Ending this Manufactured Debt Limit Crisis (and Preventing the Next One)

Last Updated December 6, 2021

Ten years ago, the U.S. was slowly recovering from the Great Recession. Elevated unemployment, declines in tax revenue, and necessary stimulus spending increased federal debt. Congress needed to increase the statutory debt limit. This increase was necessary to finance spending that it had already authorized and appropriated to boost the economy and keep basic government functions running. However, deficit hawks in Congress used a looming debt default as political leverage, threatening an economic crisis. This led to the Budget Control Act of 2011, which avoided default but placed new caps on federal spending for the next ten years. 

Now, as the U.S. emerges from the COVID-19 pandemic, an unnecessary fight over the debt limit once again threatens the economy. The next debt limit crisis is coming this month. Congress should not only act expeditiously to prevent a financial crisis that would imperil recovery from the COVID-19 pandemic but also prevent similar manufactured crises from happening in the future.

Underrepresented communities have borne the brunt of the COVID-19 pandemic. Millions of families fell behind on rent and mortgage payments, businesses shut down, and students lost crucial in-person learning time.  At a time when families are struggling to get their footing in a still volatile public health crisis, some in Congress are playing brinkmanship with their lives and livelihoods by threatening default on the debt. The economic impact of this default would be disastrous to families’ finances. 

Congress created the debt limit and, by extension, manufactured the repeated debt limit crises in recent years. It is past time for Congress to manufacture a solution to this crisis of its own making.