14.

3
If legislation to Congress increase the ceiling is sets a debt not passed on Aug. 2, ceiling of $14.3 trillion. the U.S. would be in default for the rst It expires Aug. 2, 2011. time in its history.

IN MINUTES

News and events visually

Confused about the U.S. federal debt crisis? Heres a primer on how the U.S. got to where they are.
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The U.S. The U.S. spends Spending cuts will could more money be made (which no longer than taken in could include Medicare, legally borrow through taxes Medicaid and other money to pay and other social security its bills. revenues. programs)

Republicans plan:

Huge spending cuts. A balanced budget amendment in the Constitution. No tax increases. Plan calls for about a $900B increase to the debt ceiling and $917B over 10 years in spending cuts. Under the Republican plan, the issue would be revisited next year.

Democrats plan:

Spending cuts. Tax increases. Plan calls for a $2.7T increase to the debt ceiling with matching spending cuts over 10 years. The Democratic plan would take Congress to 2013 before they would have to revisit the issue again when they would reach the new debt ceiling.

What should they do?

Money owed by the U.S.

$87B

$30B

Aug. 2, the U.S. Treasury will run out of money to pay their bills in social security benets due Aug. 3

Can they pay?

$23B

in interest payments due Aug. 15 payment to investors to redeem maturing Treasury securities due Aug. 15

Default would result in a Triple A credit rating reduction (a rst in U.S. history) The U.S. would be sent back into a recession Higher interest rates Higher unemployment Economy would suffer. Global markets are already showing declines.

The issue

The impact

Default

13

12

11

10

1.3% Brazil 1.6% Oil exporters 2.1% U.S. Military Retirement Fund 3.4% United Kingdom

Impact on Canada

Few e jobs r

Obama
8

6.0% U.S. Civil Service Retirement Fund 6.4% Japan

The following would result from the U.S. going into default:
Trad with U e .S down .

Higher interest rates

7.5% China (and Hong Kong)

11.6%

All other foreign nations, which include: Caribbean Banking Centres, Taiwan, Russia, Switzerland, Canada, Luxembourg, Thailand

The big picture

No matter what Congress decides on, the long-term issue of xing the decit and debt crisis still remains. Whats being proposed in Washington is a Band-Aid x.

17.9%

lar Dol p u

Social Security Trust Fund

42.2%

George W. Bush

U.S. Individuals and Institutions

3

Bill Clinton
2

U.S. debt through the years (trillions of dollars)

Roosevelt and Truman
1940 1950 1945

Eisenhower
1960 1955

Kennedy and Johnson

1965

Nixon and Ford

1970 1975

Jimmy Carter
1980

Reagan and George Bush

1

2000

2005

2010

1990

1985

1995

Sources: U.S. Treasury Department

RESEARCH BY MARK DUNN; SUSAN BATSFORD, GRAPHICS EDITOR, TWITTER @SBATS1; INFOGRAPHIC BY ANTHONY GREEN/QMI AGENCY