Federal Debt Limit
The Federal Debt Limit, commonly known as the debt ceiling is the overall limit on federal government borrowing, as authorized by Congress. It is similar to an individual's credit card limit.
According to the Constitution, the Congress must approve all borrowings on behalf of the United States. Before the 20th century, Congress approved all bond issuances separately and explicitly. With the introduction of the debt ceiling, the treasury now had a line on which it could borrow as it needed to without having to go back to Congress for borrowings under the ceiling.
Contents
Components of the Debt
There are two components to the Federal Debt, the debt held by the public, and intragovernmental debt. The debt held by the public is debt held by any individual or entity that is not the federal government such as a mutual fund, individual investor, foreign government, or a municipal government [1]. Intragovernmental debt is debt the government owes itself such as the Social Security Trust Funds, the Medicare Hospital Insurance Trust Fund, and the Civil Service Retirement and Disability Fund [2]. Currently Debt held by the public is roughly 2/3 of the total Federal Debt.
Debt Ceiling 2011 Controversy
Barack Obama voted against raising the debt ceiling in 2006. Now, he wants to raise the debt ceiling to over twice what it was raised to in 2006. However, Obama may not get the debt ceiling increased by Congress who essentially deem the Obama administration to be a serious credit risk. This is similar to a credit card company telling a person with either no income or little income who has maxed out on his credit card that he won't get a line increase and must pay off his card lest he be sued. In fact, it is almost unheard of for a credit card company to give a credit line increase to someone who's maxed out on his credit card.
The last increase in the debt ceiling occurred in early 2010 and President Obama signed it into law on February 12, 2010. The limit stood at $14,294 billion. With large deficits emerging as baby boomers retire, some members of Congress expressed concern over the government's dependence on borrowing to meet its obligations. President Obama responded by creating the National Commission on Fiscal Responsibility and Reform (Simpson-Bowles Deficit Reduction Commission), charged with identifying “policies to improve the fiscal situation in the medium term and to achieve fiscal sustainability over the long run.”[3] President Obama promptly ignored the Commission's recommendations.[4]
Obama's failure to take personal responsibility and instead his resorting to blaming others is a typical liberal victimhood mindset.
The prospect of the Obama administration defaulting on its debt rose greatly when the Democrats insisted on raising taxes to cover for their irresponsible spending habits. Obama refuses to engage in negotiations, similar to a deadbeat who refuses to answer the phone when the creditors are calling. Unfortunately, for the world, Obama's personal irresponsibility will hurt many honest hard working people who have done nothing wrong.
Background to Obama debt crisis
After the failure of President Obama's Stimulus package, his entire White House economic team quit. Over the next several years, the deficit was projected to fall somewhat, but if discretionary spending were to stay at the same level, the deficit would not fall enough under President Obama's economic policies to stabilize debt payments. Further, the debt is projected to begin rising more rapidly under Obama's policy because of the rising costs of Social Security, Medicare, and Medicaid.
History of the "Debt Limit"
The Second Liberty Bond Act of 1917, which helped finance the United States’ entry into World War I, allowed the U.S. Treasury to issue long-term Liberty Bonds marketed to the public to hold down the federal government's borrowing costs. The 1919 Victory Liberty Bond Act raised the maximum allowable federal debt to $43 billion, although the total outstanding federal debt at the time was only $25.5 billion.
In 1939, Congress eliminated separate limits on bonds and other types of debt, and created the first aggregate limit that covered nearly all public debt. This gave the Treasury freer rein to manage the federal debt as it saw fit. Thus, the Treasury could issue debt instruments with maturities that would reduce interest costs and minimize financial risks stemming from future interest rate changes. The debt limit then was $45 billion with total debt of $40.4 billion.
During World War II the debt ceiling was raised each year from 1941 through 1945, where it topped out at $300 billion. After the war, it was reduced to $275 billion. The Korean War was mostly financed by higher taxes rather than increased debt, and the limit remained at $275 billion until 1954. After 1954, the debt limit was reduced twice and increased seven times, until March 1962 when it again reached $300 billion, its level at the end of World War II.[5]
The United States debt ceiling has been raised approximately 84 times since the early 1900's. The table below gives details on the year, and the amount that the ceiling was raised. As seen below, many of the debt ceiling increases have been short term, contrary to Obama's position.
