US blows out $16.7 trillion debt limit

The US Treasury has already exceeded the federal legal borrowing limit of $16.7 trillion in May. That signals the main structural problems remain unresolved putting at risk the fragile recovery.

The country’s  outstanding public debt is already $38.82 million above the statuary debt ceiling and now at $16,738,220,000,000.00, according to Treasury data.

Christopher Weafer from the Economist Macro Advisory Consultancy says the numbers show “that the debt issue along with the deficit is two very structural problems in the US that remain unresolved and without any clear mechanism on how they are going to be resolved”.

“In the short term it doesn’t cause any immediate crisis and that’s why I guess the news is not widely covered, ” Weafer told RT.

The American economy grew at 1.8 percent during the first three months of the year, lower than its 2.5 percent average pace during the last two decades. The unemployment rate, at 7.6 percent in June, remains above its 6 percent average during the period, Reuter’s reports.

Despite the US Fed and politicians are speaking  about recovery, that US economy which is picking up and looking stronger next year, the unsolved debt and deficit issues may reverse the process, Weafer says.

“The US budget deficit has only been twitted down by a few hundred million dollars. It’s still massively in deficit, and therefore the amount that the US government needs to borrow to fund that is still rising,  so we’ve reached this technical limit and it will go higher. These are issues that still need to be resolved and they will determine whether or not the pace of recovery can be expanded or whether it will be temporary and reverse next year.” 

On Thursday President Barack Obama criticized House Republicans for demanding conditions on raising the US debt ceiling as he tries to shape the coming congressional debate over the nation’s budget priorities, Reuters reports. Obama accused Republicans of skirting responsibility to “pay the country’s bills” and refusing to spend for needed investments in education, energy and research.

“That’s not an economic plan,” Reuters quotes Obama.  “That’s just being a deadbeat.”

House Speaker John Boehner earlier this week said Republicans won’t agree to raise the debt ceiling without spending cuts. The current limit was expected to be reached sometime between October and December, according to Reuters.

In the debt ceiling debate two years ago, lawmakers and the White House battled for months before Obama signed an increase into law on Aug. 2, 2011, the day the Treasury Department warned that US borrowing authority would expire, Reuters reports.