After Treasury Secretary Hank Paulson spent weeks patting himself on the back after the Congressional Budget Office projected last month that the fiscal 2007 deficit will likely fall below $160 billion, it is a wonder that he still had enough strength to sign his recent letter to congressional leaders encouraging them to pass legislation raising the debt ceiling before Oct. 1. On that day, which coincidentally marks the beginning of the new fiscal year, Treasury estimates that the government will hit the current debt ceiling of $8.965 trillion. Unless the debt ceiling is raised, the government would be unable to pay interest on existing bonds and notes and borrow additional funds.
The House approved an increase in the debt ceiling in May, and last month the Senate Finance Committee approved raising the ceiling by $855 billion to $9.82 trillion. The full Senate must now act.
In August 1997, Congress raised the debt ceiling by $450 billion, from $5.5 trillion to $5.95 trillion. When George W. Bush entered the White House on Jan. 20, 2001, the national debt stood at $5.728 trillion. It took the government about five years (the last three-and-a-half years of the Clinton administration and the first one-and-a-half years of the Bush administration) to increase the national debt by the $450 billion approved in August 1997. Since June 2002, the debt limit has been raised four times for a cumulative total of more than $2.5 trillion. Thus over roughly the same time span of about five years, the national debt will have increased more than five times as fast (July 2002-September 2007) as it increased during the previous five-year period (August 1997-June 2002).
Between the time Mr. Bush entered office and the present, his administration has increased the national debt by $3.25 trillion, or more than 55 percent. The fact that he now needs Congress to pass legislation giving the government the authority to issue another $855 billion in additional debt confirms that his administration will almost certainly cumulatively raise the national debt by more than $4 trillion over eight years.
The annual budget deficit in recent fiscal years has totaled $318 billion (2005), $248 billion (2006) and a projected $158 billion (2007), which add up to $724 billion. However, over the same three-year period, the national debt will have increased by more than $1.6 trillion, which is nearly $900 billion above the three-year sum of the budget deficits. It’s fairly obvious which road the Bush administration and Congress must now take. The sign points to belt tightening.