With the risk of a fiscal cliff averted, the focus once again turns towards the debt ceiling debate. And like the situation in the fall of 2011, which eventually led to the downgrade of U.S. government debt and its agencies by S&P, the argument centers on the need to raise the debt limit to accommodate for the budgetary fiscal imbalance. Technically, the U.S. government reached its credit obligation maximum of about $16.4 trillion at the end of last year. The Treasury Department, however, has certain measures that it can invoke to maintain federal operations for a brief period, but that will only last until March. Though the ongoing squabble is mostly political in nature, there are real economic consequences to mismanaging the nation's debt as witnessed in the European zone.
Read the Article (PDF)