We’ve Raised the Debt Limit Many Times Before. That’s the Problem.

In summer 2011, after a long showdown, Congress agreed to raise the statutory limit on federal debt. It wasn’t the first time we’d raised the debt limit. And no one expected it to be the last. That’s the problem.

Under Ronald Reagan, we raised the debt limit 18 times. Under Bill Clinton we raised it eight times. Under George W. Bush we raised the limit another seven times. By the time Obama took office, it became routine. The 2011 debt limit hike raised the cap by about $2 trillion—to $16.4 trillion. Just 18 months later, the Obama administration is insisting on raising it again.

What the Obama team says it wants this time is a “clean” raise—a hike in the debt ceiling that’s paired with no significant changes. In other words, the president wants to continue the same old routine: raise the debt limit, spend more, borrow more—wash, rinse, repeat.

The White House argues that a clean hike is the only way to avoid a potential downgrade of the nation’s creditworthiness. If the GOP resists authorizing a hike in the limit, political instability will make creditors wary of further lending, raising the nation’s borrowing costs and destabilizing the global economic system.

Perhaps they should pay a little more attention to what the big credit rating agencies are actually saying. Earlier this week, Fitch put the U.S. government on notice: Yes, it wants the debt limit raised without a major fight, but it also warned that the fundamental strengths of the country’s creditworthiness “are being eroded by the large, albeit steadily declining, structural budget deficit and high and rising public debt.” Without a credible medium term deficit reduction plan, the agency says, a downgrade of the U.S. credit rating is likely by the end of this year. Fitch isn’t the only agency to sound this alarm about unsustainably high debt levels. As The Wall Street Journal noted this week, all three rating firms “have implored lawmakers to lower the country's debt relative to its economic output.”

So what this episode of our national debt limit drama needs to be about is figuring out, or at least beginning to figure out, a way to end the ugly cycle of debt buildup and debt limit hikes. It’s the refusal to do that—the stubborn insistence on continuing with spending and entitlement policies that have made debt limit hikes a routine in Washington—that’s the biggest problem.

President Obama should be sensitive to this. After all, in 2006, as a young Democratic Senator, he faced a vote to raise the debt limit from $8.1 trillion to $8.9 trillion. The deficit was much smaller then—less than $250 billion, compared to today’s $1 trillion-plus gaps—but Obama declared his opposition the debt limit hike anyway. “The fact that we are here today to debate raising America’s debt limit is a sign of leadership failure,” he said. “It is a sign that the U.S. Government can’t pay its own bills. It is a sign that we now depend on ongoing financial assistance from foreign countries to finance our Government’s reckless fiscal policies.…Leadership means that ‘the buck stops here.’ Instead, Washington is shifting the burden of bad choices today onto the backs of our children and grandchildren. America has a debt and a failure of leadership. Americans deserve better.”

Since winning the presidency, Obama has distanced himself from those remarks and the vote they went with, saying it was an example of a new senator making “a political vote.” But Obama is still playing politics with the debt limit—just from a different perch. He had it right the first time. The fact that the debt limit is up for a vote yet again is a sign of reckless fiscal policies. And the fact that Obama doesn’t  seem to want to end the cycle of spending and borrowing that brought us to the point of needing yet another hike is, as he said, a failure of leadership. 

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  • Almanian.||

    Fuck Michigan!

    Also - fired chicken

    That was for Reppin'...:)

  • Almanian.||

    The misspelling was for John...

    /All My Children Reasonoids

  • EDG reppin' LBC||

    For today, I will refrain from my usual screed.

    Fuck Notre Dame!

    Also, fried chicken.

  • Fist of Etiquette||

    It wasn’t the first time we’d raised the debt limit. And no one expected it to be the last. That’s the problem.

    Why would we have a mechanism for raising the debt ceiling if the ceiling was meant to be a cap? What you're arguing just doesn't make any sense.

  • T o n y||

    The debt limit was conceived (during WWI) as a means of making borrowing to pay for stuff easier. Since the war would cost an unknown amount, the debt limit was created so that Congress wouldn't have to approve every issuance of debt in order to pay for the things Congress already bought.

    It is not, and never has been, a spending limit. Now that raising the debt ceiling in order to accommodate the costs Congress has incurred has stopped being routine and started being a game of chicken, it's far outlived its usefulness.

