Couple argues over credit limit

Raising the debt ceiling will make Congress confront past spending decisions, but puts no limits on future spending despite claims by some congressional leaders.

Legislation allowing an increase in the national debt, which is now near the top of the Capitol Hill agenda, is one of the most politically challenging and most misunderstood tasks that lawmakers ever undertake. It’s also one of the few measures over which Congress has no viable choice.

Failure to raise the debt ceiling on time, before the Treasury must borrow above the current statutory limit in order to keep paying the government’s bills, would result in the United States defaulting on obligations to its own citizens as well as creditors around the world. This has never happened, but almost all economists agree the consequences would be catastrophic, nothing short of “irreparable harm to the U.S. economy and the livelihoods of all Americans,” in Treasury Secretary Janet Yellen’s view.

The reality that Congress has no practical discretion when it comes to increasing the debt limit, however, has not prevented intense periods of partisan posturing, legislative brinkmanship, and the spread of misinformation when such deadlines approach — especially, as now, when the party out of power wants to thwart the majority party’s fiscal policies.

Progress toward confronting the depth of the nation’s red ink, then, requires understanding this essential truth: Votes Congress takes to permit more debt are entirely about continuing the borrowing necessary to pay for policies enacted in the past. These votes do not increase federal spending. Neither do they authorize, in advance, the borrowing and debt that would be required to finance new federal programs enacted in the future.

But these votes may fairly be described as an affirmation that current policies have and will continue to cause the debt to expand. They are a compulsory acknowledgement by current Senators and House members of the enormously expensive consequence of all the decisions made by Congresses and presidents of both parties.

In the past two decades, the most costly of them have been the expansions of the social safety net, including the Medicare prescription drug benefit started under George W. Bush and the Affordable Care Act under Barack Obama; the tax cuts won by Bush and extended by Obama; the additional $1.5 trillion tax cut pushed by Donald Trump; the six pandemic economic recovery packages worth a combined $5.3 trillion signed by Trump and Joe Biden; and the extraordinary wartime military budgets sustained by all four presidents since the 9/11 attacks, including more than $2.2 trillion in Afghanistan alone.

The Inevitable Confrontation

The next legislation to address the limit will almost surely have to be passed sometime this fall, although a precise deadline for avoiding default has not yet been identified by the Treasury.

Under a law enacted with bipartisan support in the summer of 2019, the ceiling on the debt was “suspended” for two years, permitting the government to borrow as needed to pay bills and make interest payments on existing debt. That period ended August 1, when the borrowing limit was reset as the government’s total accumulated debt on that day: $28.4 trillion. This number includes about $6 trillion in Treasury bonds held by federal trust funds and other government accounts; the rest are bonds held by the public, which is the number normally cited in discussions of the debt.

To buy some time for Congress to formally raise the the debt ceiling, the Treasury has taken what it calls “extraordinary measures” to keep the government under that limit, mainly not putting money into civil service and Postal Service pension funds that don’t immediately need to pay benefits. Similar accounting maneuvers have been made by administrations of both parties during earlier debt limit standoffs. (The law requires all funds not invested or removed from the pension funds be restored with interest as soon as the debt limit is addressed.)

The Democrats in control of Congress say they will seek to complete the task in September by including language in a bill to keep routine government operations going, and avoid a partial government shutdown, when the next fiscal year starts October 1. The alternatives are raising the ceiling to a precise dollar amount or suspending it again, which amounts to postponing the date for the next increase.

But either way, the majority’s leaders will need essentially unanimous support from their members. That’s because the Democrats have just three votes to spare in the House and none in the Senate, where 60 votes will be required and Republican leaders are lining up their members to vote en masse against such a bill.

Securing approval for a higher debt limit, especially from those in re-election trouble, is always difficult given the widespread misperception that lawmakers are voting for fresh spending, when in fact they’re voting to make good on past commitments.

That looks sure to be the case this fall. Before the Senate recessed for its summer recess, GOP Leader Mitch McConnell deployed a false construct to explain why the GOP will vote as a bloc against raising the ceiling: He conflated that position with his party’s unified opposition to the Democrats’ push for $3.5 trillion in new spending during the next decade on family support, health, education and climate repair.

“If our colleagues want to ram through yet another reckless tax and spending spree without our input, if they want all this spending and debt to be their signature legacy, they should leap at the chance to own every bit of it,” McConnel said of the Democrats August 5. “If they don’t need or want our input, they won’t get our help with the debt limit increase that these reckless plans will require.”

Again, the rising debt that Congress must confront this fall is borrowing to cover current policies. It’s not in any way connected to the additional borrowing that would be required if Biden’s massive plan for expanding the federal government is enacted.

