The U.S. Treasury recently announced that the federal debt subject to congressional limits has for the first time surpassed $7 trillion - approximately 62 percent of gross domestic product. In addition, in fiscal year 2003, over $300 billion was spent on paying interest on the debt.

Rising federal deficits will push the debt level even higher in coming months and years. With projected deficits near $500 billion for 2004, the congressionally mandated limit of $7.384 trillion will likely be reached sometime this fall. Without congressional action to raise the debt limit, the U.S. would not be able to meet its obligations and would potentially be in default on some loan payments. If the date for raising the debt limit occurs before the election, it could turn into a political hot potato.