THE UNITED States currently owes $US16,963,794,390,038 ($16.96 trillion) and its debt is rising every second.

According to the US Treasury Secretary Jack Lew the country only has $30 billion in the bank.

If Democrats and Republicans can't find a solution to raise the debt ceiling, the country could default on its debt for the first time ever.

How did this happen?

While most countries have some form of debt, the US is unique in that it has a self-imposed debt ceiling set by the government in order to curb national spending.

That limit is currently $16.7 trillion which the government reached in May. Ever since, they have been using "extraordinary measures" to fund the country, while negotiating for the debt ceiling to be raised.

The US debt ceiling explained



But negotiations have led to political gridlock, taking the US to within hours of the October 17 deadline. If they don't find a solution, the government is expected to default on an unknown "X date" expected to occur between October 22 and November 1, according to the Bipartisan Policy Centre (BPC).

What would it mean?

The US is one of the world's biggest borrowers, issuing bonds which other countries and investors can buy.

This debt is normally rolled over without incident, but if the US came close to a default investors might choose to pull their money out or the US government would have to pay higher interest rates.

Over $434 billion worth of debt is due to mature in the coming days - meaning the US may have to pay out the investors if they decide not to roll it over, the BPC reports.

These are the countries who hold the most US debt (source: Washington Post)

• China - $1.3 trillion

• Japan - $1.1 trillion

• Caribbean banking centres - $287.7 billion

• Oil exporters - $257.7 billion

• Brazil - $256.4 billion

• Taiwan - $185.8 billion

• Switzerland - $178.2 billion

• Belgium - $167.7 billion

• UK - $156.9 billion

• Luxembourg - $146.8 billion

• Russia - $131.6 billion

• Hong Kong - $120 billion

And that's just their overseas obligations.

The government also has to make major payments to its own citizens. The BPC estimates these are just some of the payments due in the coming days.

• $12 billion - Social security benefits due October 23

• $3 billion - Federal employee salaries due October 28

• $2 billion - Medicaid payment due October 30

• $6 billion - Interest payment on public debt due October 31

• $18 billion - Medicare payment to providers due November 1

• $25 billion - Social security benefits due November 1

• $12 billion - Military active pay and veterans benefits due November 1

• $3 billion - Security income payment benefit November 1

• $12 billion - Social security payment due November 14

• $29 billion - Interest payment on debt due November 15

The 2011 debt ceiling standoff which led to the lowering of the US credit rating cost American taxpayers nearly $20 billion over a decade in higher interest payments.

This time around it's expected to be even more. Mark Zandi, chief economist of Moody's Analytics, told Mother Jones:

"The point is that with each passing day the debt limit is not increased the more damage it will do to our economy. If lawmakers don't raise the debt limit by November 1, the economy will fall back into recession. If they can't raise it by the end of November, we will be dooming our economy and the entire global economy to a wrenching economic downturn with implications for years if not decades to come."

Do you think the US government will default on its debt? Contine the conversation on Twitter @newscomauHQ | @SarahMichael24 | @Victoria - Craw

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