April 5, 2011 could be the day the debt limit is reached, according to the Department of the Treasury. Now, Congress must raise the debt limit... or else.
A new report by the Government Accountability Office explains that a vote against raising the debt limit could make the financial crisis in America worse, contrary to the belief of some lawmakers on Capitol Hill.
"Failure to raise the debt limit in a timely manner could have serious negative consequences for the Treasury market and increase borrowing costs," concludes the GAO report.
That's because the debt limit reflects previous spending levels, and is simply a limit on our ability to pay past debts. It does not control the government's ability to run deficits or incur obligations.
Further, the report titled "Debt Limit: Delays Create Debt Management Challenges and Increase Uncertainty in the Treasury Market," explains that in the past the Treasury Department has managed debt levels by suspending investments or temporarily disinvesting certain securities held in federal retirement funds. But, that now, such "extraordinary actions available to the Treasury have not kept pace with the growth in borrowing needs."
The debt limit has recently been a very divisive issue in Washington, with many Republicans arguing it should not be increased because they believe it will keep America on the road to eventual insolvency. This GAO report appears to refute those lawmakers' math, but it supports their passion, and suggests that if they apply it appropriately elsewhere, things might start to get better.
"To avoid potential disruptions to Treasury markets and help inform fiscal policy decisions in a timely way," the report summarizes, "Congress should consider ways to better link decisions about the debt limit with decisions about spending and revenue."
Not exactly a novel idea.
Peter Doocy is currently a Washington D.C.-based correspondent for FOX News Channel (FNC). He joined the network in 2009 as a general assignment reporter based in the New York bureau.