Originally Published: 5/17/2006
NATIONAL DEBT LIMITS
By The Issue Wonk
The authority to borrow money on the full faith and credit of the United States is vested in Congress by the Constitution, Article I, Section 8, Paragraph 2, which states: “[The Congress shall have the power] . . . to borrow money on the credit of the United States.”
Prior to 1917, each time debt was issued, it was approved by Congress, including the determination of the interest rate and the term. In 1917, during World War I, Congress passed the Second Liberty Bond Act which allowed the Treasury to borrow as necessary to finance government operations up to a limit specified by Congress. The law was intended to “accommodate the Treasury’s need for flexibility in financing growing government activities. It also freed Congress from having to legislate each issuance of government debt. The limit persisted after World War I and was raised periodically as government debt increased.”1
The Second Liberty Bond Act was actually a combination of two (2) separate limits, debt sold to the public and intergovernmental debt. (See National Debt) In the early 1940s the two limits were consolidated and the form of setting debt limits as we see it today was set except regarding “temporary” debt limits. In the 1950s, “in the unfulfilled hope that the debt would shrink in the future,” Congress introduced “temporary” increases. But in 1983, the “temporary” and permanent debt limits were combined into a single permanent limit.1
Since 1940 the debt limit has been raised many times.2 Below is a synopsis of the various presidential administrations and the debit limit changes that occurred during that administration.3
1940-1946, Roosevelt/Truman Administrations
As of June 25, 1940 the debt limit was $49,000,000,000. By June 26, 1946 it was $275,000,000,000, an increase of 461.25%. These were the World War II years.
1947-1954, Truman Administration
No changes to the debt limits.
1954-1960 – Eisenhower Administration
By June 30, 1960 the debt limit had increased 4.27% to $293,000,000,000.
1961-1967 – Kennedy/Johnson Administrations
By June 30, 1967 the debt limit had increased 20.13% to $358,000,000,000. These were years of the Vietnam War and Johnson’s “Great Society” programs.
1969-1977 – Nixon/Ford Administrations
By April 1, 1977 the debt limit had increased 85.68% to $700,000,000,000. Up to 1972 the nation was still fighting in Vietnam.
1977-1980 – Carter Administration
By December 19, 1980 the debt limit had increased 24.35% to $935,100,000,000.
1981-1987 – Reagan Administration
By September 29, 1987 the debt limit had increased 184.26% to $2,800,000,000,000.
1989-1990 – Bush Administration
By November 5, 1990 the debt limit had increased 44.43% to $4,145,000,000,000. While the Persian Gulf War didn’t begin until 1991, military deployment and other preparations were ordered at the end of 1990.
1993-1997 – Clinton Administration
By August 5, 1997 the debt limit had increased 36.16% to $5,950,000,000,000.
2001-2008 – Bush Administration
Currently the debt limit is $11,300,000,000,000. During this administration, the debt limit has been increased seven (7) times, a total increase of 89.92%. The nation is still currently at war with Iraq and has a presence in Afghanistan.
2009-Present - Obama Administration
In February 2009 Congress raised the debt limit to $12,100,000,000,000 in order to pay for the $787 billion stimulus package. In January 2010 the debt limit was again raised to $14,294,000,000,000. In January 2012 it was again raised to $16,394,000,000,000.
1 Winters, Philip D. (2001) The Debt Limit. Congressional Research Service Issue Brief for Congress.
2 See Table 7.3 of the Historical Tables of the President’s Budget for Fiscal Year 2007.
3 I attempted to identify the make-up of the Congress during each period of time but found that this was an impossible task. Yes, you could get a count of seats in each house occupied by each party, but with groups such as “Dixiecrats” (conservative Democrats) and “Gypsy-moth Republicans,” (moderate-liberal Republicans) a “group” ideology is indeterminable. It wasn’t until 1994 that strict party discipline became a major player in Congressional action.
© The Issue Wonk, 2012