The government reaching, breaching, and re-establishing its own spending limit is hardly a new phenomenon. We did it in 2010 with a total debt burden of $14.3 trillion, largely a product of wars in the Middle East and post-crisis stimulus spending. Congress raised the ceiling by $900 billion to $15.2 trillion, but we hit that in 2011, at which time $1.2 trillion was added to fund operations while policymakers negotiated the fiscal cliff.
Between the last-minute half-deal that was the fiscal cliff tax deal and the awkward rollout of the sequestration spending cuts, America managed to hit its federal debt limit again at $16.4 trillion at the end of 2012. The ceiling was temporarily suspended and later increased to $16.7 trillion, at which it now ostensibly sits. If this seems like a soul-crushingly large number, that’s because it is: the total current-dollar market value of America’s economic output in the second quarter was $16.6 trillion.
Treasury data from July shows that the U.S. budget deficit this year to date is $607 billion, down substantially from $974 billion in 2014 and on track to hit $759 billion by the end of the year. This compares against a total 2012 budget deficit of $1.1 trillion in 2012, and the decline can mostly be attributed to the fiscal cliff tax deal, which increased government revenue, and the sequestration spending cuts, which decreased outlays.