Issue Brief posted October 9, 2013
The President’s Legal Authority at the Debt Limit
Some time between the middle and the end of October, the federal government will reach a hard limit on the amount of debt it can issue, and its ability to finance governmental operations will be affected. Confusion about the debt limit abounds, and this Issue Brief will address some common questions.
What Is the Debt Limit?
The United States debt limit, or debt…
Issue Brief posted October 8, 2013
America’s Debt, Through the Eyes of the Founders
The Founders of the United States wanted to establish a country that could endure for generations, and they understood that massive debt would endanger their project. They knew that managing public finances to force government to live within its means was the prudent thing to do.
They understood that it would sometimes be necessary for the country to run a deficit—for…
Backgrounder posted September 18, 2013
Debt Limit: Options and the Way Forward
Congress cuts spending only when forced to act, but it should carefully consider its options on the debt limit. The federal government hit the statutory debt limit on May 19, 2013, with $16.7 trillion in debt.; Two days earlier, Secretary of the Treasury Jack Lew sent a letter to Congress detailing $260 billion in extraordinary measures that the Department of the…
Backgrounder posted September 3, 2013
Advanced Energy Trust Fund: Tying a Good Idea to a Bad One
Senator Lisa Murkowski (R–AK) recently released draft legislation outlining her idea of an Advanced Energy Trust Fund. The trust fund would create a new stream of revenue for the Secretary of Energy to spend on basic and applied research for new energy technologies—with funding coming predominately from oil and gas production on federal lands currently off-limits to…
Special Report posted August 20, 2013
Federal Spending by the Numbers, 2013: Government Spending Trends in Graphics, Tables, and Key Points
In 2013, federal spending approached $3.5 trillion and the deficit dropped to “only” $642 billion. Some are using this small improvement in the nation’s fiscal situation to avoid further budget tightening. But as the figures and graphics in this report show, this is the wrong conclusion to draw. Following four years of trillion-dollar deficits, the national…
Factsheet on August 14, 2013
Getting America’s Debt under Control
Before Debt Limit Is Raised, Americans Deserve Spending Cuts and Path to Balance
Washington is spending far more money than tax revenues cover, once again reaching the limit for how much debt it may borrow. The debt limit was reached on May 19, 2013, with an unprecedented $16.7 trillion in national debt—larger than the entire U.S. economy as measured in gross…
Issue Brief posted June 18, 2013
Soaring National Debt Remains a Grave Threat
Federal government debt has nearly doubled since President Barack Obama took office and is projected to increase 50 percent over the next decade—and then rise rapidly thereafter—under existing policies. As federal debt has soared, so have concerns about America’s future.
Used properly, debt can safely finance private and government investment in productive capital to…
Backgrounder posted June 18, 2013
The Many Real Dangers of Soaring National Debt
Federal government debt has nearly doubled since President Barack Obama took office. Recent progress toward reducing the annual budget deficit is welcome, yet federal debt is still projected to increase 50 percent over the next decade—and then rise rapidly thereafter—under existing policies. As federal debt has soared, so have concerns about America’s future. Used…
Issue Brief posted May 1, 2013
Debt and Growth in a Time of Controversy
The weight of the evidence indicates that high debt slows growth, but there is no magic threshold above which any country at any time will experience slower growth. This truth has been illustrated in the recent controversy around “Growth in a Time of Debt,” an academic paper by Carmen Reinhart and Kenneth Rogoff.
Reinhart, Rogoff, and Rebuttals
“Growth in a Time of…
Issue Brief posted March 5, 2013
Research Review: Spending Cuts Are Better Than Tax Increases
Governments regularly run fiscal deficits and periodically awake to the need to restore balance to their finances. These episodes of “fiscal correction” or “austerity” may emphasize either tax increases or spending cuts. As the United States faces an out-of-control budget deficit and trillions in unfunded promises to future retirees, the question looms large: Tax more,…
Issue Brief posted February 22, 2013
High Debt Is a Real Drag
Three teams of economists have separately shown that high government debt has a negative effect on long-term economic growth. When government debt grows, private investment shrinks, lowering future growth and future wages.
Estimates across advanced economies show that debt drag reaches large and statistically significant levels as debt grows, with the worst effects…
Backgrounder posted February 12, 2013
How the United States’ High Debt Will Weaken the Economy and Hurt Americans
Growing federal debt also would increase the probability of a sudden fiscal crisis, during which investors would lose confidence in the government’s ability to manage the budget and the government would thereby lose its ability to borrow at affordable rates. Such a crisis would…probably have a very significant negative impact on the country.
-Congressional Budget Office,…
Backgrounder posted January 8, 2013
U.S. Government Increases National Debt—and Keeps 128 Million People on Government Programs
The number of people receiving benefits from the federal government in the United States has grown from under 94 million people in 2000 to more than 128 million people in 2011. That means that 41.3 percent of the U.S. population is now on a federal government program. The 128 million is an estimate based on the recently released March 2011 U.S. Census Bureau Current…