A New Approach to the Public Debt Legislation Should Be Considered
FGMSD-79-58: Published: Sep 7, 1979. Publicly Released: Sep 14, 1979.
- Full Report:
Congress has attempted to control the size of the public debt over the last several years by authorizing only temporary debt increases which expired in a year or less. Based on statements in congressional documents, this method was considered advantageous because it allowed Congress to increase the debt limit and later change it as more accurate data on receipts, disbursements, and required borrowing became available. Congressional desire to control the public debt has merit. However, any advantages that may have been achieved by employing the temporary increase process are being offset by the costs and undesirable conditions that develop when extensions of the temporary increase are delayed.
Because circumstances change, however, there is no guarantee that another delay will not have a greater impact. Enacting new legislation before the current temporary ceiling increase expires on September 30 is critical because historically, October has been one of the Government's largest deficit-spending months. In addition to being an obstacle to the Department of the Treasury's borrowing program, the temporary ceiling increase concept has lost its meaning in recent years. The temporary increase has grown to a point where it exceeds the permanent ceiling, and has limited prospects for reduction in the immediate future. Finally, the implementation of the Congressional Budget and Impoundment Control Act of 1974 has brought into question the need for Congress to consider the debt ceiling separately from the budget process. It seems that the two processes can be consolidated without diluting Congressional control over the public debt.
Matter for Congressional Consideration
Comments: Please call 202/512-6100 for additional information.
Matter: To avoid the problems associated with the present approach to the temporary debt ceiling increases, Congress should: make the current amount of the temporary ceiling a permanent ceiling and consider any future substantive increases permanent unless the debt can clearly be reduced within a reasonable time; and develop an approach to adjusting the public debt ceiling that would take advantage of the Congressional Budget and Impoundment Control Act, similar to the proposal that the Treasury has made.