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On Christmas Eve the Senate voted along party lines to raise the limit on the national debt by $290 billion. That sounds like a lot of money. But it’s only a momentary stopgap, postponing the next debt increase for a couple of months.
By the end of February, a debate will rage again over why we should or should not increase the debt limit. History suggests that however passionate the debate, it’s largely a charade.
The statutory debt limit is supposed to keep a lid on how much the government can borrow, but in this it has clearly failed. Since 1940, Congress has voted 90 times to increase the limit, extend the duration of a temporary increase, or change the definition of debt subject to it. Just since 2002 it has raised the limit nine times and nearly doubled the Treasury’s borrowing authority, from $6.4 to $12.4 trillion.
Every time Congress sets a new limit, the government quickly reaches it, and Congress responds by raising the limit again. So the question is not whether Congress will raise the debt limit again. The question is who will finance the huge federal budget.
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This article is from the January 11 issue of Research Reports.
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