The President’s Demand for a 2-Year Debt Limit Increase is Abnormal
Historical data are clear: short-term debt limit increases have been the norm and financial markets don’t “panic” over them. So, why are President Obama and Senate Democrats insisting on a debt limit increase that spans nearly 2 years? Consider the facts:
- Over the last twenty-five years, Congress and the President have acted 31 times to increase the debt limit.
- 22 of those 31 were for less than a year.
- Only three of those 31 increases lasted longer than 2 years.
Debt Increases Are Traditionally Tied to Reform Legislation
Historically, debt limit increases are tied to spending reforms, often preceded by very short-term increases. Three examples of that include:
- 1987: Three short-term debt limit increases prior to a longer-term increase that included deficit targets and automatic sequestration provisions.
- 1990: Six very short-term increases prior to a longer-term increase that included PAYGO, discretionary caps, and other programmatic changes.
- 1996: Two very short-term increases to ensure full funding of Social Security and other Federal funds prior to a longer-term increase included in the “Contract with America Advancement Act.”
The President’s FY12 Budget Requires the Debt Limit to Nearly Double to $26.3 Trillion over the Next Ten Years (from $14.3 Trillion Today)
The current debate over the debt limit provides an opportunity to reduce out-of-control Washington spending. In fact, the debt limit was designed to provide this fiscal accountability, as noted in the following from the Congressional Research Service:
“Congress created a statutory debt limit in the Second Liberty Bond Act of 1917. This development changed Treasury’s borrowing process and assisted Congress in its efforts to exercise its constitutional prerogatives to control the federal government’s fiscal outcomes. The debt limit also imposes a form of fiscal accountability that compels Congress and the President to take deliberate action to allow further federal borrowing if necessary.” (“Reaching the Debt Limit: Background and Potential Effects on Government Operations,” June 3, 2011, Report R41633)