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No Elephants Donating Member (1000+ posts) Send PM | Profile | Ignore Fri Oct-11-13 04:51 AM
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In case you were wondering (debt limit)
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Edited on Fri Oct-11-13 05:09 AM by No Elephants
Further information: History of United States debt ceiling

Prior to 1917, the United States had no debt ceiling. Congress either authorized specific loans or allowed Treasury to issue certain debt instruments and individual debt issues for specific purposes. Sometimes Congress gave Treasury discretion over what type of debt instrument would be issued.<4> The United States first instituted a statutory debt limit with the Second Liberty Bond Act of 1917. This legislation set limits on the aggregate amount of debt that could be accumulated through individual categories of debt (such as bonds and bills). In 1939, Congress instituted the first limit on total accumulated debt over all kinds of instruments.<5>

Prior to the Budget and Impoundment Control Act of 1974, the debt ceiling played an important role since Congress had few opportunities to hold hearings and debates on the budget.<6> James Surowiecki argued that the debt ceiling lost its usefulness after these reforms to the budget process.<7>

In 1979, noting the potential problems of hitting a default, Dick Gephardt imposed the "Gephardt Rule," a parliamentary rule that deemed the debt ceiling raised when a budget was passed. This resolved the contradiction in voting for appropriations but not voting to fund them. The rule stood until it was repealed by the Republican Congress in 1995.<8>
1995 debt ceiling crisis
Main article: United States debt-ceiling crisis of 1995

The debt-ceiling debate of 1995 led to a showdown on the federal budget, which did not pass, and resulted in the United States federal government shutdown of 1995 and 1996.<9><10>
2011 debt ceiling crisis
Main article: United States debt-ceiling crisis of 2011

In 2011, Republicans in Congress attempted to use the debt ceiling as leverage for deficit reduction. The delay in raising the debt ceiling led to the first ever downgrade in the federal government's credit rating. The credit downgrade and debt ceiling debacle contributed to the Dow Jones Industrial Average falling 2,000 points in late July and August. Following the downgrade itself, the DJIA had one of its worst days in history and fell 635 points on August 8.<11> The GAO estimated that the delay in raising the debt ceiling raised borrowing costs for the government by $1.3 billion in 2011 and noted that the delay would also raise costs in later years. The Bipartisan Policy Center extended the GAO's estimates and found that the delay raised borrowing costs by $18.9 billion over ten years.<12>
2013 debt ceiling crisis
Main article: United States debt-ceiling crisis of 2013

Following the increase in the debt ceiling to $16.394 trillion in 2011,<13> the United States again reached the debt ceiling on December 31, 2012 and the Treasury began taking extraordinary measures. The fiscal cliff was resolved with the passage of the American Taxpayer Relief Act of 2012 (ATRA), but no action was taken on the debt ceiling. Following the tax cuts from ATRA, the government needed to raise the debt ceiling by $700 billion to finance operations for the rest of the 2013 fiscal year.<14> Extraordinary measures were expected to be exhausted by February 15.<15> The Treasury has said it is not set up to prioritize payments, and it's not clear that it would be legal to do so. Given this situation, the Treasury would simply delay payments if funds could not be raised through extraordinary measures and the debt ceiling had not been raised. This would put a freeze on 7% of the nation's GDP, a contraction greater than the Great Recession. The economic damage would worsen as recipients of social security benefits, government contracts, and other government payments cut back on spending in response to having the freeze in their revenue.<16>

Under the No Budget, No Pay Act of 2013, both houses of Congress voted to suspend the debt ceiling from February 4, 2013 until May 19, 2013. On May 19, the debt ceiling was raised to approximately $16.699 trillion to accommodate the borrowing done during the suspension period. The Treasury is now using extraordinary measures to avoid a default. Due to the impacts of the American Taxpayer Relief Act of 2012, the Sequester, and a $60 billion payment from Fannie Mae and Freddie Mac that will reach the Treasury on June 28, 2013, extraordinary measures are currently predicted to last until October 17 by the Treasury, <2> but financial firms suggest funds may last a little longer. Jefferies Group says extraordinary measures may last until the end of October while Credit Suisse estimates mid-November.<3>



Much more at http://en.wikipedia.org/wiki/United_States_debt_ceiling

Just as an aside, in both 1917 and 1939, when the debt ceiling was created and then expanded, Democrats controlled both houses of Congress and the White House. Maybe they did not want Presidents to incur debt to fight wars? (Roosevelt did impose a war tax.)

So, they shot their future selves and the future nation in the foot. I am not really sure why.

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