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peterroelants/wiki_search_trace_tree.html

Created September 24, 2023 11:05
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Wikipedia search agent tracing visualisation.
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wiki_search_trace_tree.html
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<html>
<head>
<style>.tree {
position: relative;
}
/* Define variables used in tree-node */
:root {
--indent: 1em;
--border-width: 2px;
--non-hover-grey: #eee;
--hover-grey: #ddd;
--icon_expand: url("data:image/svg+xml,%3Csvg version='1.1' id='Layer_1' xmlns='http://www.w3.org/2000/svg' x='0' y='0' viewBox='0 0 28.35 28.35' style='enable-background:new 0 0 28.35 28.35' xml:space='preserve'%3E%3Cstyle%3E .st0%7Bfill:%23fff%7D %3C/style%3E%3Cpath id='Plus_White' d='M22.73 14.16c0 .82-.68 1.5-1.5 1.5h-5.54v5.54c0 .82-.68 1.5-1.5 1.5-.84 0-1.5-.68-1.5-1.5v-5.54H7.14c-.84 0-1.5-.68-1.5-1.5 0-.84.66-1.5 1.5-1.5h5.54V7.12c0-.84.66-1.5 1.5-1.5.82 0 1.5.66 1.5 1.5v5.54h5.54c.83 0 1.51.66 1.51 1.5zm5.62-11.3v22.63a2.86 2.86 0 0 1-2.86 2.86H2.86A2.86 2.86 0 0 1 0 25.49V2.86A2.86 2.86 0 0 1 2.86 0h22.63a2.86 2.86 0 0 1 2.86 2.86zm-2.4 1.64a2.1 2.1 0 0 0-2.1-2.1H4.5c-1.16 0-2.08.94-2.08 2.1v19.34c0 1.16.92 2.08 2.08 2.08h19.34c1.16 0 2.1-.92 2.1-2.08V4.5zm-4.73 8.16h-5.54V7.12c0-.84-.68-1.5-1.5-1.5-.84 0-1.5.66-1.5 1.5v5.54H7.14c-.84 0-1.5.66-1.5 1.5 0 .82.66 1.5 1.5 1.5h5.54v5.54c0 .82.66 1.5 1.5 1.5.82 0 1.5-.68 1.5-1.5v-5.54h5.54c.82 0 1.5-.68 1.5-1.5.01-.84-.67-1.5-1.5-1.5zm0 0h-5.54V7.12c0-.84-.68-1.5-1.5-1.5-.84 0-1.5.66-1.5 1.5v5.54H7.14c-.84 0-1.5.66-1.5 1.5 0 .82.66 1.5 1.5 1.5h5.54v5.54c0 .82.66 1.5 1.5 1.5.82 0 1.5-.68 1.5-1.5v-5.54h5.54c.82 0 1.5-.68 1.5-1.5.01-.84-.67-1.5-1.5-1.5z'/%3E%3C/svg%3E%0A");
--icon_expand_hover: url("data:image/svg+xml,%3Csvg version='1.1' id='Layer_1' xmlns='http://www.w3.org/2000/svg' x='0' y='0' viewBox='0 0 28.35 28.35' style='enable-background:new 0 0 28.35 28.35' xml:space='preserve'%3E%3Cstyle%3E .st0%7Bfill:%23fff%7D %3C/style%3E%3Cpath id='Plus_Black' d='M25.48 0H2.86A2.86 2.86 0 0 0 0 2.86v22.63a2.86 2.86 0 0 0 2.86 2.86h22.63a2.86 2.86 0 0 0 2.86-2.86V2.86A2.874 2.874 0 0 0 25.48 0zm-4.26 15.66h-5.54v5.54c0 .82-.68 1.5-1.5 1.5-.84 0-1.5-.68-1.5-1.5v-5.54H7.14c-.84 0-1.5-.68-1.5-1.5s.66-1.5 1.5-1.5h5.54V7.12c0-.82.66-1.5 1.5-1.5.82 0 1.5.68 1.5 1.5v5.54h5.54c.82 0 1.5.68 1.5 1.5s-.68 1.5-1.5 1.5z'/%3E%3C/svg%3E%0A");
--icon_collapse: url("data:image/svg+xml,%3Csvg version='1.1' id='Layer_1' xmlns='http://www.w3.org/2000/svg' x='0' y='0' viewBox='0 0 28.35 28.35' style='enable-background:new 0 0 28.35 28.35' xml:space='preserve'%3E%3Cstyle%3E .st0%7Bfill:%23fff%7D %3C/style%3E%3Cpath id='Minus_Black_00000010292228966354165790000011481895238573070755_' d='M22.71 14.16c0 .82-.66 1.5-1.5 1.5H7.14c-.84 0-1.5-.68-1.5-1.5 0-.84.66-1.5 1.5-1.5H21.2c.85 0 1.51.66 1.51 1.5zm5.64-11.3v22.63a2.86 2.86 0 0 1-2.86 2.86H2.86A2.86 2.86 0 0 1 0 25.49V2.86A2.86 2.86 0 0 1 2.86 0h22.63a2.86 2.86 0 0 1 2.86 2.86zM25.93 4.5c0-1.16-.92-2.1-2.08-2.1H4.5a2.1 2.1 0 0 0-2.1 2.1v19.34c0 1.16.94 2.08 2.1 2.08h19.34c1.16 0 2.08-.92 2.08-2.08V4.5z'/%3E%3C/svg%3E%0A");
--icon_collapse_hover: url("data:image/svg+xml,%3Csvg version='1.1' id='Layer_1' xmlns='http://www.w3.org/2000/svg' x='0' y='0' viewBox='0 0 28.35 28.35' style='enable-background:new 0 0 28.35 28.35' xml:space='preserve'%3E%3Cstyle%3E .st0%7Bfill:%23fff%7D %3C/style%3E%3Cpath id='Minus_Black_00000084489819287380944260000013642984634899850914_' d='M25.49 0H2.86A2.86 2.86 0 0 0 0 2.86v22.63a2.86 2.86 0 0 0 2.86 2.86h22.63a2.86 2.86 0 0 0 2.86-2.86V2.86A2.86 2.86 0 0 0 25.49 0zm-4.28 15.66H7.14c-.84 0-1.5-.68-1.5-1.5s.66-1.5 1.5-1.5H21.2c.84 0 1.5.68 1.5 1.5.01.82-.65 1.5-1.49 1.5z'/%3E%3C/svg%3E%0A");
--icon_expand_all: url("data:image/svg+xml,%3Csvg version='1.1' id='Layer_1' xmlns='http://www.w3.org/2000/svg' x='0' y='0' viewBox='0 0 28.35 28.35' style='enable-background:new 0 0 28.35 28.35' xml:space='preserve'%3E%3Cstyle%3E .st0%7Bfill:%23fff%7D %3C/style%3E%3Cpath id='Plus_white_all' d='M25.49 0H2.86A2.86 2.86 0 0 0 0 2.86v22.63a2.86 2.86 0 0 0 2.86 2.86h22.63a2.86 2.86 0 0 0 2.86-2.86V2.86A2.86 2.86 0 0 0 25.49 0zm.44 23.85c0 1.16-.92 2.08-2.08 2.08H4.5c-1.16 0-2.1-.92-2.1-2.08V4.5c0-1.16.94-2.1 2.1-2.1h19.34c1.16 0 2.08.94 2.08 2.1v19.35zM20.66 5.72H10.22c-.74 0-1.32.58-1.32 1.32v2.5H7.68c-.74 0-1.32.58-1.32 1.32V21.3c0 .72.58 1.32 1.32 1.32h10.44c.72 0 1.32-.6 1.32-1.32v-2.5h1.22c.72 0 1.32-.6 1.32-1.32V7.04c0-.74-.6-1.32-1.32-1.32zm-2.34 5.88v8.94c0 .52-.42.96-.96.96H8.44a.96.96 0 0 1-.96-.96V11.6c0-.52.42-.96.96-.96h8.92c.52 0 .94.42.96.92v.04zm2.54 5.12c0 .54-.42.96-.96.96h-.46v-6.82c0-.74-.6-1.32-1.32-1.32h-1.98V9c0-.38-.32-.68-.7-.68-.38 0-.7.3-.7.68v.54h-4.72V7.8c0-.54.42-.98.96-.98h8.92c.54 0 .96.44.96.98v8.92zm-4.02-.66c0 .38-.32.7-.7.7H13.6v2.56c0 .38-.32.68-.7.68-.38 0-.7-.3-.7-.68v-2.56H9.64c-.38 0-.68-.32-.68-.7 0-.38.3-.68.68-.68h2.56v-2.56c0-.38.32-.7.7-.7.38 0 .7.32.7.7v2.56h2.54c.38 0 .7.3.7.68z'/%3E%3C/svg%3E%0A");
--icon_expand_all_hover: url("data:image/svg+xml,%3Csvg xmlns='http://www.w3.org/2000/svg' viewBox='0 0 28.35 28.35' style='enable-background:new 0 0 28.35 28.35' xml:space='preserve'%3E%3Cpath d='M28.34 2.86v22.63a2.86 2.86 0 0 1-2.86 2.86H2.86A2.86 2.86 0 0 1 0 25.49V2.86A2.86 2.86 0 0 1 2.86 0h22.63c1.57 0 2.85 1.28 2.85 2.86z'/%3E%3Cpath d='M20.67 5.72H10.22c-.74 0-1.32.58-1.32 1.32v2.5H7.68c-.74 0-1.32.58-1.32 1.32V21.3c0 .72.58 1.32 1.32 1.32h10.44c.72 0 1.32-.6 1.32-1.32v-2.5h1.22c.72 0 1.32-.6 1.32-1.32V7.04c.01-.74-.59-1.32-1.31-1.32zm-2.34 5.88v8.94c0 .52-.42.96-.96.96H8.44a.96.96 0 0 1-.96-.96V11.6c0-.52.42-.96.96-.96h8.92c.52 0 .94.42.96.92.01.02.01.02.01.04zm2.54 5.12c0 .54-.42.96-.96.96h-.46v-6.82c0-.74-.6-1.32-1.32-1.32h-1.98V9c0-.38-.32-.68-.7-.68-.38 0-.7.3-.7.68v.54h-4.72V7.8c0-.54.42-.98.96-.98h8.92c.54 0 .96.44.96.98v8.92zm-4.02-.66c0 .38-.32.7-.7.7H13.6v2.56c0 .38-.32.68-.7.68-.38 0-.7-.3-.7-.68v-2.56H9.64c-.38 0-.68-.32-.68-.7 0-.38.3-.68.68-.68h2.56v-2.56c0-.38.32-.7.7-.7.38 0 .7.32.7.7v2.56h2.54c.39 0 .71.3.71.68z' style='fill:%23fff'/%3E%3C/svg%3E%0A");
