The U.S. Hits Its Credit Limit


Tuesday July 9th, 2013   •   Posted by Craig Eyermann at 7:52am PST   •  

j0439237-source-wa-atty-genl-gov The U.S. national debt hasn’t grown since May 19, 2013!

It’s true! On May 16, 2013, the total public debt outstanding reached the statutory limit of $16.7 trillion, however a subsequent act of Congress had suspended the debt limit until May 19, 2013, by which it had grown to roughly $16.74 trillion. Since then however, it hasn’t meaningfully grown beyond that figure.

This really hasn’t caused much of any problem however, thanks to several factors that have increased the amount of money coming into and going out of the U.S. Treasury, including:

  • The budget sequester, which mandated $85 billion of spending cuts, 50% of which are in defense, in 2013.
  • The payroll tax hikes that took effect at the beginning of 2013, which are expected to add over $108 billion in 2013.
  • The Obamacare tax hikes on high income earners and investment income that took effect at the beginning of 2013, which are expected to add $36 billion in 2013.
  • The income tax hikes on high income earners that took effect at the beginning of 2013, which are expected to add over $80 billion in 2013.
  • A surge in dividend and capital gains tax collections for the 2012 tax year (much of which was paid when 2012 income taxes came due in April 2013), as investors sought to beat the clock on the higher tax rates they recognized were sure to take effect in 2013 following President Obama’s re-election.

In addition, the U.S. Treasury is using its “extraordinary” measures for maintaining the national debt at its current level, in which it defers some payments and then only issues new debt securities to match the value of retiring debt securities.

The CBO provides more analysis here of the U.S. Treasury’s emergency methods. They estimate that the nation’s debt can be sustained at this level into October or November 2013.

Featured Image:
Washington State Office of the Attorney General



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