As of today, the United States is one week from the date -- Aug. 2 -- when it will owe more on its debts than it will have on hand to pay all those debts.
If we reach that point, the most important bills -- such as pay for our soldiers and benefits for those on Social Security -- can still be paid, despite scare tactics to the contrary. But there will not be enough money to cover all our other debts, so we as a nation will be in partial default.
The current federal debt limit is $14.3 trillion, and as you probably know, Congress and President Barack Obama are locked in an increasingly bitter debate over how we will continue to meet our financial obligations after the limit is surpassed next Tuesday.
While there are a number of plans on the table, Democrats, including the president, generally are seeking tax increases of $1 trillion or more, in addition to some spending cuts that may or may not materialize. Previous deals to raise taxes and cut spending often have led to the increased taxes but not to real spending cuts. If history is any guide, it would be no surprise if some current promise to boost taxes and lower spending would again mean higher taxes but continued high spending.
Most Republicans in Congress want serious, deep cuts in spending by the federal government in exchange for any increase in the debt limit. They do not want imposition of tax increases, which would be particularly destructive in the midst of the current economic downturn.
Weekend talks among the president and Democrat and Republican leaders in Congress were not productive, so GOP and Democrat leaders are crafting separate plans as next Tuesday's deadline draws nearer.
It is impossible to know just what Congress and the president will do. But any debt limit increase that raises taxes or fails to make real budget cuts will be a defeat for our country.