long-term plan and so is President Obama. Still, some Republicans and Democrats are looking to propose partisan plans. A vote on a plan in either the House or Senate is expected before Tuesday's deadline. 

What happens with a short-term solution?

A long-term solution may not materialize as the 11th hour approaches. In the short-term the United States could push the ceiling up enough to get through August, only to have to do the same song and dance later.

Maplewood-Richmond Heights Patch  what would happen with a short-term fix: unemployment is expected to rise, borrowing money will be tougher and interest rates will go up.

What can be done?

In an address on Friday morning, President Obama encouraged the nation to keep bombarding Congress on both sides of the aisle to tell them to get a deal done. He later Tweeted: "The time for putting party first is over. If you want to see a bipartisan #compromise, let Congress know. Call. Email. Tweet. —BO."