Responsibly Raising the Debt Limit
Yesterday, Treasury Secretary Janet Yellen warned Congress that the Treasury is likely to run out of extraordinary measures in October. Without action by lawmakers, this would lead to a breach of the debt ceiling. Below is a statement from Maya MacGuineas:
Congress must address the debt ceiling as soon as possible, and in fact they should have dealt with the debt ceiling before the statutory deadline at the end of July. You don’t play chicken with the full faith and credit of the U.S. government; not now, not ever.
Paying our nation’s bills should not be a partisan issue. Both parties are responsible for our rising debt, which has grown more than $6.4 trillion over the last two years. Most of that debt growth is a result of the pandemic and bipartisan COVID relief. Some was from partisan bills, such as the 2017 Tax Cuts and Jobs Act or the 2021 American Rescue Plan. Neither party can credibly claim the debt is solely the other party’s fault or the other party’s responsibility.
But just as we need to deal with the debt limit, we also need to address the underlying debt. The debt ceiling should offer an opportunity to step back and take a sober look at our unsustainable fiscal outlook. In the past, lawmakers often passed policies to reduce the long-term debt and improve the budget process when increasing the debt ceiling. It would be a positive step for lawmakers to return to that practice.
Certainly, policymakers should avoid increasing the debt while lifting the debt ceiling – a mistake they’ve made in the last three debt limit increases.
Increasing the debt limit should not be used as an excuse to borrow more – something that should be avoided now that the economy is improving. However, it should be increased immediately to accommodate the borrowing that both parties have already put on the books.
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