National Debt Limit

Report Outline
Pressures on the Public Debt Celling
Composition and Growth of Federal Debt
Debt Management and Economic Health
Special Focus

Pressures on the Public Debt Celling

Need for New Borrowing for National Defense

Mounting pressure on the federal budget, produced by a combination of strong new defense demands on the spending side and a prospect of slipping tax receipts on the revenue side, now seems likely to force the administration to ask Congress to raise the statutory limit on the public debt. Secretary of the Treasury Anderson, testifying before the House Small Business Committee on Nov. 21, said that he did not “want to minimize the importance of maintaining a balanced budget” and that he thought the government should “make every effort to get by within the national debt limit.” But he added that he “would not want to take any position of absolutism.”

President Eisenhower told the nation., in an address broadcast from Oklahoma City on Nov. 13, that it was “time for another critical re-examination of our entire defense position.” He said that “very considerable” additions would have to be made to current annual expenditures, and his description of moves necessary to ensure national safety left the impression that the budget to be sent to Congress in January would not be balanced. Because federal borrowings already approach the currently allowed maximum, a resumption of deficit financing would make unavoidable an increase in the present debt limit of $275 billion.

Both political and economic considerations argue against heavier taxes in the immediate future. It therefore appears probable that additional borrowing cannot be long-postponed if the United States is to meet threats to its security implied in Soviet scientific advances and at the same time carry on indispensable domestic and foreign activities.