For the last two years, the federal government has been legally at liberty to borrow any amount of money necessary to cover its deficit spending under the Bipartisan Budget Act of August 2019. Unless Congress extends this Act or raises the official debt limit, starting on August 1, 2021 Uncle Sam will only be able to spend what he takes in, in taxes. The thought of living within a balanced budget sends a frightening shiver down almost every politician’s spine.
In its July 2021 report on the “Federal Debt and the Statutory Limit,” the Congressional Budget Office (CBO) explains that at the time the Bipartisan Budget Act was passed in the summer of 2019, the Congressionally approved debt limit stood at $22 trillion. The Act specified that that debt level would come back into effect as of July 31, 2021, plus any and all additional debt accumulated between those two dates. As of June 30, 2021, the federal government had added an extra $6.5 trillion of debt over the previous two years, bringing the outstanding national debt to over $28.5 trillion.