WAFF 48 Investigates: What is the debt ceiling? - WAFF-TV: News, Weather and Sports for Huntsville, AL

WAFF 48 Investigates: What is the debt ceiling?

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HUNTSVILLE, AL (WAFF) -

What is the debt ceiling?

The question is only five words, but when we asked folks for the answer, many had no idea where to start. But you need to know.

"What the debt ceiling represents is the authority that Congress has given to borrow money," explained Athens State business dean and economist, Dr. Tom Pieplow.

Pieplow breaks the concept down like this: You go to your bank and get a $5,000 credit line. As long as you're below that, you can keep spending. Once you hit that $5,000 limit, you have no more money to spend.

"So when you go above that, how are you going to address it? In the past, we've borrowed money. Some political sides say we can't keep doing that, which I think we'd all tend to agree with. Generally, people are okay with cuts as long is its not those they're benefiting from," said Pieplow.

Pieplow said if the United States is going to make cuts to get a grip on our spending, it is going to have to come from one of only a few areas, such as the defense budget or entitlements like Social Security, Medicare and social programs.

We researched both conservative and liberal budget groups, and no matter what side of the aisle they were on, they agreed the total annual government spending on social services and defense exceeds 75%. Throw in everything else we owe money to, and you quickly see how fast the money goes and why we have the ‘debt ceiling' we do.

"The real problem with entitlements isn't so much where they're at today, it's the trajectory of where they're going to be ten or 20 years from now," Pieplow added.

That trajectory isn't just Pieplow's opinion. The Social Security Administration, in their 2013 annual report, acknowledged they can't meet their obligations long-term under current conditions. Pieplow said the ramifications of having the debt ceiling and spending continue while not addressing these major issues could be devastating to nearly every American.

If the US defaults on its debt, Pieplow points to the country's bond rating taking a major hit – higher interest rates coming next, and our economy going into the tank.

"I'm not sure if you lose confidence, you will ever be able to restore it to its previous levels," Pieplow said.

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