Where Were You When the U.S. Hit the Debt Ceiling?

Treasury Secretary Timothy Geithner.Were you counting down the moments untilSnooki, suspended in a translucent ball, would make her descent upon Times Square? Or were you Googling “debt ceiling,” “what is debt ceiling,” “what happens when we hit debt ceiling,” and “panic debt ceiling”? In the case of the latter, you’ve come to the right place.

Per NPR’s Planet Money: “There’s a law on the books—first passed in 1917, updated many times since—that caps the federal debt at $14.3 trillion. This is the debt ceiling.” Now that the ceiling has been reached, you’ll be relieved to hear that as of right now, there may not be many tangible consequences other than perhaps some more polarizing David Brooks columns.CNN.com has a straightforward explanation why:

In theory, the limit is supposed to help Congress control spending. Every time the debt limit needs to be raised, lawmakers and the president are forced to take stock of the country’s fiscal direction.

In reality, however, the debt limit is ineffective in controlling spending and deficits. Budget experts say the right forum for that is the debate over the federal budget: Every year, lawmakers are supposed to decide how much money should be spent and how much should be raised in taxes. The problem, of course, is that Congress can skirt the obligation to set or meet those targets.

In the past 10 years, Congress has raised the debt ceiling that many times. And, according to CNN, “even if lawmakers never pass another spending increase or tax cut, the debt ceiling would need to be increased repeatedly in the future.”

The consequential date now appears to be somewhere around August 2, which is when Treasury Secretary Timothy Geithner estimates the country would run out of money. According to The Wall Street Journal, if the borrowing limit does not increase by then, it “could mean stopping or limiting not only interest payments to debt holders, but also Social Security and Medicare payments, unemployment benefits, tax refunds and money owed to government contractors.” And just think of the David Brooks columns.