GAO: Debt Pays For Past — Not Future — Spending

First Bernanke, now the GAO: It appears the adults — an admittedly small group of folks in Washington DC —   are beginning to assert themselves.

The GAO issued a research report discussing what raising the US Debt Limit is about:

“The debt limit does not control or limit the ability of the federal government to run deficits or incur obligations. Rather, it is a limit on the ability to pay obligations already incurred.

While debates surrounding the debt limit may raise awareness about the federal government’s current debt trajectory and may also provide Congress with an opportunity to debate the fiscal policy decisions driving that trajectory, the ability to have an immediate effect on debt levels is limited. This is because the debt reflects previously enacted tax and spending policies.”

That is your wonk update of the day . . .

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Source:
Delays Create Debt Management Challenges and Increase Uncertainty in the Treasury Market
Highlights of GAO-11-203 report to the Congress
February 2011
http://www.gao.gov/new.items/d11203.pdf

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