If the U.S. debt ceiling is not raised by Tuesday, August 2nd, the U.S. Treasury has warned that the country will not be able to pay all its obligations . The debt ceiling is the amount that the country may legally borrow. Congressional Republicans have demanded budget cuts as a condition to raising the debt ceiling and avoiding a default.
Proposals from both Democrats and Republicans amount to a budget reduction of more than $1 trillion in spending over the next ten years; that’s approximately $100 billion per year. Defense spending cuts are off the table, and it’s likely that social security, Medicare and Medicaid programs will also be left untouched. Cuts are expected to be made to the roughly $600-billion domestic discretionary budget.