Barack Obama’s awful, no good, very bad day

His bad day is worse for us. (Elizabeth Cromwell/Wikimedia)

Barack Obama has had a bad day.  His bad day actually started last Friday when the stock market dropped 500 points on news of Europe’s failure to deal with its own debt crisis.  After the close of markets that day, Standard and Poors, one of the rating agencies for financial bonds, made a long feared announcement that it was downgrading the credit rating of the United States.  To make matters worse, the U.S. federal debt was revealed to have reached 100 percent of GDP a few days earlier, a milestone not seen since 1947.

 

Over the weekend, investors and ordinary Americans (who are one and the same if they have a pension, an IRA, or a 401k) contemplated how the downgrade would affect Wall Street and Main Street.  To add to the somber mood, on Saturday, August 6, an Afghan insurgent shot down a U.S. Army CH-47 Chinook transport helicopter killing thirty Americans, including members of a U.S. Navy SEAL team.  Seven Afghan soldiers and a civilian interpreter were also killed.

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The debt limit and default: What it means and how it will affect you

As the deadline for an agreement on raising the debt ceiling approaches on August 2, it remains to be seen whether the Democrats and Republicans in Congress can reach a compromise that will allow the federal government to continue to meet its obligations.  Many Americans do not understand the background of the debt limit debate.  Many others don’t believe that it will have an impact on them.

 

The debt limit is the congressionally imposed limit on borrowing.  According to Factcheck.org, the federal government is currently borrowing thirty-six cents for every dollar that it spends.  Part of the problem is that tax revenues have fallen since the onset of the recession in 2008, while federal spending has increased.  When the federal government reaches the limit of what Congress allows it to borrow, it will have to begin choosing what bills to pay and which ones to default on.

 

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