3. The United States debt-ceiling
crisis was a financial crisis in
2011 that started as a debate in
the United States Congress
about increasing the debt ceiling.
5. What is the Debt Ceiling
•Under federal law, the amount up to what limit
that the government can borrow to meet the
deficit budget is the Debt Ceiling.
•This concept was introduced at time of World
War l .
•These borrowings are done by the department
of the Treasury
6. Process of Debt Ceiling
• Debt ceiling can increase by the vote of
congress
• To change the debt ceiling, Congress must
enact specific legislation, and the President
must sign it into law.
7. Contd….
• The process of setting the debt ceiling
is separate and distinct from the regular
process of financing government
operations
8. The debt ceiling has been raised 74 times
since March 1962
including 18 times under Ronald Reagan,
eight times under Bill Clinton, seven times
under George W. Bush and three times (as of
August 2011) under Barack Obama.
9.
10. Treasury view-
According to the Treasury, "failing to increase
the debt limit would . . . cause the government to
default on its legal obligations – an
unprecedented event in American history".
These legal obligations include paying Social
Security and Medicare benefits, military salaries,
interest on the debt, and many other items
11. Critics view
Debt ceiling crisis is "self-inflicted”.
It is a routine work of treasury.
it was used to score political points for the
minority party.
12.
13. Different Issues to Resolve the Problem
Democratic party and Republican party have
given important points to come out from this
crisis in few months
American President has told that I need
support of both the parties to represent the
view of American people what they want ?
14. Increase the limit of
According to
debt ceilingparty
republican from
This pointto 14.29
proposed by
(opposition party)
12.93
American President
trillion dollar
Because are demandingexpending more
They it is not about a ceiling on such
borrowing they believe that such
money the raising the debts ceiling its
simply ability to pay treasury bills burden
borrowing will increase the debt
On future generation without helping
the economy.
Democratic Party Republican Party
15. According to
democratic
SENATE has given
party
two options
(these
borrowing will
help in future)
1. A balance budget amendment is sent to
1. will invest in thousand of project
all states
2. it will increase employment.
2. The joint committee cuts spending by
3. Demand of goods and services will
greater amount then requested debt
increase
ceiling
Democratic Party SENATE
16. The republican
According to
party proposed
democratic
deficit
party
reduction plan
TheIf govt. reduction commission planed to
deficit would reduce the expenditure it
$3.8 trillion for goods and services would
demand deficit-cutting plan.
reduce.
Democratic Party Republican Party
17. According to
democratic party
According to
(reduction in
republican
unilateral
party
expenditure)
For next 10 year
If thisReduction in Defense the lenders
1. will happen most of
wouldmedical
2. get uncomfortable in holding US
bondsroad would want start selling the
3. and
bonds govt. would reduced $733 billion.
The
Democratic Party Republican Party
18. According to Democratic
party
Tax reform should be
(agree but they want to
considered
reform tax after few year)
Because……??
Ifif taxgovt.reform increase the tax
the will would the govt will get
$751 billions.
right now the demand of goods and
services of the people at large would
reduce.
Democratic Party Republican Party
19. ?
Directly question to the
American people
People can mail ,tweet directly to us that
will keep pressure on Washington
(Senate)to move out from this crisis.
Democratic Party
20. o U.S. military salaries and retirement ;
o Social Security and Medicare;
If borrowing ceiling limit will
o federal civil service salaries and retirement ;
o individual and corporate taxthese things
not increase than refunds;
o unemployment to states;
may happen
o defence vendor payments;
o interest and principal payments on Treasury bonds
and other securities;
o student loan payments;
o Medicaid payments to states;
Democratic Party
21.
22. Agreement
1. The agreement cut spending more than
it increased the debt limit.
2. The agreement established a Congressional Joint
Select Committee that would produce debt
reduction legislation by November 23, 2011.
23. 3. The goal of the legislation is to cut at least $1.5 trillion over
the coming 10 years and should be passed by December 23,
2011.
4. Congress must vote on a Balanced Budget Amendment
between October 1, 2011, and the end of the year
5. Projected revenue from the Joint Select Committee's
legislation must not exceed the revenue baseline produced
by current law
24. 6. The agreement specified an incentive for Congress to act. If
Congress fails to produce a deficit reduction bill with at least
$1.2 trillion in cuts, then Congress can grant a $1.2 trillion
increase in the debt ceiling
7 . The debt ceiling may be increased an additional
$1.5 trillion if either one of the following two conditions are
met:
1-A balanced budget amendment is sent to the states
2-The joint committee cuts spending by a greater
amount than the requested debt ceiling increase
25. CONSEQUENCES
1. If U.S government does not increase the debt limit
it will cause catastrophic damage to the economy .
2. To reduce deficit American government has to
increase the tax rate on middle class people which
they don’t want to do so .
26. 3.If debt limit doesn’t increase it will negatively effect the
dominant rate of dollar in U.S market & also it will effect the world
economy .
4. The dollar is expected to be weaker in forex market , If debt
limit doesn’t increased .
5. If debt limit is not increased there is med rush of money into
safer physical assets such as GOLD , METAL & OIL .
27. 6. If debt limit will not increased it will effect payment on
broad range of benefits and U.S obligation would be
discontinued limited & adversely affect included :
- U.S military salaries and retirement benefits .
- Interest and principle payment on treasury bonds &
other securities.
- Medical payment to the states .
28. FUTURE PLAN AGAINST DEBT CRISIS
1. There is $ 1 trillion in spending cut over next 10 year.
2. By the end of December congressional committee will have find
somewhere else to cut $ 1.5 trillion .
3. U.S government will also reduce their spending on healthcare
legislation and increase the tax rate .
29. 4. If U.S government increased minor tax rate it will
increase $ 3.6 trillion government revenue .
5. Mr. president has to make their debt market
optimistic .
