But a statutory debt limit is a poor substitute for a constitutional balanced budget amendment.
In the last 20 years, the U.S. has permanently increased its statutory debt limit 14 times.
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The statutory debt ceiling and the threat of default have become political bargaining chips in the debate over fiscal policy.
From 1790 to 1916, when America was free of the welfare state, the U.S. borrowed, but neither chronically nor under a statutory debt limit.
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But to facilitate the extraordinary demands of war finance, Congress set a statutory debt limit up to which the Treasury could borrow as needed without further authorization.
That is when the statutory debt limit will be breached.
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The decisions on spending will now be taken concurrently with negotiations on the raising of the statutory debt ceiling which was reached on 31 December, with extraordinary measures expected to last until the end of February.
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It is not clear what the legal priority is among the Treasury's obligations, whether contractual such as bond debt or statutory such as social security.
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As US federal debt approaches its statutory ceiling, confidence on Capitol Hill is growing that a deal to raise the limit will soon be struck, avoiding the theoretical possibility of default.
Far better would be statutory limits on spending increases and debt as a share of GDP, sequesters that automatically cut spending if Congress exceeds those limits, supermajority rules for replacing those limits, and revisions of the budget baseline so that each year's budget begins at last year's spending levels, not with automatic increases.
Are they serious about enacting statutory PAYGO, attaching it to raising the debt limit?
And there have been some suggestions that a President could use that language to basically ignore this debt ceiling rule, which is a statutory rule.
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In the COD context, the taxpayer has realized a clear accession of wealth by being relieved of a debt that is then being excluded under a statutory provision.
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