As of yesterday, Monday, March 16, the Temporary Debt Limit Extension Act, which suspended the government’s statutory debt limit of $18 trillion, officially expired. To the surprise of no one, we now find ourselves in excess of said limit, with the national debt topping out at a startling $18,114,324,000,000.00. In other words, our debt has officially surpassed the GDP of our entire country.
If congressional action isn’t taken to increase the debt limit, the Department of Treasury will “take extraordinary measures to fund the operations of the government on a temporary basis,” putting us at risk of default come October or November.
Keep in mind that raising the debt limit doesn’t permit supplementary spending. It just allows the government to pay off the bills we’ve already promised to pay. Whether or not we can resolve this issue without denting the economy again is another issue entirely.
A Government Divided
Unfortunately, there’s reason to believe that this time around will be even more tumultuous than the last major debt ceiling debate, which caused a government shutdown in November 2014. With a controversial budget proposal on the table and the 2016 presidential election looming, experts contend that the ideological divide surrounding the debt limit issue will be exacerbated.
Ben White of CNBC predicts a “fiscal showdown,” with Democrats demanding a debt limit and spending bill devoid of entitlement spending cuts, while Republicans will find the idea laughable. “What will [Republicans] demand in return for raising the debt limit? Possibilities include approval of the Keystone XL pipeline, changes in President Obama’s immigration actions, big spending cuts or some combination of all of those requests,” predicts White.
This “fiscal showdown” comes as no surprise, given the partisan bickering surrounding a potential shutdown of the Department of Homeland Security last month.
So, What’s The Point of a Debt Limit?
To be honest, nobody seems to know. The idea of a “debt limit” was first established in 1917 with the purpose of limiting the amount of money the Department of Treasury could borrow from the public without Congress’ consent. Nowadays, it’s more of a debt suggestion, seeing as Congress has raised the debt limit 11 times in the past decade alone. In fact, we’ve more than tripled the debt limit since the year 2000. In the words of Cady Heron:
As U.S. News reporter Ryan Alexander points out, the size of our debt is no mystery. “As a country, we have a decades-long track record of spending more money than we take in. Our debt will continue to grow, and the debt ceiling will continue to need to be increased, as long as Congress continues to authorize and appropriate more spending than it anticipates collecting in revenues.” Sound familiar?
The real problem lies in our inability to analyze the effectiveness of our budget and make changes accordingly. Sure, it’s easier to just raise the deficit ceiling and ignore it for another year, but nothing will be improved this way. Real change can only be expected once we confront the more complex issues at hand, such as curbing wasteful spending and reevaluating our tax code.
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