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$14 trillion and rising, America's debt crisis

Lisa Millar reported this story on Saturday, July 9, 2011 08:08:00

ELIZABETH JACKSON: The unemployment rate in the US has ticked up again, now sitting at 9.2 per

cent.

The economy continues to be Barack Obama's biggest hurdle and he's putting pressure on Republicans

to compromise during talks about raising the nation's debt ceiling above the current $14 trillion. That's

the limit set by Congress on the amount of debt the federal government can legally have.

Our Washington correspondent Lisa Millar headed west of the capital to the historic town of

Fredericksburg to see what American voters make of the debate.

LISA MILLAR: It's Wednesday and the streets of Fredericksburg are bustling, despite the talk that it's

going to feel like 40 degrees by lunchtime.

Once isolated from the nation's capital, highways and railways have turned it into a commuter town. And

they're not isolated from the debate going on in Washington, where Republicans and Democrats are still

disagreeing over the raising the debt ceiling. The deadline is August the 2nd.

Congress has said it won't raise it unless tough budget decisions are made. In very simplistic terms,

Democrats want to raise taxes while Republicans prefer to cut spending

Faylee Hydorn is standing outside her teddy bear gallery in the main street of Fredericksburg. She's an

older woman, her grey hair dyed black.

FAYLEE HYDORN: I don't think generally the public realises what it's about. There is, everyone has

their own individual problems with the economy and if you're elderly like I am, I don't often admit to it,

you're concerned about social security, you're concerned about Medicare, Medicaid, so I would say in

general that people don't.

Right now people are kind of concerned to have their own personal desires, their own personal goals,

and also if you're elderly, you're concerned about your future and what' going to happen, as far, as I said

,Medicare and Medicaid.

LISA MILLAR: Older people are fearful about possible cuts to pensions and medical benefits -

77-year-old Alan Edmondson is waiting for the hop-on hop-off tour trolley.

ALAN EDMONDSON: I think we've overstepped our limits, I think we're going further than we should

have gone and I think we need to do something to put a stop to it. I think it's as going as far as, we

thought when Reagan was in office that we're going too far even then, with $3 trillion. But now we're up

in to the tens of the trillions and I think we're just going over our limits and I think I'll say, we don't need,

we don't need any more debt.

LISA MILLAR: Do you think that most people understand the debate in America?

ALAN EDMONDSON: I don't think so, I really don't think we do understand it, I know we just pay our

taxes dutifully and when they bill us we pay them, but I don't think we really understand what's going on.

LISA MILLAR: Sammy J's is doing a roaring trade. The cafe sits in the middle of town. And Curtis and

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Judy Simmons are regulars from Spotsylvania County.

CURTIS SIMMONS: From what I understand, they have a limit as to how much the government can

borrow and if they don't raise that ceiling then we won't be able to borrow money to keep the government

going and unfortunately that's how they're keeping the government afloat right now, by borrowing money

from other countries.

LISA MILLAR: And does it worry you that America seems to be reaching this limit? Well, has reached

it.

CURTIS SIMMONS: Yes, it does. I mean, from what I understand, if they don't increase is, we'll start

defaulting on loans and if people start calling in our loans we'll be on the same shape that Greece is in.

LISA MILLAR: What do you think is happening in Washington?

CURTIS SIMMONS: They're out of touch with reality. They don't, they have no idea what it's like for

the common man to try to pay his bills and make a living and put food on this table and clothe his kids.

They're all out of touch, if you look at the way I feel about it.

With the way things are going, I just saw on the news the other day the average American worker around

$40,000 or $50,000 annual income only got a 0.5 per cent raise last year while the CEOs of all these big

companies and stuff got a 24 per cent pay increase.

LISA MILLAR: Can I ask you a question. Do you hear that from your friends and children, how hard

they're finding it?

JUDY SIMMONS: Of sure, all the time. I work at the courthouse and we're seeing more and more

people defaulting on credit cards and judgements entered against them and it's just very difficult for the

average American today to survive.

LISA MILLAR: So what then do they make of this debate in Washington about the country's debt ceiling

and fairly technical talk, including possible parts of the constitution that could be brought into bear?

JUDY SIMMONS: Most people in my office don't ever talk about it because probably most people

don't understand what's really going on.

LISA MILLAR: They'll watch closely as both sides of politics make a final push to reach agreement

before the deadline.

This is Lisa Millar in Fredericksburg for Correspondents Report.

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