October 10, 2013
In the Media
We need a debt-limit do-over
By Charles Lane
The Washington Post
October 7, 2013
The United States has experienced many periods of crippling
partisan conflict in Congress. It has also experienced bouts of
heavy national indebtedness.
Yet it has seldom, if ever, experienced both simultaneously.
This helps explain why Treasury securities have come to be regarded
as “risk-free,” safe enough to use as reserves in banks — and
central banks — around the world.
Now, though, the government’s publicly held debt exceeds 70 percent of
gross domestic product, Congress is more polarized than it has been since
the 19th century, and both conditions are likely to
This state of affairs makes the impasse over extending the debt
limit especially fateful.
How did we get here? Between 1789 and 1917, the federal
government’s debt wasn’t much of an issue at home or abroad. As Anita Krishnakumar showed in a 2005 article
for the Harvard Journal on Legislation, the U.S. government was
small and generally went into debt only to pay for wars, or when
recession temporarily dried up tax revenue.