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

Last Updated: October 8, 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 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.

Now, as the U.S. emerges from the COVID-19 pandemic, the specter of the debt limit once again threatens the economy.

Historically underrepresented communities bore 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. However, Congress is playing political brinkmanship with the lives and livelihoods of families across the country. The economic impact of this political game will be disastrous to families’ finances. 

Congress created the debt limit and, by extension, manufactured the repeated debt limit crises in recent years. The current suspension of the debt limit expired on July 31, 2021. Congress should not only act immediately to prevent a financial crisis that would imperil recovery from the COVID-19 pandemic but also prevent similar manufactured crises in the future.