--icon_collapse_all: url("data:image/svg+xml,%3Csvg version='1.1' id='Layer_1' xmlns='http://www.w3.org/2000/svg' x='0' y='0' viewBox='0 0 28.35 28.35' style='enable-background:new 0 0 28.35 28.35' xml:space='preserve'%3E%3Cstyle%3E .st0%7Bfill:%23fff%7D %3C/style%3E%3Cpath id='Minus_White_All' d='M20.66 5.72H10.22c-.74 0-1.32.58-1.32 1.32v2.5H7.68c-.74 0-1.32.58-1.32 1.32V21.3c0 .72.58 1.32 1.32 1.32h10.44c.72 0 1.32-.6 1.32-1.32v-2.5h1.22c.72 0 1.32-.6 1.32-1.32V7.04c0-.74-.6-1.32-1.32-1.32zm-2.34 5.88v8.94c0 .52-.42.96-.96.96H8.44a.96.96 0 0 1-.96-.96V11.6c0-.52.42-.96.96-.96h8.92c.52 0 .94.42.96.92v.04zm2.54 5.12c0 .54-.42.96-.96.96h-.46v-6.82c0-.74-.6-1.32-1.32-1.32h-8.1V7.8c0-.54.42-.98.96-.98h8.92c.54 0 .96.44.96.98v8.92zm-4-.65c0 .38-.31.69-.69.69H9.66c-.39 0-.69-.31-.69-.69 0-.39.31-.69.69-.69h6.51c.38-.01.69.3.69.69zM25.49 0H2.86A2.86 2.86 0 0 0 0 2.86v22.63a2.86 2.86 0 0 0 2.86 2.86h22.63a2.86 2.86 0 0 0 2.86-2.86V2.86A2.86 2.86 0 0 0 25.49 0zm.44 23.85c0 1.16-.92 2.08-2.08 2.08H4.5c-1.16 0-2.1-.92-2.1-2.08V4.5c0-1.16.94-2.1 2.1-2.1h19.34c1.16 0 2.08.94 2.08 2.1v19.35z'/%3E%3C/svg%3E%0A");
--icon_collapse_all_hover: url("data:image/svg+xml,%3Csvg xmlns='http://www.w3.org/2000/svg' viewBox='0 0 28.35 28.35' style='enable-background:new 0 0 28.35 28.35' xml:space='preserve'%3E%3Cpath d='M28.34 2.86v22.63a2.86 2.86 0 0 1-2.86 2.86H2.86A2.86 2.86 0 0 1 0 25.49V2.86A2.86 2.86 0 0 1 2.86 0h22.63c1.57 0 2.85 1.28 2.85 2.86z'/%3E%3Cpath d='M20.67 5.72H10.22c-.74 0-1.32.58-1.32 1.32v2.5H7.68c-.74 0-1.32.58-1.32 1.32V21.3c0 .72.58 1.32 1.32 1.32h10.44c.72 0 1.32-.6 1.32-1.32v-2.5h1.22c.72 0 1.32-.6 1.32-1.32V7.04c.01-.74-.59-1.32-1.31-1.32zm-2.34 5.88v8.94c0 .52-.42.96-.96.96H8.44a.96.96 0 0 1-.96-.96V11.6c0-.52.42-.96.96-.96h8.92c.52 0 .94.42.96.92.01.02.01.02.01.04zm2.54 5.12c0 .54-.42.96-.96.96h-.46v-6.82c0-.74-.6-1.32-1.32-1.32h-8.1V7.8c0-.54.42-.98.96-.98h8.92c.54 0 .96.44.96.98v8.92zm-4.01-.65c0 .38-.31.69-.69.69H9.66c-.39 0-.69-.31-.69-.69 0-.39.31-.69.69-.69h6.51c.38-.01.69.3.69.69z' style='fill:%23fff'/%3E%3C/svg%3E%0A");
}
/* No left margin for root node */
.tree > .tree-node {
margin-left: 0em;
}
.tree-node {
display: block;
color: #000;
margin: 0 auto 0.5em 0;
padding: 0 0 0 0;
border-top: var(--border-width) solid var(--non-hover-grey);
border-left: var(--border-width) solid var(--non-hover-grey);
border-bottom: var(--border-width) solid var(--non-hover-grey);
/* make content align with indent of summary */
&> .tree-node-body {
display: block;
margin: 0 auto 0 var(--indent);
position: relative;
}
&> .tree-node-header {
display: block;
background: var(--non-hover-grey);
padding: 0.25em 0 0.1em 0.5em;
margin: 0 auto 0 0;
}
/* Hover effect on full tree branch up until hovered node */
&:hover {
border-top: var(--border-width) solid var(--hover-grey);
border-left: var(--border-width) solid var(--hover-grey);
border-bottom: var(--border-width) solid var(--hover-grey);
}
/* Hover effect only on hovered node */
&:hover:not(:has(.tree-node:hover)) > .tree-node-header {
background: var(--hover-grey);
}
/* Expand/Collaps icons on nodes that have children */
&:has(.tree-node) {
&> .tree-node-header > .button-collapse-node {
right: .5em;
margin: 0em 0.5em 0em 0em;
padding: 0 0 0 0.0;
border: 0;
width: 1em;
height: 1em;
cursor: pointer;
box-sizing: border-box;
font-size: inherit;
}
&> .tree-node-header > .button-collapse-all {
right: .5em;
margin: 0em 0.5em 0em 0.5em;
padding: 0 0 0 0.0;
border: 0;
width: 1em;
height: 1em;
cursor: pointer;
box-sizing: border-box;
font-size: inherit;
float: right;
}
/* Node expanded */
&:not(.tree-node-collapsed) {
/* Collapse Icons */
&> .tree-node-header {
&> .button-collapse-node {
background: var(--icon_collapse) no-repeat;
}
&> .button-collapse-node:hover {
background: var(--icon_collapse_hover) no-repeat;
}
&> .button-collapse-all {
background: var(--icon_collapse_all) no-repeat;
}
&> .button-collapse-all:hover {
background: var(--icon_collapse_all_hover) no-repeat;
}
}
}
/* Node collapsed */
&.tree-node-collapsed {
&> .tree-node-body {
display: none;
}
/* Expand icons */
&> .tree-node-header {
&> .button-collapse-node {
background: var(--icon_expand) no-repeat;
}
&> .button-collapse-node:hover {
background: var(--icon_expand_hover) no-repeat;
}
&> .button-collapse-all {
background: var(--icon_expand_all) no-repeat;
}
&> .button-collapse-all:hover {
background: var(--icon_expand_all_hover) no-repeat;
}
}
}
}
}
/* JSON Data formatting */
.json-string {
display: inline;
font-family: monospace;
white-space: pre-wrap;
}
.json-key {
font-weight: bold;
color: black !important;
}
.json-separator {
font-weight: bold;
color: black !important;
}
.json-value {
color: black !important;
}
</style>
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"content": "In the United States, the debt ceiling or debt limit is a legislative limit on the amount of national debt that can be incurred by the U.S. Treasury, thus limiting how much money the federal government may pay by borrowing more money, on the debt it already borrowed. The debt ceiling is an aggregate figure that applies to gross debt, which includes debt in the hands of the public and intra-government accounts. About 0.5 percent of the debt is not covered by the ceiling (as of 10/2013). Because expenditures are authorized by separate legislation, the debt ceiling does not directly limit government deficits. In effect, it can only restrain the Treasury from paying for expenditures and other financial obligations after the limit has been reached, but which have already been approved (in the budget) and appropriated.