Opinion by Patricia L Johnson
The Debt Subject to Limit is “the maximum amount of money the government is allowed to borrow without receiving additional authority from Congress”, not to be confused with the deficit. The deficit is the fiscal year difference between the amounts the U.S. Treasury receives in revenues [receipts] less the amount it pays out [outlays]. Source: U.S. Treasury
The current statutory limit of $14.294 trillion dollars [$14,294,000,000,000.00] was set February 12, 2010, when President Obama signed H.J. Res 45, a joint resolution passed by Congress on January 28, 2010.
Over the next month the Debt Subject to Limit will be the main topic of the day. Everyone will have an opinion on when it should be increased, how much it should be increased, etc. Eventually the limit will be increased. More than likely not until the very last minute, as the Republicans are in control of the U.S. House, which gives them control of the purse strings. Appropriation requests begin in the U.S. House, so they’ll probably drag their feet as long as humanely possible.
Not increasing the debt subject to limit could in effect put discretionary government programs on hold, while continually necessary services [services as defined by the President]. This consequence is highly unlikely due to the flak the Republicans would receive from the public.
Increasing the debt subject to limit is the perfect time for one party to push the blame on another and they’ll be a lot of talk about the out-of-control-spending by the Democrats. That’s not quite the way I see it.
So, let’s take a trip back in time. The last debt increase prior to George W. Bush taking office on January 20, 2001 was on August 5, 1997 when the debit limit was raised to $5,950.0. During the eight-years of the Clinton presidency the debit limit was raised a total of $1.805 trillion dollars.
Along came President George W. Bush, under his administration the debt subject to limit was increased seven times as follows: 2002, $450 billion, 2003 $984 billion, 2004 $800 billion, 2005 $781 billion, 2007 $850 billion, 2008 $800 billion and three months later in 2008 $700 billion, for a total increase of $5.365 trillion dollars during his eight-year term.
President Bush left office on January 20, 2009, which is the same day President Barack Obama took office. Less than one month later [February 17, 2009], the debt subject to limit had to be increased once again by $789 billion to $12,104.0 The American Recovery and Investment Act of 2009, P.L. 111-5 was not signed into law until February 17, 2009 so this particular increase was not due to any legislation put in place by the Obama administration.
At the end of December 2009 the debt subject to limit was increased by $290 billion and on February 12, 2010 increased by $1.9 trillion to its current total of $14.294 trillion.
Although the debt subject to limit is not the same as the deficit, the two are related. The same items that impacts one has an effect on the other, see “Facts Behind Current U.S. Deficit”
Legislation signed into law during the period from 2001 through 2008 (President George W. Bush) caused a $903 billion dollar deficit for fiscal year 2009. That much of a deficit in one fiscal year creates an ongoing need for increases in the Debt Subject to Limit. Legislative changes by year may be viewed on the following Deficit Chart Source: Table 4. Budgetary Effects of Legislative Changes by Year of Enactment FY2001-FY2009 ($ in billions) – Congressional Research Service “The Impact of Major Legislation on Budget Deficits: 2001-2009”
©2011 Patricia L Johnson