As the year 2011 draws to an end, the US debt crisis has once again triggers world concerns. President Barack Obama is delaying his request for a 1.2 trillion dollars increase in the debt limit, at the request of congressional leaders.
Treasury Department statistics show, the government is less than 100 billion dollars away from exhausting its current borrowing authority in 2011. The White House had prepared to ask for an increase in its debt limit on Friday. Congress would then have 15 days to reject the request.
But with Congress not due to return to Washington until mid-January, a bipartisan group of lawmakers called on Obama to delay his request.
The debt limit sets the amount the government can borrow to finance its operations. It has soared due to record deficits run over the past decade.
Obama’s request to increase the borrowing authority would boost the debt limit to a record $16.4 trillion. The President and Congress agreed to this level as part of the August deal to raise the debt limit in three steps.
Rating agency Fitch, has said that the US must come up with an effective plan to cut budget deficit after presidential election next year. Otherwise it will cut the nation’s triple-A rating. And since the last limit raise in August, ratings agency Standard & Poor’s has already made such a cut.
The Washington Post reports that the US debt to GDP ratio is expected to hit 71.7 percent this fiscal year, the highest level ever since World War two. In response, investors have voiced fears that continually raising the debt ceiling will bring another round of crisis to the already unstable world economy.