\nThere is a debate among legal scholars regarding the constitutionality of the debt ceiling. Some scholars argue that the debt ceiling does not provide the legal authority for the United States to default on its debt. Some also argue that the debt ceiling itself is unconstitutional since it does not provide a clear mechanism for the government to meet its constitutional obligation to repay its debts once it meets the borrowing limit.When the debt ceiling is reached without an increase in the limit having been enacted, Treasury will need to resort to \"extraordinary measures\" to temporarily finance government expenditures and obligations until a resolution can be reached. The Treasury has never reached the point of exhausting extraordinary measures, resulting in a constitutionally questionable default, although, on some occasions, it appeared that Congress might allow a default to take place. If this situation were to occur, it is unclear whether the Treasury would be able to prioritize debt payments to avoid a default on its bond obligations. A protracted default could trigger a variety of economic problems including a financial crisis, and a decline in output that would put the country into an economic recession.Management of the United States public debt is an important part of the macroeconomics of the United States economy and finance system, and the debt ceiling is designed to be a constraint on the executive's ability to manage the U.S. economy. There is debate, however, on how the U.S. economy should be managed, and whether a debt ceiling is an appropriate or constitutional mechanism for restraining government spending.The most recent time that the debt ceiling was raised was on June 3, 2023, when U.S. president Joe Biden signed the Fiscal Responsibility Act of 2023 into law ending the 2023 United States debt-ceiling crisis that began on January 19, 2023. The debt limit extends into 2025. Previously, in December 2021, the debt ceiling was raised when it was increased by $2.5 trillion, to $31.381 trillion, which lasted until January 2023.\n\n\n== Background ==\nUnder Article I Section 8 of the United States Constitution, only Congress can authorize the borrowing of money on the credit of the United States. From the founding of the U.S. until 1917, Congress directly authorized each debt issued. To provide more flexibility to finance the United States' involvement in World War I, Congress modified the method by which it authorized debt in the Second Liberty Bond Act of 1917. Under this Act, Congress established an aggregate limit, or \"ceiling,\" on the total amount of new bonds that could be issued.\nThe present debt ceiling is an aggregate limit applied to nearly all federal debt, which was substantially established by the Public Debt Acts of 1939 and 1941 which have subsequently been amended to change the ceiling amount.\nFrom time to time, political disputes arise when the Treasury advises Congress that the debt ceiling is about to be reached and indicates that a default is imminent. When the debt ceiling is reached, and pending an increase in the limit, Treasury may resort to \"extraordinary measures\" to buy more time before the ceiling can be raised by Congress. The U.S. has never reached the point of default where the Treasury was incapable of paying U.S. debt obligations, though it has been close on several occasions. The only exception was during the War of 1812 when parts of Washington D.C. including the Treasury were burned.In 2011, the U.S. reached a crisis point of near default on public debt. The delay in raising the debt ceiling resulted in the first downgrade in the United States credit rating, a sharp drop in the stock market, and an increase in borrowing costs. Congress raised the debt limit with the Budget Control Act of 2011, which added to the fiscal cliff when the new ceiling was reached on December 31, 2012.\n\n\n== Relationship to federal budget ==\nThe process of setting the debt ceiling is separate and distinct from the United States budget process, and raising the debt ceiling neither directly increases nor decreases the budget deficit, and vice versa. The Government Accountability Office explains, \"the debt limit does not control or limit the ability of the federal government to run deficits or incur obligations. Rather, it is a limit on the ability to pay obligations already incurred.\"The President formulates a federal budget every year, which Congress must pass, sometimes with amendments, in a concurrent resolution, which does not require the President's signature and is not binding. The budget details projected tax collections and expenditures and, therefore, specifies the estimated amount of borrowing the government would have to do in that fiscal year.\n\n\n=== Debt not covered by ceiling ===\nIn December 2012, the Treasury calculated that $239 million in United States Notes were in circulation, which in accordance with the debt ceiling legislation, are excluded from the statutory debt limit. The $239 million excludes $25 million in U.S. Notes issued prior to July 1, 1929, determined pursuant to Act of June 30, 1961, 31 U.S.C. 5119, to have been destroyed or irretrievably lost.Debts of the Federal Financing Bank are not debts of the government per se and therefore are also not subject to the ceiling, but have a separate limit of $15 billion.\n\n\n== Legislative history ==\n\nBefore 1917, the U.S. had no debt ceiling. Congress either authorized specific loans or allowed the Treasury to issue certain debt instruments and individual debt issues for specific purposes. Sometimes Congress gave the Treasury discretion over what type of debt instrument would be issued. 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.In 1953, the U.S. Treasury risked reaching the debt ceiling of $275 billion. Though President Eisenhower requested that Congress increase it on July 30, 1953, the Senate refused to act on it. As a result, the president asked federal agencies to reduce how much they spent, plus the Treasury Department used its cash balances with banks to stay under the debt ceiling. And, starting in November 1953, Treasury monetized close to $1 billion of gold left over in its vaults, which helped keep it from exceeding the $275 billion limit. During spring and summer 1954, the Senate and the executive branch negotiated on a debt ceiling increase, and a $6 billion one was passed on August 28, 1954.Before the Budget and Impoundment Control Act of 1974, the debt ceiling played an important role in enabling Congress to hold hearings and debates on the budget. James Surowiecki argued that the debt ceiling lost its usefulness after these reforms to the budget process.In 1979, noting the potential problems of hitting a default, Dick Gephardt imposed the \"Gephardt Rule,\" a parliamentary rule that deemed the debt ceiling was 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-controlled Congress in 1995.A vote to increase the debt ceiling has usually been (since the 1950s) a legal budgetary formality between the President and Congress. As of 1993 the debt ceiling had not historically been a political issue that would make the elected government fail to pass a yearly budget.