Today, at this moment, we might be hitting the debt ceiling.
During the past 11 years, Congress has voted to raise the debt ceiling 10 times. In 2000, the ceiling was approximately $6 trillion; in 2011, it was just above $14 trillion. The whole story is here, in a congressional research report.
Now, Congress has to vote again. But first, they have to decide if and how spending cuts will relate to a debt ceiling agreement. House Speaker John Boehner has proposed at least $2 trillion in cuts that would be “achieved on a time frame no longer than the life of the debt-limit increase.”
What is $2 trillion? Divided equally among everyone in the U.S., it is approximately $6,666.66. (Where Does the Money Go? Your Guided Tour to the Federal Budget Crisis, p. 46).
The Economic Lesson
In terms of the federal budget, this excellent Washington Post federal budget interactive chart gives us some idea of what $2 trillion means. Total annual spending is $3.7 trillion. $2 trillion would be close to 2 1/2 times what we spend annually on Social Security ($770 billion a year) or 25 times the international affairs budget ($75 billion a year). For other spending categories, you can look here.
An Economic Question: Citing revenue and spending, explain why the debt ceiling had to be increased 3 times between 2008 and 2009. (Hint: the recession).