In the House, the majority Republican party says it won’t raise the debt limit without spending cuts of equivalent amounts. Mr. Obama has said he won’t negotiate over the matter, saying it is the responsibility of Congress to enable the government to pay bills it has incurred.
The government spends 40% more than it takes in and borrows money to cover the difference. Without an increase in the debt ceiling, the Treasury won’t be able to borrow the additional money needed to pay all its bills.
Failure to make payment on even some of its obligations could wreak havoc in the economy and financial markets and possibly trigger another financial crisis and recession, analysts have warned.