U.S. Debt Ceiling Deadline Could Be Sooner Than Anticipated

EconEye Admin

3 years ago

The U.S. government’s deadline to raise the $31.4 trillion debt ceiling could be sooner than expected. Goldman Sachs analysts said weak tax collections in April indicate a higher probability that the so-called “X-date,” when the government is no longer able to pay all its bills, would be reached in June. —reuters.com

Answer the following questions to check your understanding of the story.

1) Why does the United States have a government debt?

The United States has a government debt because _____________.

a) the government response to the pandemic created several years of budget deficits

b) every year, the government has a budget deficit

c) over the country’s entire history, there have been more years with budget deficits than budget surpluses

d) the sum of its past government budget deficits exceeds the sum of its past government budget surpluses

Wrong! - How is a government debt created?

Correct! - Government debt is the sum of past budget deficits minus the sum of past budget surpluses. The United States has a government debt because the sum of its past government budget deficits exceeds the sum of its past government budget surpluses.

2) Why is the government debt increasing?

The government debt is increasing because _____________.

a) rising interest rates have increased debt interest payments

b) Congress and the President cannot agree on discretionary taxes and expenditures

c) in the current fiscal year, outlays exceed receipts

d) people are slow to pay their income tax obligations

Wrong! - What must happen to the government budget for the debt to increase?

Good Job! - The government debt increases when the government has a budget deficit in the current year, and a government budget deficit occurs when outlays exceed receipts.

Share this: