The Hill News

As we continue to monitor the hourly reports on whether Congress will grant authority to borrow the money needed to pay the nation’s bills, it worth noting that the United States got along for 128 years without having a formal debt ceiling. So how has this limitation helped us manage our finances?

The first debt limit legislation was attached to the Liberty Bond Act in 1917 (to help finance W.W.I). At that time the public debt that had been accumulated since the birth of the nation totaled less than $6 billion â€" equal less than 10 percent of the nation’s gross domestic product in that year. But the limit on borrowing seemed to have an inverse impact on deficits. Within only three decades of enactment our public debt was $257 billion, equaling 105 percent of GDP â€" more than ten times the debt-to-output ratio the country had when the requirement for debt limit legislation was adopted.

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