This week’s vote on Capitol Hill to raise the debt ceiling by $ 2.5 trillion reflects aggressive spending lawmakers have made over the past two years in an attempt to deal with the societal and economic fallout caused by the coronavirus pandemic.
What had been a steady increase in US federal debt over the past decade accelerated dramatically once the pandemic took hold.
Since February 2020, lawmakers have passed nine legislative packages that have authorized at least $ 5.7 trillion in new money, according to the Committee for a Responsible Federal Budget. All but one of the measures cleared Congress with bipartisan support, as Democrats and Republicans put aside their differences to respond to the worst economic crisis since the Great Depression.
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Federal spending has exploded during this time, with spending higher each month than the same month before the pandemic.
By supporting businesses and trying to financially clean up families, lawmakers have ended their usual concerns about deficit spending. They have chosen not to offset their bills with higher taxes or cuts elsewhere, spending more in the red in a country that historically has spent more than it collects annually in revenue.
Income plummeted in 2020 due to the economic fallout from the pandemic and was written off for years in the wake of President Donald Trump’s 2017 tax cuts and jobs act.
The sum total of Congressional coronavirus relief efforts – which have resulted in spending so far in excess of the entire federal budget in fiscal 2019 – helped bring an economy back to the brink by reversing rampant unemployment and providing much needed aid, including vaccines.
“I think the lesson from the Great Recession is that if you don’t go big with the aid, you might not get it at all,” said Daniel Zhao, senior economist at the job site Glassdoor. . “The fact that we had such tremendous support during this recovery facilitated a very dramatic recovery in the labor market.”
Yet the bill for these spending envelopes is essentially coming to an end, paving the way for what had been a vicious political fight. For months, Republicans had refused to help Democrats lift the country’s borrowing limit, even as GOP lawmakers backed some of the past spending that contributed to the debt. Republicans have declined support, believing it would help President Biden spend more, as he seeks to push forward a new social spending program of around $ 2 trillion. Democrats say this measure is fully funded.
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Ultimately, the two sides struck a deal, setting up a fast-track process that will allow Democrats in the tightly divided Senate to increase the limit without needing GOP support. Raising the debt ceiling could support federal borrowing until after the 2022 midterm elections, postponing a new high-stakes political row over the country’s fiscal health until the end of next year or in early 2023.