\n\n\n=== Debt ceiling increases under Presidents Ronald Reagan and George H. W. Bush ===\nUnder the two terms of President Ronald Reagan, the House was controlled by Democrats, and the Senate was, at various points, under the control of both parties. Early in his term, Reagan faced some bipartisan resistance from Congress for a 1981 raising of the debt limit. But Democrats, using the Gephardt Rule, joined with Republicans to increase the debt ceiling eighteen separate times.Under President George H.W. Bush, Democrats controlled both the House and Senate. Again using the Gephardt Rule, Congress increased the debt ceiling nine times without controversy.\n\n\n=== Debt ceiling increases under President Bill Clinton ===\n\nThe debt-ceiling debate of 1995 led to a showdown on the federal budget and resulted in the U.S. federal government shutdowns of 1995 and 1996.\n\n\n=== Debt ceiling increases under President George W. Bush ===\nWhile George W. Bush was President, both Republicans and Democrats controlled the House and the Senate at various points during his term. Congress increased the debt ceiling eight times in 2002, 2003, 2004, 2006, 2007, and twice in 2008.When Republicans were in the majority, they consistently voted to increase the debt ceiling. While some Democrats did vote against the debt ceiling when the process was controlled by a Republican majority, Democrats did not filibuster debt limit increases in 2003, 2004 and 2006, allowing Senate Republicans to raise the debt limit with a simple majority.When Democrats controlled the House and the Senate in the last two years of George W. Bush's term, Democratic majorities in the House and the Senate reinstated the automatic Gephardt Rule and increased the debt ceiling three times without attaching preconditions.\n\n\n=== Debt ceiling increases under President Barack Obama ===\n\nIn 2011, Republicans took control of Congress and again suspended the Gephardt Rule as they had under Clinton. The Republican majority in Congress demanded deficit reduction as part of raising the debt ceiling. The resulting contention was resolved on August 2, 2011, by the Budget Control Act of 2011. Under the \"McConnell Rule,\" the president was allowed to unilaterally raise the debt ceiling. This action could be overturned by an act of Congress, but this would require a 2\u20443 majority vote in both houses assuming that the president vetoed the act.On August 5, 2011, Standard &amp; Poors issued the first ever downgrade in the federal government's credit rating, citing their April warnings, the difficulty of bridging the parties and that the resulting agreement fell well short of the hoped-for comprehensive 'grand bargain'. The credit downgrade and debt ceiling debacle contributed to the Dow Jones Industrial Average (DJIA) falling nearly 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.Following the increase in the debt ceiling to $16.394 trillion in 2011, the U.S. 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. Extraordinary measures were expected to be exhausted by February 15.Another debt ceiling crisis arose in early 2013 when the ceiling was reached again, and the Treasury adopted extraordinary measures to avoid a default. The Treasury said it was not set up to prioritize payments and had given the opinion that it is unclear whether 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 was not raised. Economists estimated that such an action would cause GDP to contract by 7 percent, which is larger than the contraction during 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 the freeze in their revenue.The 2013 crisis was temporarily resolved on February 4, 2013, when President Barack Obama signed the No Budget, No Pay Act of 2013 which suspended the debt ceiling 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. During the suspension period, the Treasury was authorized to borrow to the extent that it \"is required to meet existing commitments\". On May 19, the debt ceiling was raised by $306 billion to cover the borrowings done during the suspension period, as well as commitments that accrued in the preceding period that extraordinary measures were in place, which commenced on December 31, 2012.Treasury Secretary Jack Lew notified Congress that these measures would be exhausted by October 17, 2013 and that a default would occur on October 17 when interest payments came due. From October 17, 2013 until February 7, 2014, the debt ceiling was again suspended. On February 12, 2014, the Temporary Debt Limit Extension Act was passed, suspending the debt ceiling until March 15, 2015. At that time, the Treasury Department took extraordinary measures.The debt ceiling would again have been reached on November 3, 2015. But on October 30, 2015, the debt ceiling was again suspended to March 2017.\n\n\n=== Debt ceiling increases under President Donald Trump ===\nWhen Donald Trump was President, the debt ceiling was subject to less partisan controversy. The administration and the Republicans who controlled the House and the Senate prioritized tax cuts over a balanced budget.\nThe ceiling was suspended three times: from September 30, 2017, to December 8, 2017; from December 8, 2017 to March 1, 2019; and, after concerns were raised from Treasury in July 2019 of an unexpected shortfall due to reduced tax receipts under Trump's tax legislation, from August 2, 2019 to July 31, 2021.Congress did not impose any preconditions or significant spending cuts. Democrats in the Senate could have threatened to stop the debt ceiling increase by use of the filibuster but declined to do so.\n\n\n=== Debt ceiling increases under President Joe Biden ===\n\nDuring Biden's first two years as president, the House and Senate were both controlled by the Democratic Party. In October 2021, the debt ceiling was increased by $480 billion, as a temporary measure requiring fresh legislation by December 3, 2021. That month, Congress voted to increase it by $2.5 trillion, which President Biden signed into effect on December 16, 2021. At that point, it was set at about $31.4 trillion.On January 19, 2023, the United States hit its debt ceiling of $31.4 trillion. By this time, Republicans had taken control of the House during the 2022 midterm elections. Although Republicans were a minority in the Senate, they threatened for the first time in American history to use the filibuster to stop the debt ceiling increase. The crisis was resolved by negotiation of the Fiscal Responsibility Act of 2023.