    The only sane policy to have is to allow the Treasury to borrow to pay Congress's bills. If Congress wants to reduce spending, it should reduce spending.

  • Zeb||

    You're right Tony. They should get rid of the limit and go back to making congress approve any new debt before it is issued.

  • Randian||

    I am going to have to remember that one.

  • Restoras||

    It's a sock, people, and a very tired and predictable one at that. It only posts to satiate its response boner.

    Please ignore, with extreme prejudice.

  • $park¥||

    If Congress wants to reduce spending, it should reduce spending.

    And they don't, because there is literally nothing to cut. Our government is running lean at near peak efficiency. All this talk of ceilings is just pure nonsense made up by people who hate poor and old people. It can't be helped that people are too stupid to realize that costs continually go up and there is just no possible way to eliminate some of the things that must be paid for.

  • Randian||

    I am responding to this because it is ignorance that deserves to be abolished in this debate.

    The debt limit was conceived (during WWI) as a means of making borrowing to pay for stuff easier.

    So what?

    It is not, and never has been, a spending limit. Now that raising the debt ceiling in order to accommodate the costs Congress has incurred has stopped being routine and started being a game of chicken, it's far outlived its usefulness.

    Checks and balances and laws can be used for different ends. The simple fact that you don't like those ends does not mean that political tools have "outlived their usefulness".

    The only sane policy to have is to allow the Treasury to borrow to pay Congress's bills. If Congress wants to reduce spending, it should reduce spending.

    Here's the thing: they aren't bills. Bills are statements for goods and services already provided. Congress hasn't spent most of the money in question yet. Money allocated by Congress isn't sacrosanct.

    Congress can reduce spending - by holding the debt ceiling hostage and forcing the President to negotiate.

    What is the President's incentive to negotiate otherwise? He clearly has no interest in even a short-range deficit reduction plan, and he doesn't negotiate on this issue in good faith.

    In other words, pretend I am the President. In the absence of at debt ceiling, give me a good reason I should negotiate anything at all.

  • T o n y||

    The president doesn't want a policy of slashing the federal government to its bones. Isn't that his right? You act as if the only thing anyone can possibly think is that the government needs to shrink, and it needs to shrink right fucking now.

    I'll concede that holding the global economy hostage over domestic policy obsessions is a legitimate legislative tactic if you concede that minting a trillion dollar platinum coin is an appropriate reaction to such ridiculousness.

  • epsilon given||

    When we are facing yearly trillion dollar deficits, about the only way you are going to bring spending under control, is by slashing the federal government to the bones.

    While it is the President's right to oppose that slashing, he's advocating something that will destroy us financially. Thus, he's holding the global economy hostage as much, if not more so, than the Republicans, who are so yellow-bellied, that any spending cuts they *do* accept aren't going to do squat at denting the deficit, yet alone "cutting things to the bone".

  • Restoras||

    It's a sock, people, and a very tired and predictable one at that. It only posts to satiate its response boner.

    Please ignore, with extreme prejudice.

  • Randian||

    Like I say, normally I agree, but it posted something substantive on the debt ceiling (actually, the Team Blue talking points) and they should be debunked.

  • carol||

    So, Tony, you've maxed out your credit card and the only sane thing to do is borrow more money. Cool. Would you mind openning an account at the credit union where I work? Our interest income has been a little flat and we could use someone like you.

  • tarran||

    Essentially, Congress has tried to walk away from its responsibilities and have painted themselves into a corner where they have to behave responsibly or face bad consequences.

    The responsible thing is to stop promising to spend so much money. But they are afraid they will lose their phoney-baloney jobs because of blowback from an electorate propagandized for decades to accept those promises as achievable.

  • $park¥||

    behave responsibly or face bad consequences

    HAHA! Good one.

    lose their phoney-baloney jobs because of blowback

    Good thing blowback doesn't exist.

  • Randian||

    Partially true, but the President hasn't proposed a serious budget in three years, and because the Democrats have demogogued so badly about a government shutdown, even thinking of one is now politically toxic. Add to that the fact that the House Republicans pass many budgets, but the Senate Ds and the Pres aren't interested because it reduces the baseline by the amount of the stimulus, and you a recipe for can-kicking.

    If the debt ceiling has to be held hostage, so be it.

  • Palin's Buttplug||

    Where were those proposed baseline cuts 2001-09?

  • Randian||

    Irrelevant.