Federal borrowing keeps happening because — for two decades straight and in all but four years in the past half century — tax revenue has not covered annual expenses. In simple terms, the debt is the sum of all the borrowing that’s necessary to cover those annual deficits, including record shortfalls topping $3 trillion this year and last year because of the pandemic’s economic disruption and the federal rescue in response.

As a consequence, by year’s end the amount of debt will be 103% the size of the American economy, a number not seen since the end of World War II.

Debt Ceilings and Personal Credit

In thinking about the debt and the partisan clash ahead, an analogy to family finances works quite well.

The US debt ceiling is akin to the limit on a personal credit card — albeit the government cap is nine orders of magnitude bigger than even an American Express Platinum card maximum.

The Treasury regularly sells interest-bearing bonds to raise the money to bridge the gap between revenue and spending. It’s the same reason families put big-ticket essentials on credit cards, and take out loans for their most expensive purchases, when wages and other income don’t cover all those expenses. And, in both cases, a predicate to getting the credit is a legal promise to make the payments when required.

Now, consider the example of a bickering couple. One is pressing to take out a loan for a new minivan, arguing the current car is no longer safe for the kids. The other contends the clunker is good enough, and on top of that there’s a need to pinch pennies further by giving up pizza delivery nights and making the kids’ winter coats last another year.

As the standoff hardens, one partner refuses to make another mortgage payment or write another student loan or Visa check until winning the argument.

Of course, their bankers would not countenance that. And, with much more catastrophic consequences, neither would the millions of people the government stiffs if partisan brinkmanship in Washington yields a default — from the Social Security beneficiaries and salaried soldiers across the country to the Treasury bond holders abroad. Failure to make those payments, even for a short time, could well lead to investors to demand higher interest rates to compensate for a greater perceived risk in the future, which in turn would drive up borrowing costs further.

A Clash for Concessions

In every other country in the world except Denmark, the national treasury has the power to pay whatever debts the government incurs. But Congress decided more than a century ago, when expenses surged for World War I, that it wanted a formal say-so. For decades afterward, though, raising the debt ceiling was a routine matter — it happened 65 times without much controversy between the start of World War II and the start of the Clinton administration in 1993.

It has been increased or suspended two dozen times since, as well. But only in those past three decades, when the fiscal policy debate has become especially heated and partisan, has the time to raise the debt limit become occasion for a protracted budget policy fight.

Sometimes, these showdowns have resulted in Congress confronting some of the major issues that have driven up the debt. To end a standoff a decade ago, Obama agreed to a GOP demand to impose years of curbs on annual defense and domestic spending. But the deal came so close to the default date that Standard & Poor’s downgraded the US credit rating for the first time  — saying the recent “political brinkmanship” had rendered the government’s ability to manage its finances “less stable, less effective and less predictable.”

This fall, Republicans will likely once again demand fiscally conservative concessions in return for backing more debt. Nine GOP senators, for example, are pushing a bill that would make legislation that increases spending much more difficult to get through Congress, and bills to cut spending much easier to advance, whenever the debt is bigger than the GDP.

The coming debt limit clash will be the first since the Obama administration. During the Trump years, which began with a national debt of $19.8 trillion, congressional Republicans uninterested in a fiscal policy clash with a president of their own party acquiesced four times in laws that permitted more borrowing as needed — the most recent of which is the measure that lapsed in August.

Such suspensions of the debt ceiling have been the vehicle of choice for the past decade. That is because they have eliminated the need for a majority of lawmakers to vote “yes” for a 13-digit figure that many of their constituents would label mind-bogglingly outrageous — even if those voters cannot correctly identify what it represents: A higher limit on the national credit card so we can keep paying for the purchases of the past.

Have an Opinion? Don’t Hyperventilate on Social Media.

Save your time and energy for a more productive rant. If you have an opinion on the debt ceiling and what Congress should do about it, contact your senators and congressperson. shows you how to contact your elected officials. Just follow the links provided on the page to find your representatives and call or contact them via email.

Problem Addressed: National Debt

Written by David Hawkings

Published on September 8, 2021

Feature image: Photo by Mikhail Nilov from Pexels

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Caitlin Emma, “McConnell vows no GOP help with debt limit hike”, Politico, Aug 5, 2021,, accessed Aug 19, 2021

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Office of Sen. Rick Scott (R-FL), “Sen. Rick Scott Introduces Federal Debt Emergency Control Act to Fight Washington’s Spending & Debt Crisis”, Jun 9, 2021,, accessed Aug 19, 2021

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