If the US federal debt limit is not raised within 6 months, the US Treasury Department will exhaust all of its borrowing capacity and run out of cash in October or November.
The Treasury will need to begin extraordinary cash management measures to continue borrowing if Congress fails to raise or extend the debt limit.
Experts say the debt problems of the US are an echo of the 2008 financial crisis. During seven years Washington has raised the government debt limit several times. Each time, the decision was preceded by tough debates between Republican congressmen and the Democratic administration of country’s President Barack Obama. A big part of the debt is social and medical insurance programs. The US population is steadily aging and frequently gets sick. Thus, there is an acute need in spending on medical and social care, but the flows of taxes to the government budget are decreasing with every year. Plus, the negative global economic situation contributes to the growth of the American debt liabilities.
Social Security expert Laurence J. Kotlikoff, Boston University economics professor, says the current borrowings amount is underestimated considerably.
“In reality we're facing a fiscal gap of $210 trillion,” Kotlikoff proclaimed. That's 16 times larger than the official US debt.