  • Jeff||

    BOOOOOOOOOOSHHHHH!!!1

  • Restoras||

    This is also a sock, people, and is also a very tired and predictable one at that. It only posts to satiate its response boner.

    Please ignore, with extreme prejudice.

  • epsilon given||

    Yeah, sure, the Republicans dropped the ball in their years of power. That doesn't mean that the Democrats have to take things to the next level of irresponsibility, as they have done these last four years.

    And that's the beauty of it! The Democrats have demonstrated their utter incapability to be fiscally responsible...so we should put the Republicans, who have also demonstrated an inability to be responsible, back in power. (At least we can take *some* comfort that, in theory, at least, they won't be as irresponsible as the Democrats have been, I hope...)

  • PapayaSF||

    Yup.

  • ||

    Nice alt-text, Suderman.

  • Dr. Frankenstein||

    Of course you have to raise the debt limit when you debase the currency.

  • Another David||

    the problem isn't the debt limit. Increased debt is a function of increased spending. Congress keeps passing new spending bills and then is shocked, shocked to find that there's borrowing going on to pay for the enormous deficits they agreed to.

    Fuck you, cut spending.

  • DaveAnthony||

    Has anyone created a petition on whitehouse.gov that just says "Fuck you, cut spending!" because it would be totally awesome. Especially if it got enough signatures.

  • Another David||

    The assholes probably put in a fucking profanity filter.

  • Jeff||

    Evidently not.

  • Jeff||

  • DaveAnthony||

    Signed. Although I expect it to get flagged as inappropriate soon enough.

  • ||

    That picture of the five present and prior presidents fills me with a loathing that is indescribable. It's like seeing several mass murderers taking a picture for laughs. "Ha ha, aren't we funny here." Disgusting.

  • DaveAnthony||

    They should have got a blow up Reagan doll that Jimmy Carter could hold up.

  • Libertymike||

    They ARE serial mass murderers.

  • PapayaSF||

    ongoing financial assistance from foreign countries to finance our Government’s reckless fiscal policies

    It's far worse than that now. The last I read, about 70% of our debt is now bought by the Federal Reserve, which ought to scare the pants off of anyone who thinks about it.

  • tarran||

    Oh please! We're Americans!

    The germans and Zimbabweans are lesser races and that's why it didn't work out for them. For us, hyperinflation will not be a problem.

  • Marla Singer||

    The White House argues that a clean hike is the only way to avoid a potential downgrade of the nation’s creditworthiness. If the GOP resists authorizing a hike in the limit, political instability will make creditors wary of further lending, raising the nation’s borrowing costs and destabilizing the global economic system.

    Uh, yeah, your wife says this all the time. Don't you guys, like, talk while you're waiting for your dinner to be Thermomixed?

  • EdS||

    We need spending cuts and we need certainty. That means an ongoing plan that continues until modified instead of a plan that expires in months or years. I'd like to see a 5% budget cut every year until there is sufficient surplus to payoff the debt in 10 years. I'd even be willing to allow offsetting increases for population and inflation. But we must start cutting. Until a cutting plan is firmly defined, there should be no discussion of the debt ceiling. With a cutting plan and the already passed tax increases, an estimate of the debt needed for the next year (hint less than last year) can be made and approved. Next year, the actual revenue, spending, and debt can be reviewed and if things are on plan, another spending reduction and smaller debt increase can be approved. It may take a few years to turn the corner and start producing a surplus and paying off the actual debt. With each year's smaller budget, Congress and Government will have to increase efficiencies and make choices about priorities. That's a good thing.

  • lfstevens||

    1 Unless you propose to cut spending by 40% starting next week, by definition you either support huge tax increases or unprecedented spending cuts - or you support an increase in the debt ceiling.

    2 The Boehner program of $1 of spending cuts for each $1 of ceiling increase is at bottom a large increase in the debt ceiling. See 1. Thus those who want that level of "spending cuts" (really reduced increases) support that increase. Has anyone on the right produced a "no ceiling increase" budget? Such a budget would make the sequester look like chicken feed.

    3 In future, Congress should include debt ceiling adjustments in spending and tax bills. Having a separate ceiling debate is just playing games, albeit one that Obama was happy to play before he moved into 1600.

    4 Note that tax revenues are 3+% below their historical average, because of the slow economy. I'd love to see more talk about how to fix that and less of this gamesmanship.

  • lfstevens||

    3+% of GDP...

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