Monday, September 28, 2009

Statutory debt limit about to be raised - again

The chart below shows the increases in the US statutory debt limit since 1974. The limit applies to the amount of federal debt outstanding that only applies to publicly held debt. Debt held by the Social Security Trust Fund is not included.

The Treasury is projecting that we are going to hit the current limit of $12.1 trillion shortly. That means going back to Congress for a vote, which is going to get noisy. Nobody is going to want to vote for it, yet unless we plan on shutting down the government (which nearly happened in 1996), this increase will pass. But other than setting these artificial limits, there is no real strategy in place to keep this from escalating out of control.

source: Moody's
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