\n\n\n== Extraordinary measures ==\nThe Treasury Department is permitted to borrow funds needed to fund government operations, as had been authorized by congressional appropriations, up to the debt ceiling, with some small exceptions. In a letter to Congress on April 4, 2011, Treasury Secretary Timothy Geithner explained that when the debt ceiling is reached, the Treasury can declare a \"debt issuance suspension period\" during which it can take \"extraordinary measures\" to continue meeting federal obligations provided that it does not involve the issue of new debt. These measures are taken to avoid, as far as resources permit, a partial government shutdown or a default on the debt. These methods have been used on several previous occasions in which federal debt neared its statutory limit.Extraordinary measures can include suspending investments in the G Fund of the Thrift Savings Plan of individual retirement funds of federal employees. In 2011, extraordinary measures included suspending investments in the Civil Service Retirement and Disability Fund (CSRDF), the Postal Service Retiree Health Benefits Fund (Postal Benefits Fund), and the Exchange Stabilization Fund (ESF). In addition, certain CSRDF investments were also redeemed early. In 1985, the Treasury had also exchanged Treasury securities for non-Treasury securities held by the Federal Financing Bank.However, these amounts are not sufficient to cover government operations for extended periods. Treasury first implemented these measures on December 16, 2009, to avoid a government shutdown. These measures were implemented again on May 16, 2011, when Treasury Secretary Geithner declared a \"debt issuance suspension period\". According to his letter to Congress, this period could \"last until August 2, 2011, when the Department of the Treasury projects that the borrowing authority of the United States will be exhausted\".The measures were again implemented on December 31, 2012, the start of the debt ceiling crisis of 2013 with the default trigger date ticking to February 2013. The crisis was deferred with the suspension of the limit on February 4, and the cancellation of the extraordinary measures. The measures were again invoked at the end of the ceiling's suspension on May 19, 2013, with the date of exhaustion of the resources and the default trigger date being estimated by the Treasury as October 17. The ceiling was again suspended by legislation on that date until February 4, 2014.\n\n\n== Default on financial obligations ==\nAccording to the text of the debt ceiling law, if the debt ceiling is not raised and extraordinary measures are exhausted, the U.S. government is legally unable to borrow money to pay its financial obligations. At that point, the law indicates that the government must cease making payments unless the treasury has cash on hand to cover them. In addition, the law indicates that the government would not have the resources to pay the interest on (and some time redeem) government securities when due, which would be characterized as a default. A default may affect the United States' sovereign risk rating and the interest rate that it will be required to pay on future debt. As of 2012, the U.S. defaulted on its financial obligations once in 1979, due to a computer backlog, but the periodic crises relating to the debt ceiling have led several rating agencies to United States federal government credit-rating downgrades. As of 2012, the GAO estimated that the delay in raising the debt ceiling during the debt ceiling crisis of 2011 raised borrowing costs for the government by $1.3 billion in the fiscal year 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.As of 2012, some writers expressed the view that if extraordinary measures are exhausted, the executive branch has the authority to determine which obligations are paid and which are not, though the Treasury has argued that all obligations are on equal footing under the law. The writers have argued that the executive branch can choose to prioritize interest payments on bonds, which would avoid an immediate, direct default on sovereign debt. During the debt ceiling crisis of 2011, Treasury Secretary Timothy Geitner argued that prioritization of interest payments would not help since government expenditures would have needed to be cut by an unrealistic 40% if the debt ceiling is not raised. Also, a default on non-debt obligations would still undermine American creditworthiness according to at least one rating agency. In 2011, the Treasury suggested that it could not prioritize certain types of expenditures because all expenditures are on equal footing under the law. In this view, when extraordinary measures are exhausted, no payments could be made except when money (such as tax receipts) is in the treasury, at all and the U.S. would be in default on all of its obligations. The CBO notes, that prioritization would not avoid the technical definition found in Black's Law Dictionary where default is defined as \u201cthe failure to make a payment when due.\u201dMany scholars argue that debt ceiling law is unconstitutional and there is no legal basis by which the U.S. government may default on any of its debt. They point to Section Four of the 14th Amendment of the United States Constitution, which states that \"the validity of the public debt of the United States...shall not be questioned.\" They argue that it was unconstitutional for the U.S. Congress to pass the debt ceiling law in the first place, since the law does not provide a clear way for the U.S. to pay its debts and implicitly requires a default. Harvard University legal scholar Laurence Tribe argues that \"using the ceiling to make us default on our debts clearly would be unconstitutional.