Year | Amount of Debt | Sitting President |
---|---|---|
February 2010 | 14.294 trillion | Barack Obama |
December 2009 | 12.394 trillion | Barack Obama |
February 2009 | 12.104 trillion | Barack Obama |
October 2008 | 11.315 trillion | George W. Bush |
July 2008 | 10.615 trillion | George W. Bush |
September 2007 | 9.815 trillion | George W. Bush |
March 2006 | 8.965 trillion | George W. Bush |
November 2004 | 8.184 trillion | George W. Bush |
May 2003 | 7.384 trillion | George W. Bush |
June 2002 | 6.400 trillion | George W. Bush |
August 1997 | 5.950 trillion | Bill Clinton |
March 1996 | 5.500 trillion | Bill Clinton |
August 1993 | 4.900 trillion | Bill Clinton |
April 1993 | 4.370 trillion | Bill Clinton |
November 1990 | 4.145 trillion | George H. W. Bush |
October 1990 | 3.230 trillion | George H. W. Bush |
November 1989 | 3.123 trillion | George H. W. Bush |
August 1989 | 2.870 trillion | George H. W. Bush |
September 1987 | 2.800 trillion | Ronald W. Reagan |
August 1987 | 2.352 trillion | Ronald W. Reagan |
July 1987 | 2.320 trillion | Ronald W. Reagan |
October 1986 | 2.300 trillion | Ronald W. Reagan |
August 1986 | 2.111 trillion | Ronald W. Reagan |
December 1985 | 2.079 trillion | Ronald W. Reagan |
November 1985 | 1.904 trillion | Ronald W. Reagan |
October 1984 | 1.824 trillion | Ronald W. Reagan |
July 1984 | 1.573 trillion | Ronald W. Reagan |
May 1984 | 1.520 trillion | Ronald W. Reagan |
November 1983 | 1.490 trillion | Ronald W. Reagan |
May 1983 | 1.389 trillion | Ronald W. Reagan |
September 1982 | 1.290 trillion | Ronald W. Reagan |
June 1982 | 1.143 trillion | Ronald W. Reagan |
September 1981 | 1.080 trillion | Ronald W. Reagan |
September 1981 | 999.80 billion | Ronald W. Reagan |
February 1981 | 985.00 billion | Ronald W. Reagan |
December 1980 | 935.10 billion | Jimmy Carter |
June 1980 | 925.00 billion | Jimmy Carter |
September 1979 | 879.00 billion | Jimmy Carter |
April 1979 | 830.00 billion | Jimmy Carter |
August 1978 | 798.00 billion | Jimmy Carter |
October 1977 | 752.00 billion | Jimmy Carter |
June 1976 | 700.00 billion | Gerald Ford |
March 1976 | 627.00 billion | Gerald Ford |
November 1975 | 595.00 billion | Gerald Ford |
February 1975 | 577.00 billion | Gerald Ford |
June 1974 | 495.00 billion | Gerald Ford |
December 1973 | 475.7 billion | Richard M. Nixon |
October 1972 | 465.00 billion | Richard M. Nixon |
March 1972 | 450.00 billion | Richard M. Nixon |
March 1971 | 430.00 billion | Richard M. Nixon |
June 1970 | 395.00 billion | Richard M. Nixon |
April 1969 | 377.00 billion | Richard M. Nixon |
June 1967 | 358.00 billion | Lyndon B. Johnson |
March 1967 | 336.00 billion | Lyndon B. Johnson |
June 1966 | 330.00 billion | Lyndon B. Johnson |
June 1965 | 328.00 billion | Lyndon B. Johnson |
June 1964 | 324.00 billion | Lyndon B. Johnson |
November 1963 | 315.00 billion | Lyndon B. Johnson |
May 1963 | 309.00 billion | Lyndon B. Johnson |
July 1962 | 308.00 billion | John F. Kennedy |
March 1962 | 300.00 billion | John F. Kennedy |
June 1961 | 298.00 billion | John F. Kennedy |
June 1960 | 293.00 billion | Dwight D. Eisenhower |
June 1959 | 295.00 billion | Dwight D. Eisenhower |
September 1958 | 288.00 billion | Dwight D. Eisenhower |
February 1958 | 280.00 billion | Dwight D. Eisenhower |
July 1956 | 278.00 billion | Dwight D. Eisenhower |
August 1954 | 281.00 billion | Dwight D. Eisenhower |
June 1946 | 275.00 billion | Harry S. Truman |
April 1945 | 300.00 billion | Harry S. Truman |
June 1944 | 260.00 billion | Franklin D. Roosevelt |
April 1943 | 210.00 billion | Franklin D. Roosevelt |
March 1942 | 125.00 billion | Franklin D. Roosevelt |
February 1941 | 65.00 billion | Franklin D. Roosevelt |
June 1940 | 49.00 billion | Franklin D. Roosevelt |
December 1939 | 45.00 billion | Franklin D. Roosevelt |
December 1919 | 43.00 billion | Woodrow Wilson |
External links
- The Debt Limit:History and Recent Increases.
- Bureau of the Public Debt
- Public Debt to the Penny
- Department of the Treasury
References
- ↑ http://www.concordcoalition.org/issue-briefs/2011/0708/understanding-federal-debt-limit
- ↑ http://www.concordcoalition.org/issue-briefs/2011/0708/understanding-federal-debt-limit
- ↑ Congressional Research Service, pp. 24-25 pdf.
- ↑ http://www.realclearpolitics.com/2011/06/23/cbo_quotwe_don039t_estimate_speechesquot_258038.html
- ↑ The Debt Limit: History and Recent Increases, Congressional Research Service, July 1, 2011, pdf pps. 9-10.
- ↑ http://usgovinfo.about.com/od/federalbudgetprocess/a/US-Debt-Ceiling-History.htm