Alert
Close

Watch the NASCAR race on Sunday at Talladega Superspeedway. Join the Drive to End Hunger!

Highlights

Open
Celebrate Hispanic Heritage Month

 

FREE FUN!

AARP Games - Play Now!

Contests and
Sweeps

$10,000 Winter Escapes Sweepstakes

Beat the cold and cozy up to a chance of winning $10,000! See official rules.

AARP Auto Buying Program

MOST POPULAR

Viewed

House Passes Increase in Debt Ceiling

Obama and Congress marginally closer to a resolution

Q. Why do we have a debt ceiling anyway?

A. Most countries don't. In 1917 Congress set the first debt limit as part of the effort to finance America's participation in World War I. The law allowed the U.S. government to sell bonds (acquire debt) without asking Congress to approve every bond offer but capped the amount the government could borrow. “It's kind of like a nuclear weapon,” said Powell, a former undersecretary in President George H.W. Bush's Treasury Department. Congress should instead use its legislative power to cut spending, he said.

Q. Can't the president just borrow what he needs under the powers of the 14th Amendment?

A. Obama, who is up for reelection next year, is unlikely to take that risky political path. The 14th Amendment does say the validity of the public debt shall not be questioned.

But Mann said borrowing more by using the 14th Amendment argument is likely to upset the financial markets anyway, leading to higher interest rates. And "the Republicans would probably try to impeach him. It would darken our politics rather than resolve them,” he said.

Q. What's next?

A. Although the debt ceiling won't be reached until Aug. 2, the fallout could start earlier. Credit agencies already have begun rethinking the United States' sterling credit rating, which allows the country to borrow money at low interest rates.

"There's a lot of nervousness in those markets," Mann said, noting higher interest rates could wreak havoc. "We have come through the greatest financial crisis since the Great Depression. It's a fragile world."

Obama has threatened to veto anything that raises the debt ceiling for only a short while, saying that will not assuage the financial markets.

"Now they're just looking for something that can get passed," Certner says.

Tamara Lytle is a freelance writer in the Washington, D.C., area who has covered government and politics for more than 20 years.

Topic Alerts

You can get weekly email alerts on the topics below. Just click “Follow.”

Manage Alerts

Processing

Please wait...

progress bar, please wait

Tell Us WhatYou Think

Please leave your comment below.

Discounts & Benefits

From companies that meet the high standards of service and quality set by AARP.

Downloadable mobile app from AARP® Roadside Assistance from Allstate.

AARP Credit card from Chase

Members can earn 3% cash back on purchases with the AARP® Credit Card from Chase.

Member Benefits

Join or renew today! Members receive exclusive member benefits & affect social change.

Rewards for Good

Your Points Balance:

Learn More

Earn points for completing free online activities designed to enrich your life.

Find more ways to earn points

Redeem your points to save on merchandise, travel, and more.

Find more ways to redeem points