Raising the Roof on the Debt

Anywhere else but Capitol Hill, calls to “raise the roof” might mean it’s time to party. But for some members of Congress, it is signaling a partisan fight. Amidst heated budget talks, the issue of raising the so-called debt ceiling looms overhead. House Republicans want to hold off authorizing any increase in the government’s ability to borrow until further curbs on spending are agreed to. And Treasury Secretary Timothy Geithner’s recent announcement that the ceiling won’t be reached until a few months’ time won’t make the issue go away.

According to some commentators, debates about raising the national debt ceiling do not belong in budgetary discussions. In other words, it is not “up for debate” whether the United States would default on its debt obligations. Thus, raising the ceiling is seen as the fiscally sensible thing to do. And if the federal government is to pay for commitments that have already been signed into law, it will need to do so.

Legislation to limit federal borrowing authority was first passed in 1917; the cap was then set at $11.5 billion. It has been lifted repeatedly, every time government spending has bumped up against it. In fact, the debt ceiling has been raised ten times in the last ten years alone—it was a mere $6 trillion a decade ago, and now stands at more than twice that amount, at $14.3 trillion. The U.S. government has never defaulted on its debts, and it is widely agreed that not to raise the ceiling now would have wide-ranging, “catastrophic” economic effects for the American and global economies.

Related Links

• Extra Tax Revenue to Delay Debt Crisis
  This article discusses the federal debt crisis that looms in just a few more months. (Source: New York Times, May 2, 2011)
• Debt Ceiling FAQs: What You Need to Know
  This CNN money article offers basic explanations of the debt ceiling and the controversy surrounding it; includes a video interview with past U.S. Treasury secretaries, a graph showing the growth of the U.S. national debt, and a quiz on the federal deficit. (Source: CNN, May 18, 2011)
• GRAPHIC: 10 Years, 10 Broken U.S. Debt Ceilings
  This brief article focuses on a graph of the last decade’s repeated raisings of the debt ceiling. (Source: National Journal, April 11, 2011)