\" This argument has also been endorsed by various politicians, including President Bill Clinton, former labor secretary Robert Reich, Representative Jerry Nadler, and Representative James Clyburn. In 2023, a group of lawmakers from the Senate and House of Representatives sent a letter to President Biden encouraging him to consider invoking the 14th Amendment to pay government debts. However, there are scholars who argue that even if the law itself is unconstitutional, that determination must be made by the courts and the President does not have the authority to unilaterally ignore the debt ceiling law. In practice, the administrations of Presidents Barack Obama and Joe Biden have rejected relying on legal arguments against the constitutionality of the debt ceiling. Obama said in 2011 that his lawyers \"were not persuaded that that is a winning argument.\" In 2023, Biden's Treasury Secretary Janet Yellen called this strategy \"legally questionable.\" Biden himself said \"I think we have the authority\" to invoke the 14th Amendment to pay government debts, suggesting that he would explore this question in the future, but he questioned the practicality of relying on this approach to defuse a debt ceiling standoff. In May 2023, the National Association of Government Employees filed a lawsuit in federal court alleging that the debt ceiling law is unconstitutional.\n\n\n== Debate on debt ceiling ==\nReports to Congress from the OMB and other sources in the 1990s have repeatedly stated that the debt limit is an ineffective means to restrain the growth of debt.In 2011, James Surowiecki argued that the debt ceiling originally served a useful purpose. When introduced, presidents had stronger authority to borrow and spend as they pleased. However, after 1974 the Congress began passing comprehensive budget resolutions which specified exactly how much money the government could spend.The apparent redundancy of the debt ceiling has led to suggestions that it should be abolished altogether. Several Democratic House members, including Peter Welch, proposed abolishing the debt ceiling. The proposal found support from some economists such as Jacob Funk Kirkegaard, a senior fellow at the Peterson Institute for International Economics.\nIn January 2013, a survey of 38 highly regarded economists found that 84 percent agreed that, since Congress already approves spending and taxation, \"a separate debt ceiling that has to be increased periodically creates unneeded uncertainty and can potentially lead to worse fiscal outcomes.\" Only one member of the panel, Luigi Zingales, disagreed with the statement. Rating agency Moody's has stated that \"the debt limit creates a high level of uncertainty\" and that the government should change \"its framework for managing government debt to lessen or eliminate that uncertainty\".In 2021, the U.S. debt ceiling has been described as \"anachronistic\", with the two major parties criticized for utilizing the debt ceiling to play a dangerous game of chicken for purely partisan political purposes.\n\n\n=== Modern Monetary Theory ===\nProponents of Modern Monetary Theory (MMT), a heterodox, post-Keynesian economic theory which arose in the late 20th century, have critiqued the concept of the debt ceiling and its theoretical and practical uses. A core tenet of MMT is that currency arose from and is wholly controlled as fiat money by governments, the latter claim is dependent on the government as the sovereign issuer of the given currency. As of 2019, MMT theorists believed that governments have the power to create and spend money within a limit of reason without creating hyperinflation, as well as the ability to forgive its debt or repay itself; in contrast, as of 2020, orthodox economic theorists tended to focus on national deficit as a debt that needs to be repaid eventually. As a result, MMT theorists argue the debt ceiling is largely a symbolic limit on government spending; in 2020 Stephanie Kelton, a prominent supporter of MMT, wrote that \"there are no constraints on the federal budget.\"After the turn of the 20th century, and particularly during and since the Great Recession (2007-2009) political landscape, MMT has been the subject of political debate between post-Keynsian, mainstream, and free-market economic theorists and politicians alike. As of 2019, MMT debates on the debt ceiling have pervaded Congress, with progressive representatives, prominently Alexandria Ocasio-Cortez, boosting the theory to the mainstream, while conservative representatives have been critiquing MMT's potential impacts on government spending and inflation.As of January 2023 Treasury Secretary Janet Yellen supported legislation to abolish the debt limit, which President Biden has ruled out.\n\n\n== References ==\n\n\n== Sources ==\n\"Amerikanere kan l\u00e6re af dansk g\u00e6ldsloft\" (in Danish). DR Nyheder. August 3, 2011. Retrieved May 6, 2013.\n\"Analysis of 2011-2012 Actions Taken and Effect of Delayed Increase on Borrowing Costs\" (PDF). GAO. July 2012. Retrieved January 13, 2013.\nAustin, D. Andrew (August 9, 2017). The Debt Limit Since 2011 (PDF). Washington, DC: Congressional Research Service. Retrieved November 22, 2017.\nMurray, Justin (November 6, 2017). Votes on Measures to Adjust the Statutory Debt Limit, 1978 to Present (PDF). Washington, DC: Congressional Research Service. Retrieved November 22, 2017.\n\"Federal Debt and the Statutory Limit, November 2012\" (PDF). Congressional Budget Office. November 2012.\n\"Delays Create Debt Management Challenges and Increase Uncertainty in the Treasury Market\" (PDF). GAO-11-203. GAO. February 2011. Retrieved January 13, 2013.\nGreen, Joshua (May 9, 2011). \"How Dick Gephardt Fixed the Debt-Ceiling Problem\". The Atlantic.\nKowalcky, Linda W.; LeLoup, Lance T. (1993). \"Congress and the Politics of Statutory Debt Limitation\". Public Administration Review. 53 (1): 14. CiteSeerX 10.1.1.397.5755. doi:10.2307/977272. JSTOR 977272.\nLawder, David (June 29, 2011). \"Prioritizing debt payments won't work: Geithner\". Reuters.\nLevit, Mandy R.; Brass, Clinton T.; Nicola, Timothy J.; Nuschler, Dawn (January 4, 2013). \"Reaching the Debt Limit: Background and Potential Effects on Government Operations\" (PDF). Archived from the original (PDF) on January 23, 2013.\nMasters, Jonathan. \"U.S. Debt Ceiling: Costs and Consequences\". Renewing America. Council on Foreign Relations.\nSahadi, Jeanne (January 7, 2013). \"Debt Ceiling: 'Chaotic' choices on 100 million payments\". CNNMoney. Retrieved January 13, 2013.\nSahadi, Jeanne (May 17, 2013). \"Debt ceiling: Treasury starts juggling act\". CNNMoney. Archived from the original on June 7, 2013.\nSurowiecki, James (August 1, 2011). \"Smash the Ceiling\". The New Yorker.\nSweet, Ken (August 8, 2011). \"Dow plunges after S&amp;P downgrade\". CNNMoney.\nYglesias, Matthew (January 16, 2013). \"What if Congress Doesn't Raise the Debt Ceiling?\". Slate.\n\n\n== Further reading ==\nEisner, Robert (1993). \"Federal Debt\". In David R. Henderson (ed.). Concise Encyclopedia of Economics (1st ed.). Library of Economics and Liberty. OCLC 317650570, 50016270, 163149563\nGeorge J. Hall and Thomas J. Sargent. 2018. \"Brief history of US debt limits before 1939.\" PNAS March 20, 2018. 115 (12) 2942-2945",
