CBSNews.com reports that, at least by some measures, the U.S. has exceeded the legally authorized debt limit, but this doesn’t mean the government is about to shut down or stop spending money — at least not yet.
The ceiling was set at $12.104 trillion dollars. The latest posting by Treasury shows the National Debt at nearly $12.135 trillion.
A senior Treasury official told CBS News that the department has some “extraordinary accounting tools” it can use to give the government breathing room in the range of $150-billion when the Debt exceeds the Debt Ceiling.
Were it not for those “tools,” the U.S. Government would not have the statutory authority to borrow any more money. It might block issuance of Social Security checks and require a shutdown of some parts of the federal government.
Congress is expected to increase the debt limit by $290 billion, if not more, in coming weeks.
UPDATE: The end of the story has a qualification I omitted: “Technically, not all of the National Debt is subject to the Debt Limit – a small percentage is exempt.” The number cited in the story is the National Debt, not the Public Debt Subject to Limit, so as a legal matter we may not be “over the limit.” However, as this graph shows, only a very small percentage of the National Debt is excluded.
J. Aldridge says:
I feel sorry for the suckers who continue to purchase U.S debt.
December 16, 2009, 11:10 pmCornellian says:
I wonder how they got that extra 4 billion tacked on at the end of “12.104 trillion.”
December 16, 2009, 11:32 pmuh_clem says:
The debt “ceiling” has been hit and then expanded pretty much every year since Reagan took over.
Yawn. A dog-bites-man story.
December 16, 2009, 11:48 pmConstantin says:
It’s been widely reported that Barack had some psychologists to do studies during the transition. What they found is that once you get past a billion, people just stop processing numbers and just register the amount as “a lot.” Doesn’t matter if it’s a billion or ten trillion, it’s too big for most to comprehend. They did not take this finding lightly, and have bragged to this effect.
Now we’re seeing that lesson put to work.
December 17, 2009, 12:07 amMark N. says:
This approach has always struck me as rather irresponsible by Congress (both parties have been guilty of it). Congress should not create a situation where the U.S. government has statutory obligations but is not given the authority to raise revenue sufficient to meet them.
There are several ways to avoid the problem. Congress could:
1. Raise taxes that are sufficient to fully fund the expenses its legislation has created;
2. Authorize issuance of debt to pay for obligations in excess of current tax receipts; and/or
3. Revise the legislation that requires the expenditures, in order to reduce them.
Some combination of those is fine; which combination to pick is a policy choice. Doing none of the above abdicates that responsibility to make a policy choice, and forces the government to default on some of its obligations, much like a household “solving” its financial troubles by simply choosing not to pay its bills.
December 17, 2009, 12:25 amType 1 Commenter says:
That’s interesting. Can you provide a link?
December 17, 2009, 12:28 amrpt says:
Just think, we had a balanced budget on January 19, 2009. Until Obama’s psychologists went to work. Who knew?
December 17, 2009, 12:42 amredc1c4 says:
what’s really funny is that if i ran my checkbook this way, i’d get a visit from the cops fairly shortly……
December 17, 2009, 2:03 amRicardo says:
“[The $700 billion bailout is] not based on any particular data point,” a Treasury spokeswoman told Forbes.com Tuesday. “We just wanted to choose a really large number.”
Oh wait, that was Bush’s Treasury Department in 2008 commenting on Hank Paulson’s bailout plan.
Link
December 17, 2009, 2:13 amCornellian says:
It’s been widely reported that Barack had some psychologists to do studies during the transition. What they found is that once you get past a billion, people just stop processing numbers and just register the amount as “a lot.”
A ludicrous allegation. You don’t need to spend money on psychologists to find out what politicians have all known for decades.
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December 17, 2009, 4:18 amLior says:
I wonder what the DOJ and the SEC would do if they learned that a private business had used “accounting tools” to lower its reported debt.
December 17, 2009, 6:15 amMuskrat says:
As uh_clem noted, this is routine. During one of the debt impasses in the Clinton years one of the accounting tricks they used was to dip into the federal employee Thrift Savings Plan accounts (specifically the government bond fund). As a federal employee at the time, I was a little peeved that they were borrowing a few billion dollars from me and my colleagues without our permission, but we got the money back soon enough. Just as we always got back pay for furlough days during “shutdowns.” It’s just theater. (I’d say “nobody’s dumb enough to let the USG actually default on anything,” but of course plenty of people are that dumb. I just have reasonable confidence that they’ll get adult supervision on this issue.)
December 17, 2009, 9:02 amrarango says:
agree with muskrat and uh_clem–business as usual except for, perhaps, scale. As long as we can print money, and the rubes overseas keep buying it, we are in business. Our saving grace is probably that they are more f**ked up than we are.
December 17, 2009, 9:08 amSmooth, like a Rhapsody says:
How close are we to a national debt that exceeds GDP?
Where does that put us relative to the rest of the G-20 in that regard?
As I recall, it was not long ago that only very sick developed economies had a debt that was greater than GDP.
December 17, 2009, 9:12 amSteve says:
I wonder what the DOJ and the SEC would do if they learned that a private business had used “accounting tools” to lower its reported debt.
Well, other than the fact that private companies don’t have reported debt, basically every company takes advantage of accounting artifices to the extent it can.
December 17, 2009, 9:24 amBarry says:
redc1c4 says:
“what’s really funny is that if i ran my checkbook this way, i’d get a visit from the cops fairly shortly……”
do you really not understand the difference between personal and national finance?
Oh – sorry, it’s the Volokh Conspiracy, so no, you don’t.
December 17, 2009, 9:29 amCarl Donath says:
GDP 2008 : $14.2T
December 17, 2009, 9:34 amDebt 2008 : $10.7T
Debt now : $12.1T
Gabriel McCall says:
I think that the use of “extraordinary accounting tools” deprives the American people of their intangible right to honest services.
December 17, 2009, 9:58 amTheBadness says:
Their story is technically wrong in that it relies on a figure that includes money not subject to the debt limit.
The number they report is accurate. Plus, the spirit of the story is accurate.
December 17, 2009, 11:13 amDotar Sojat says:
All we have to do is tax some rich people and we’ll be out of it in a jiffy.
December 17, 2009, 11:52 amLN says:
But isn’t this one of Alinsky’s Rules? And I think Bill Ayers and Jeremiah Wright have both been known to write about this.
December 17, 2009, 12:22 pmMark N. says:
It’s not been entirely uncommon among wealthy countries to have public debt greater than GDP for at least some number of years, and then recover to lower levels without either defaults or inflation. Canada, Denmark, and Ireland have all done so in the past 20 years.
December 17, 2009, 2:29 pmRyan Waxx says:
What, may I ask, is the point of having a ceiling at all?
December 17, 2009, 4:51 pmuberVU - social comments says:
Social comments and analytics for this post…
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December 17, 2009, 7:13 pmBrett Bellmore says:
Sure: The cops work for the government, not individuals, so the government gets to violate the law with impunity, and individuals don’t.
December 17, 2009, 7:20 pmJon says:
12 Trillion includes the obligations to Social Security… which are not real. US Debt to GDP ratio is still quite low… on a cash-accounting basis.
December 18, 2009, 1:13 am