So Tell Me, Why Should I Care About the Debt Limit?

WHAT is the debt limit, anyway? Ask the average college student in Michigan or dentist in Oregon, and you're likely to get a blank stare.

Some of us may know Congress and the president have been fighting over it lately, but, well, it's a whole lot easier to flip on ''Friends'' in the evening than plow through another newspaper article with a headline like ''Interim Measures Advance in House.''

The debt-limit concept is actually not that complicated. The government has run up nearly a $4.9 trillion debt - a financial snowball brought on by years of spending more than it takes in.

Uncle Sam can't just print more money to pay for all this. He has to borrow from investors. The government also can't just rack up endless debt. By law, it must remain within a limit set by Congress. Every time we near that cap, Congress must vote for an increase or risk a default, in essence, a declaration of bankruptcy by the United States government. The impact would be enormous, and it would affect all of us.

The US is now getting close to its debt limit, so Congress is moving this week to raise the limit temporarily, enough to keep things humming through Dec. 12. If this move fails - for example, if President Clinton vetoes it - the government will hit its debt-ceiling on Nov. 15, and could be faced with a default on its debt. But for now, let's say Clinton and Congress get over this hurdle. They still face the December deadline. By then, maybe they will have agreed on a budget and can put in place a permanent hike in the debt ceiling.

But maybe not.... And that's what the ultimate battle is all about. The Republican-led Congress wants Clinton to pass its balanced-budget plan, but Clinton is resisting. He says it's too harsh. So the GOP has strapped the permanent debt-limit increase to the budget like a nuclear device, threatening to set it off if Clinton won't pass their budget.

Budget-watchers say no one would really let that bomb go off, not even that self-described revolutionary, House Speaker Newt Gingrich. Besides, they say, there are lots of bookkeeping tricks the Treasury Department could do to keep the US solvent a bit longer. It could, for example, borrow money out trust funds such as Social Security's.

Not so fast, Congress said this week. To make things harder, a House panel wrote into its temporary debt-limit increase restrictions on just such maneuvers. The Treasury Department is furious, and wants Clinton to veto this bill.

If the US really did default on its debt, it would have to stop paying bills. That would make it harder to get future credit. Investors would lose some of their confidence in the US economy. That means the US would pay higher interest rates on loans - something that would ripple through the global economy.

Higher overall interest rates mean we'd pay more to carry debt on credit cards. Rates on mortgages would rise. The cost of doing business would go up, and those added costs would be passed on to consumers - so prices would go up. That means inflation.

''The important thing to recognize when we talk about raising the debt limit is that we're accommodating spending which we have already committed ourselves to,'' says deficit hawk Carol Cox Wait. ''There's no excuse for not raising the debt limit.''

Some members of Congress may not completely understand that, like the one who proposed that the US pay just some of its bills, Ms. Wait says. ''Many are confused between shutting down the government for a few days because they haven't passed a budget yet and shutting it down because they haven't raised the debt limit,'' she says.

So if you're confused, you're not alone. But maybe that's not terribly comforting.

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