Raising the federal debt

The federal deficit each year is added to the federal debt which is currently about $13.7 trillion.

The federal debt is subject to a limit and that limit ($14.2 trillion) will be reached this coming spring. Does that mean that the federal budget will have to be balanced in order to avoid exceeding the limit? No, but it means that the Congress has to vote to increase the debt limit. With so much recent political concern about the deficit how palatable will it be for political leaders to vote for an increase in the debt? There isn't any choice about doing it because no one expects the budget can actually be balanced immediately. [See the previous post about that.] A failure to increase the debt limit would bring the government to a halt and almost certainly create havoc in financial markets as well as inconvenience a lot of people.

Both houses of Congress have to approve an increase in the debt limit. By the time of any vote the House will be controlled by Republicans and the Senate by Democrats. Can we expect annoying partisan posturing when it seems obvious that the limit has to be increased? Probably.

"The debt limit, when it comes in April or May, will prove who's a hero, and who's a jerk and who's a charlatan and who's a faker," says Alan Simpson, the former GOP senator from Wyoming who co-chairs the White House deficit commission. He doesn't define what constitutes a hero or a jerk. I would rather say that we are likely to find out who is a realist and who is pandering for votes.