There’s a lot going on with our government this week. Basically, lawmakers tried to prevent two potential crises: a possible government shutdown and a first-ever U.S. default.
And so far, we’ve taken care of one of those issues.
Congress avoided a government shutdown Thursday just hours before funding would have lapsed. Lawmakers were racing against a midnight deadline to prevent a shutdown of some federal operations.
But, President Joe Biden signed a short-term appropriations bill that will keep the government running through Dec. 3.
While that issue has been taken care of, Democrats and Republicans remain bitterly divided over raising the debt ceiling. Treasury Secretary Janet Yellen warns that we’ll reach the borrowing limit by Oct. 18, so lawmakers better get to it.
If action isn’t taken before then, it could trigger the nation’s first-ever default.
But wait, let’s back up a second. What exactly is the debt ceiling?
Well, it’s a cap on the amount of money our government can borrow to pay its debts. Every year, Congress passes a budget for government spending, social security, and more. Americans are then taxed
to help pay for all that spending.
The issue is that for years the government has been spending more than it takes in taxes and other revenues, which in turn increases the federal deficit.
Lawmakers now need to borrow money to continue to payout what Congress had already OK’d. The debt ceiling limits how much money the government can borrow to pay those bills.
If the government can’t borrow money to make payments there will be negative effects for millions of Americans such as stopped or delayed Social Security payments and Child Tax Credit payments, a possible tank in markets (which could hurt your 401K or other investments), and so much more.
According to ABC News, this issue is larger than a government shutdown because the U.S. has never defaulted on its credit. So basically, this would be uncharted territory.
In non-U.S. news, things haven’t been much better for the Evergrande group. However, the company did announce that it plans to sell off a nearly 20% stake in Shengjing Bank for $10 billion yuan, which is about $1.5 billion.
While that may seem like a lot, the company had more than $300 billion in debt to pay.
We’ll be sure to keep a close on these stories, so be sure to check for the latest updates.