This article was originally published on Crafting Your Home. A human contributor also wrote and edited the post.
WASHINGTON — Economist Steve H. Hanke and former U.S. Comptroller General David M. Walker called Wednesday, July 15, for a constitutional limit on federal debt. Their proposal would cap publicly held debt as a share of the economy.
Proposal Sets Debt Deadlines
The amendment would initially prevent publicly held debt from exceeding 110% of gross domestic product. It would lower that ceiling to 90% by the end of fiscal 2040. A formal declaration of war could suspend the limit. Congress could also approve a temporary emergency waiver with two-thirds support in both chambers and presidential approval.
Each waiver would last one fiscal year. Congress would need another vote for every additional year outside the limit. The proposal directs lawmakers to enact enforcement legislation within one year of ratification. That law would require steady debt reductions and automatic corrections when the government misses its targets.
Federal Outlook Keeps Worsening
Publicly held debt differs from the larger gross national debt figure. It excludes Treasury securities held by federal trust funds and other government accounts. The measure reflects federal borrowing from investors, banks, foreign governments, and the Federal Reserve. That borrowing affects interest costs and competition for private capital.
The current federal baseline projects debt rising from 101% of GDP in 2026 to 120% in 2036. That means debt has reached a historic level, exceeding the postwar record of 106% set in 1946. The federal deficit is projected at $1.9 trillion for fiscal 2026. Spending is expected to total $7.4 trillion, while revenue is expected to reach about $5.6 trillion.
The annual deficit could grow to $3.1 trillion by 2036. Publicly held debt could then reach about $56 trillion. Long-term projections show the ratio climbing to 175% of GDP by 2056. Those estimates can change with economic growth, interest rates, tax policy, and future spending laws.
Earlier Budget Restraints Faded
Congress has used deficit targets, spending caps, and pay-as-you-go requirements before. Lawmakers later changed, suspended, or allowed many controls to expire. The debt ceiling has also failed to prevent deficits. It restricts Treasury borrowing after Congress and the president approve spending and tax laws.
That structure separates budget decisions from the later debate over paying existing obligations. Debt-limit fights can disrupt markets without changing the policies that created the need to borrow. Congress recently considered a separate balanced-budget amendment. The House amendment vote failed on March 18, with 211 members supporting it and 207 opposing it.
The resolution needed a two-thirds majority because it proposed changing the Constitution. It failed despite receiving more yes votes than no votes. That measure focused on balancing annual spending against recent revenue. The Hanke-Walker proposal instead uses a debt-to-GDP ratio and a 2040 deadline.
Article V Route Faces Disputes
The Constitution provides two methods for proposing amendments. Congress can act with two-thirds approval in both chambers, or two-thirds of state legislatures can request a convention. The Article V convention route would require applications from 34 states. Any amendment produced through either method would need ratification by 38 states.
No amendment convention has ever been held. Legal disputes include whether applications from different years can be combined and whether states can withdraw earlier requests. Supporters argue Congress must call a convention once enough valid applications exist. Critics dispute how applications should be counted and whether delegates could be confined to one subject.
Congress Still Controls Choices
A constitutional debt limit would not decide which programs Congress should cut or which taxes it should raise. It would establish a target while leaving lawmakers to design annual budgets. Any serious plan would confront Social Security, Medicare, defense, domestic spending, tax preferences, and federal revenue. Smaller programs alone cannot close deficits measured in trillions of dollars.
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