"pageid": 31461654
},
{
"title": "History of the United States debt ceiling",
"content": "The history of the United States debt ceiling deals with movements in the United States debt ceiling since it was created in 1917. Management of the United States public debt is an important part of the macroeconomics of the United States economy and finance system, and the debt ceiling is a limitation on the federal government's ability to manage the economy and finance system. The debt ceiling is also a limitation on the federal government's ability to finance government operations, and the failure of Congress to authorize an increase in the debt ceiling has resulted in crises, especially in recent years. \n\n\n== Overview ==\nA statutorily imposed debt ceiling has been in effect since 1917 when the US Congress passed the Second Liberty Bond Act. Before 1917 there was no debt ceiling in force, but there were parliamentary procedural limitations on the amount of debt that could be issued by the government.\nExcept for about a year during 1835\u20131836, the United States has continuously had a fluctuating public debt since the US Constitution legally went into effect on March 4, 1789. Debts incurred during the American Revolutionary War and under the Articles of Confederation led to the first yearly report on the amount of the debt ($75,463,476.52 on January 1, 1791). The national debt, as expressed in absolute dollars, has increased under every presidential administration since Herbert Hoover.\n\n\n== Early history ==\nPrior to 1917, the United States did not have a debt ceiling, with Congress either authorizing specific loans or allowing the Treasury to issue certain debt instruments and individual debt issues for specific purposes. Sometimes Congress gave the Treasury discretion over what type of debt instrument would be issued.Between 1788 and 1917, Congress would authorize each bond issue by the United States Treasury by passing a legislative act that approved the issue and the amount.\nIn 1917, during World War I, Congress created the debt ceiling with the Second Liberty Bond Act of 1917, which allowed the Treasury to issue bonds and take on other debt without specific Congressional approval, as long as the total debt fell under the statutory debt ceiling. The 1917 legislation set limits on the aggregate amount of debt that could be accumulated through individual categories of debt (such as bonds and bills).\n\n\n=== Public Debt Acts ===\nIn 1939, Congress instituted the first limit on total accumulated debt over all kinds of instruments. The debt ceiling, in which an aggregate limit is applied to nearly all federal debt, was substantially established by Public Debt Acts passed in 1939 and 1941 and subsequently amended. The United States Public Debt Act of 1939 eliminated separate limits on different types of debt. The Public Debt Act of 1941 raised the aggregate debt limit on all obligations to $65 billion, and consolidated nearly all federal borrowing under the U.S. Treasury and eliminated the tax-exemption of interest and profit on government debt.Subsequent Public Debt Acts amended the aggregate debt limit: the 1942, 1943, 1944, and 1945 acts raised the limit to $125 billion, $210 billion, $260 billion, and $300 billion respectively. In 1946, the Public Debt Act was amended to reduce the debt limit to $275 billion. The limit stayed unchanged until 1954, the Korean War being financed through taxation. The U.S. Treasury nearly hit the debt ceiling in fall 1953, plus the Senate refused to raise it until summer 1954, but the federal government managed to avoid reaching it through using various measures, such as monetizing leftover gold.A feature of the Public Debt Acts, unlike the 1919 Victory Liberty Bond Act which financed American costs in the First World War, was that the new ceiling was set about 10% above the actual federal debt at the time.\n\n\n== 1970s ==\nPrior 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. James Surowiecki argued that the debt ceiling lost its usefulness after these reforms to the budget process.In 1979, noting the potential problems of hitting a default, Dick Gephardt (Rep, D-MO) 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 Congress in 1995.\n\n\n== Number of requests for increase ==\nDepending on who is doing the research, it is said that the US has raised its debt ceiling (in some form or other) at least 90 times in the 20th century.The debt ceiling was raised 74 times from March 1962 to May 2011, including 18 times under Ronald Reagan, eight times under Bill Clinton, and seven times under George W. Bush.\nCongress has raised the debt ceiling 14 times from 2001 to 2016. The debt ceiling was raised a total of 7 times (total increase of $5365bil) during Pres. Bush's eight-year term and it was raised 11 times (as of 03/2015 a total increase of $6498bil) during Pres. Obama's eight years in office.\n\n\n== 1995 debt ceiling crisis ==\n\nThe 1995 request for a debt ceiling increase led to debate in Congress on reduction of the size of the federal government, which led to the non-passage of the federal budget, and the United States federal government shutdown of 1995\u201396. The ceiling was eventually increased and the government shutdown resolved.