United States debt ceiling reached

The US hit its borrowing cap Thursday, triggering the Treasury Department to start taking extraordinary measures to prevent a default.

We talked to Partner and Certified Financial Planner with Barton Spector Wealth Strategies, Jay Spector, about what impact this will have on the nation’s economy.

While Treasury Secretary Janet Yellen doesn’t expect the US to default on its debt before early June, Congress has to get serious about negotiating a solution, which is not expected to be easy. Established by Congress, the debt ceiling is the maximum amount the federal government is able to borrow to finance obligations that lawmakers and presidents have already approved – since the government runs budget deficits and the revenue it collects is not sufficient. Increasing the cap does not authorize new spending commitments. The debt ceiling, which currently stands at $31.4 trillion, was created more than a century ago and has been modified more than 100 times since World War II.