The phrase “debt ceiling” sounds austere and restrictive, as if intended to keep a lid on government spending. Actually, the U.S. national debt limit was conceived almost a century ago to do the opposite: to make it easier for Washington to borrow money. For two years, it became a political crowbar many Republicans viewed as their best tool for extracting spending cuts from President Barack Obama and a proxy in a wider battle over the size and scope of the federal government. After two standoffs, one in 2011 that led to deep cuts and one in October 2013 that didn’t, Republicans leaders decided to put down the crowbar — the threat of a first-ever federal default — even at the cost of deepening a split in their own ranks.
On Feb. 11, a small group of Republicans in the House of Representatives joined with Democrats to vote to lift the debt ceiling without conditions, ending more than two years of jousting over the issue. The Senate followed suit the next day. The votes to extend the government’s borrowing power until March 15, 2015, came after Speaker John Boehner gave up on a search for conditions to attach to the bill that would satisfy the Tea Party conservatives in the House Republican caucus. They had forced Boehner into a debt ceiling showdown and 16-day government shutdown in October 2013 that ended with Republicans backing down a day before the Treasury said the government would be in default. A bipartisan deal extended the debt ceiling temporarily. Boehner said in January that he did not want to risk a default — or more political damage from another fight. So as a new debt deadline loomed, he broke with his hardliners. Disgruntled Tea Party groups vowed to make the leadership pay in party primaries in the spring.
The federal debt limit was created in 1917 to make it easier to finance World War I by grouping bonds into different categories, thus easing the legislative burden on Congress. Before that, lawmakers approved each bond separately, including borrowing that paid for the Panama Canal. With World War II looming in 1939, Congress created the first aggregate debt limit, and it was routinely raised without incident until 1953. That year, approval was held up in the Senate in an attempt to restrain President Dwight Eisenhower, a Republican, who wanted to build the national highway system. Two years ago, Republicans began using the debt limit as leverage to extract spending cuts from President Obama, resulting in the Budget Control Act of 2011 that instituted across-the-board spending cuts on discretionary domestic and military programs, types of spending now at historic lows. Partisan divisions over the debt ceiling shift with time and circumstance. When the Senate passed a 2006 resolution to raise it, all the Democrats voted no — including the first-termer from Illinois, Barack Obama.
At least one thing is clear about the debt ceiling: It hasn’t restrained the federal debt. That’s in the hands of Congress when it sets levels of taxation and spending, then borrows money when it overspends. Raising the debt ceiling simply lets the government pay for things it has already decided to buy. As a result, some budget experts and commentators want to abolish it, arguing that the uncertainty of Congressional battles costs taxpayers money by increasing economic uncertainty, among other problems. Debt-limit supporters say opponents overstate the potential harm and that using it to bargain for spending cuts serves the public interest at a time of historically high debt levels.
The Reference Shelf
- A U.S. Debt Clock displays an up-to-the-second ticker on the national debt and many other fast-moving statistics.
- The Congressional Research Service prepared an exhaustive report on the debt ceiling in September.
- The Committee for a Responsible Federal Budget aggregates news, documents and other resources in a “Debt Ceiling Watch.”
- The Congressional Budget Office issued an analysis of the situation in September 2013 that traced when bills would come due if the debt ceiling was breached.