It's debt limit time (again). What past showdowns can teach us.
Once again, the US Treasury is facing the possibility of going past the debt limit, which could prompt major policy changes or minor tweaks to the Federal budget. This feels like a modern phenomenon, but debt limit showdowns are nothing new.
Once again, the US Treasury is facing the possibility of going past the debt limit, which could prompt major policy changes or minor tweaks to the Federal budget. This feels like a modern phenomenon, but debt limit showdowns are nothing new.
It鈥檚 debt limit season again. Treasury will soon exhaust all the 鈥渆xtraordinary鈥� (if familiar) measures it鈥檚 using to stay within the limit. By mid-October, Treasury will have just $50 billion on hand. Once that鈥檚 gone鈥搈aybe at Halloween, maybe a bit later鈥揢ncle Sam won鈥檛 be able to pay all his bills or will be forced into doing something desperate like breaching the debt limit or minting platinum coins (kidding, mostly).
We seen this movie before. Sometimes it ends with major policy changes, such as the 2011 deal that spawned the sequester. Other times it leads to minor tweaks, such as the January 2013 deal that linked congressional pay to passing separate budgets through the House and Senate.
These showdowns feel like a modern phenomenon. But over at Tax Analysts, tax historian Joe Thorndike reminds us that a similar showdown happened in聽1953聽under President Eisenhower:
History, as they say, sometimes repeats. Swap the House and Senate and boost the dollar amounts and you鈥檝e got聽rhetoric聽that could almost be plucked from today.
Read Joe鈥檚 piece to find out how it all turned out. One tidbit (which I don鈥檛 think we should repeat): Treasury was forced to sell gold bullion to cover $500 million in debt.聽