The United States is the world’s largest debtor nation, with $14-trillion in the red.
Democrats claim Congress has no choice but to raise the debt limit to keep the federal government running. Hard-line Republicans, meanwhile, continue to state that a hike in the ceiling must be tied to severe cuts to federal spending with no new taxes.
The government currently borrows 41 cents for every dollar it spends.
Without the ability to borrow more money there could be cuts in everything from military active duty pay, to Veterans affairs, to federal salaries and benefits, even the to FBI and courts.
Aug. 2 is the deadline for the sides to come to an agreement.
No state would be hit harder than California. Some economists believe it would also end up costing local cities more in interest on bonds and could adversely affect the housing market.