The Second Version

18/05/11

Tales of Debt

If Greece and other European countries are crying over their public debt, well, the USA aren't laughing either:
On May 16, Treasury Secretary Timothy F. Geithner formally told Congress that the government would have reached its $14.294 trillion debt limit that day, but for what he called “extraordinary measures” to manage the nation’s money and to buy time for lawmakers to increase the limit on borrowing.

In a letter to leaders of both parties, Mr. Geithner said that the Treasury Department was suspending investments in two funds for the retirement and disability benefits of federal civilian employees. As he pointed out, such suspensions have been used by past administrations when Congress failed to increase the debt limit on time, and they will not affect payments to current beneficiaries or to future ones since the funds will be made whole as soon as the ceiling is raised.

Republicans in Congress, joined by a few Democrats, have said they will not vote for an increase unless Congress and the White House agree to cut about $2 trillion in projected spending for the next decade and to impose budget controls that will force additional trillions of dollars in savings. While the White House has criticized such threats to hold the debt limit hostage, given the global financial stakes, the administration is in negotiations with Congressional leaders to reach a bipartisan budget deal.

To simplify: the US government is not able to pay back a certain amountof debt, and it has suspended some payments. Which is something like what Greece is doing, or asked to do in order to bring its debt under control.

Yes, the scale is different but the kind is the same. Unable to pay back.

So now the last thing I want to hear is Americans ranting about the PIGS and how better they are than the big-government European countries & people, okay?

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