What’s this US debt crisis all about? (updated) | Bangkok Post: learning

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What’s this US debt crisis all about? (updated)

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Report from America: A brief explanation of the US debt ceiling and the dangerous game that US lawmakers have been playing with it. AFP Photo 

While I have been in the United States, everyone has been watching the dangerous political game being played in Washington DC over raising the US debt ceiling. This is confusing for Americans, so it must be doubly confusing for those of you living abroad. Here is a quick and easy explanation of what is going on.

There were smiles for the camera but a lot of hard bargaining between President Obama and congressional leaders behind closed doors. AFP

Morning update

President Obama announced this morning that he and congressional leaders had agreed on a set of spending cuts that would allow the debt ceiling to be increased. However, the agreement still needs to be passed by both Houses of the US Congress: the Senate and the House of Representatives. Senate passage is very likely, but the House will be more difficult, especially on the Republican side where many members do not believe the cuts went far enough. Still, most analysts think both Houses will pass the agreement sometime tomorrow.

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What’s this US debt crisis all about?

It is now August and this month the United States government expects to take in about $170 billion in revenues. Expenses will likely total more than $300 billion, however, so about $130 will have to be raised by borrowing.

That is normal. The US government is deeply in debt – more than 14 trillion dollars – and it borrows to meet its debt obligations every month. There are usually more than enough people willing to lend the US government money because it is seen as a very safe investment.

What is not normal is that for the first time a substantial number of Republican lawmakers are not willing to allow the additional borrowing unless huge spending cuts without tax increases are agreed on. They have the power to force spending cuts because of what is called the "debt ceiling".

Periodically, the Congress authorises the US Treasury Department to borrow money up to a certain limit. That is the debt ceiling. In the past, whenever the debt ceiling was reached, Congress simply voted to increase it. That has happened dozens of times in the past without problems, but not this time.

The last election brought a large group of new Republican lawmakers into the US House of Representatives who were committed to forcing the government into balancing its budget. They are refusing to support raising the debt ceiling unless their demands are met. Since the Republicans control the House of Representatives, this threat has been taken very seriously.

This is a dangerous game, because if the debt ceiling is not raised very quickly, the US Treasury Department will run out of money and it will not be able to pay its bills. This could result in financial panic throughout the world, because so many people around the world either receive payments from the US government or have lent it money.

It now looks likely that some sort of a compromise will be reached at the last minute and a default on US government debts will not occur. Watch to see what kind of a deal is reached – if it is reached.

debt – an amount of money that you owe หนี้
crisis – an urgent, difficult or dangerous situation  วิกฤตการณ์
revenue – income from taxes or business activities รายได้
total – to add up the numbers of something/somebody and get a total   ผลรวม, ยอดรวม
raise (money) – to collect money for something
normal – typical, usual or ordinary; what you would expect ภาวะปกติ
obligation – something which you must do because you have promised, because of a law, etc. สัญญาผูกมัด, ข้อผูกมัด
trillion – the number 1,000,000,000,000; one million million ล้านล้าน
lend – to give money to someone who agrees to pay it back in the future  ให้ยืม
substantial – large in size, value or importance มากมาย, ยิ่งใหญ่, สำคัญ
lawmaker – a person in government who makes the laws of a country  ผู้บัญญัติกฎหมาย
ceiling – an upper limit เพดาน ขีดจำกัด
periodic – happening repeatedly over a period of time บางครั้งบางคราว
authorise –  to give official permission for something, or to give someone official permission to do something ให้อำนาจ, มอบอำนาจ, ให้สิทธิ
US Treasury Department – the US government department responsible for  forming and recommending economic, financial, tax, and money policies กรมคลังสหรัฐ
committed – loyal and willing to give your time and energy to something that you believe in
balance a budget – to make sure spending is not more than money received ทำให้งบประมาณให้สมดุล
demand – a very firm request for something ข้อเรียกร้อง, การเรียกร้อง
threat – an occasion when someone says that they will cause you harm or problems, especially if you do not do what they want you to do การคุกคาม,การขู่เข็ญ
financial – involving money เกี่ยวกับเงิน, ทางการเงิน
panic – a sudden strong feeling of fear or worry that causes you to be unable to think clearly or calmly ความตื่นตกใจ
compromise – a way of solving a problem or ending an argument in which both people or groups accept that they cannot have everything they want ประนีประนอม
default – failure to repay a debt การไม่ยอมชำระหนี้ การผิดสัญญา
deal – a formal agreement, especially in business or politics การตกลงซื้อขาย, ข้อตกลง, การซื้อขาย

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