If you're curious how much it really costs to run a modern Western superpower, look no further than a fascinating document issued every single day by the U.S. Treasury called the Daily Treasury Statement. The statement is a concise, daily reckoning of exactly how much the U.S. federal government spent that day — rounded off to the nearest million, of course — and how much it pocketed in revenue. It's also a handy way of understanding the national debt and this mysterious thing called the debt ceiling.
Let's look at a single day in greater detail: Oct. 3, 2013. On this average Thursday, the federal government took in $110 billion in revenue from sources like
- Income and employment taxes ($171 million)
- TARP bailout loan payments ($56 million)
- Selling old military equipment to foreign governments ($27 million)
On that same day, the government spent $143 billion on items like
- Social Security benefits ($24 billion)
- Payments to companies that supply services and equipment to the military ($987 million)
- Tax refunds ($37 million)
That's one day. On that day, the government spent $33 billion more than it earned. That $33 billion amounts to the budget deficit for Oct. 3, 2013. Beginning in 2008, the U.S. ran an annual budget deficit of more than $1 trillion for an impressive four years in a row [source: Wessel]. When you add up all of those budget deficits, plus some extra money that the government borrows from itself (don't ask), you get a number called the national debt.
On Oct. 3, 2013, the national debt stood at $16,699,396,000,000. We're including all of those zeros for a reason, because as of Oct. 3, 2013, the government was only allowed to go into debt for a total of $16,699,421,000,000, a measly $25 million more than it had already borrowed. That magic $16.699 trillion mark is called the debt ceiling.
But why is the government only allowed to borrow $16.699 trillion? Can't the Treasury just print more money? And what does this have to do with spending cuts or tax increases? Keep reading to get the full story on the debt ceiling, what it is, where it came from, and why it's such a political thorn in America's side.