This is the VOA Special English Economics Report.
Anyone who has ever borrowed money can relate to the debate over raising America's borrowing limit. People who have reached their limit can try to ask their bank to increase it, and go deeper into debt. Or they can cut their spending and try to get their finances under control. Or they can do both.
Either way, they have to keep paying their bills. If they default on their debt, that only makes it harder and costlier to borrow in the future.
Congress set the government's current borrowing limit at more than fourteen trillion dollars.
President Obama and congressional leaders held hours of sometimes tense meetings this week at the White House. Opposition Republican leaders agree on the need to raise the borrowing limit by August second or risk the nation's first default.
The argument is over how to cut deficits. Most Republicans oppose any kind of tax increase. Most Democrats in Congress oppose big cuts in government spending, especially programs for retirees and the poor.
Jerry Webman is chief economist for OppenheimerFunds, an investment company.
JERRY WEBMAN: "The central issue is how the US is going to bring its federal budget back down to a sustainable deficit level. We're growing our deficit at a rate that I think everybody admits needs to slow. So the controversy is how do you do that."
He says the current debate has deep roots in the Constitution.
JERRY WEBMAN: "The Constitution that was written by people who were very, very suspicious of executive authority and built into the Constitution lots of ways in which the three branches of government could check and balance each other."
Those three branches represent the president, Congress and the courts.
Researchers at the Library of Congress say Congress passed the first debt-limit law in nineteen seventeen. That was to control the costs of America's entry into World War One.
Jerry Webman says the United States is going through an important debate on what services Americans can expect from their government.
JERRY WEBMAN: "I think we may be looking at one of those almost generational changes in the role of the federal government in US society."
Lenders worried about the risk of not getting repaid usually demand higher interest rates. That has happened to heavily indebted countries such as Greece, Ireland and Portugal.
JERRY WEBMAN: "Usually it is the bond market that says, ‘Wait a minute we're not going to accept any more debt until we feel more confident in your credit.'"
Interest rates for the United States, however, have come down.
But on Thursday, Federal Reserve Chairman Ben Bernanke warned lawmakers that lack of action to raise the borrowing limit would mean a lower credit rating. The central banker said that means the government could have to pay sharply higher interest rates. And that would only add to deficits in what he called a "self-inflicted wound."