The FY2013 Budget of the United States Government was released yesterday. It contains a message from the President, information on the President’s priorities, budget overviews organized by agency, and summary tables.
Image description: This chart illustrates the federal government’s budget challenges. The budget deficit for fiscal year 2011 was $1.3 trillion. This is the third largest shortfall in the past 40 years.
View a larger version of this image.
Infographic courtesy of the Congressional Budget Office
The federal government can borrow money to pay its bills, just like taking out a loan. The debt limit is the maximum amount that Congress allows the government to borrow, similar to the credit limit on a credit card. The government will exceed the current debt limit of $14.3 trillion dollars on August 2 unless Congress votes to raise the limit before that date.
Raising the debt limit would let the government borrow enough money to pay bills that it already owes, such as Social Security and Medicare benefits, military salaries, interest on the national debt, and tax refunds. It does not mean that the government has decided to spend more money.
According to the U.S. Treasury, “Failing to increase the debt limit would have catastrophic economic consequences. It would cause the government to default on its legal obligations – an unprecedented event in American history. That would precipitate another financial crisis and threaten the jobs and savings of everyday Americans.”
This isn’t the first time that the government has reached its debt limit. The limit has been raised, extended, or revised 78 times since 1960.
Learn more about the debt limit from the U.S. Treasury.