\n\n\n== 2011 debt ceiling crisis ==\n\nIn 2011, Republicans in Congress used the debt ceiling as leverage for deficit reduction because of the lack of Congressional normal order for fiscal year budget votes on the chamber floors and subsequent conference reconciliations between the House and the Senate for final budgets. 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. The GAO estimated that the delay in raising the debt ceiling raised borrowing costs for the government by $1.3 billion (~$1.57 billion in 2021) 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.\n\n\n== 2013 debt ceiling crisis ==\n\nFollowing the increase in the debt ceiling to $16.394 trillion in 2011, 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. With the ATRA tax cuts, the government indicated that the debt ceiling needed to raise by $700 billion (~$814 billion in 2021) for it to continue financing operations for the rest of the 2013 fiscal year and that extraordinary measures were expected to be exhausted by February 15. 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, 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.The No Budget, No Pay Act of 2013 suspended the debt ceiling from February 4, 2013 until May 19, 2013. On May 19, the debt ceiling was formally raised to approximately $16.699 trillion to accommodate the borrowing done during the suspension period. However, after the end of the suspension, the ceiling was raised only to the actual debt at that time, and Treasury needed to activate extraordinary measures to avoid a default. With the impacts of the American Taxpayer Relief Act of 2012 tax increases on those who make $400,000 per year, the 2013 sequester, and a $60 billion payment from Fannie Mae and Freddie Mac that reached the Treasury on June 28, 2013, the extraordinary measures were predicted to last until October 17 by the Treasury, but financial firms suggested funds might have lasted a little longer. Jefferies Group said extraordinary measures might have lasted until the end of October while Credit Suisse estimated mid-November.The US Treasury began taking extraordinary measures to enable payments, and stated that it would delay payments if funds could not be raised through extraordinary measures, and the debt ceiling was not raised. During the crisis, approval ratings for the Republican Party declined.\n\n\n== 2021 debt ceiling crisis ==\nFollowing the July 2021 expiration of the debt ceiling suspension, the U.S. Treasury began taking \"extraordinary measures\" which were set to expire around October 18. Senate Republicans blocked attempts to raise the ceiling using the filibuster, insisting that Democrats should act on their own and use reconciliation to raise the limit. The Senate voted to raise it on October 7, 2021, but only to grant the U.S. Treasury authority to borrow money until that December. That month, Congress voted to increase it by $2.5 (~$2.5 trillion in 2021) trillion, which President Biden signed into effect on December 16, 2021. At that point, it was set at about $31.4 trillion.\n\n\n== 2023 debt ceiling crisis ==\n\nOn January 19, 2023, the United States again reached the debt ceiling.\nPresident Biden at first refused to negotiate, instead insisting on a clean debt ceiling raise. Many news outlets and pundits have talked about this leading to a significant risk that the US defaults on its obligations, though default is not the only possible outcome of the debt ceiling not being raised, the alternative being shutting down portions of government operations. The Treasury has, however, explicitly stated that this would be technically impossible. Many news outlets have also claimed that the federal government has not defaulted on financial obligations before, including President Biden calling such a situation \"unprecedented\", however a more accurate statement is that the US has defaulted on obgliations several times in history, but never because of the debt ceiling. These included late interest payments in 1814 due to the financial strain of the War of 1812 (the last time the US experienced a \u201cmajor default on its financial obligations\"), and briefly in 1979, due to technical glitches.\n\n\n== Historical debt ceiling levels ==\nNote that this table does not go back to 1917 when the debt ceiling started.\n\nReference for values between 1993 and 2015:Note that:\n\nThe figures are unadjusted for the time value of money, such as interest and inflation and the size of the economy that generated a debt.\nThe debt ceiling is an aggregate of gross debt, which includes debt in hands of public and in intragovernment accounts.\nThe debt ceiling does not necessarily reflect the level of actual debt.\nFrom March 15 to October 30, 2015 there was a de facto debt limit of $18.153 trillion, due to use of extraordinary measures.\n\n\n== Notes ==\n\n\n== References ==\n\n\n== Sources ==\n\"Amerikanere kan l\u00e6re af dansk g\u00e6ldsloft\". DR Nyheder. 3 August 2011. Retrieved 6 May 2013.\n\"Analysis of 2011-2012 Actions Taken and Effect of Delayed Increase on Borrowing Costs\" (PDF). GAO. July 2012. Retrieved 13 January 2013.\nAustin, D. Andrew (29 April 2008). \"The Debt Limit: History and Recent Increases\" (PDF). Congressional Research Service.\nAustin, D. Andrew; Levit, Mindy R. (27 December 2012). \"The Debt Limit: History and Recent Increases\" (PDF). Congressional Research Service.\nAustin, D. Andrew (5 June 2017). \"The Debt Limit Since 2011\" Congressional Research Service.\n\"Debt ceiling\". IGM Forum. Chicago Booth. 15 January 2013. Retrieved 19 January 2013.\n\"Federal Debt and the Statutory Limit, November 2012\" (PDF). Congressional Budget Office. November 2012.\n\"Debt Limit Analysis\" (PDF). Bipartisan Policy Center. 27 November 2012. Retrieved 13 January 2013.\n\"Delays Create Debt Management Challenges and Increase Uncertainty in the Treasury Market\" (PDF). GAO-11-203. GAO. February 2011. Retrieved 13 January 2013.\nGreen, Joshua (9 May 2011). \"How Dick Gephardt Fixed the Debt-Ceiling Problem\". The Atlantic.\nKowalcky, Linda W.; LeLoup, Lance T. (1993). \"Congress and the Politics of Statutory Debt Limitation\". Public Administration Review. 53 (1): 14. CiteSeerX 10.1.1.397.5755. doi:10.2307/977272. JSTOR 977272.\nLawder, David (29 June 2011). \"Prioritizing debt payments won't work: Geithner\". Reuters.\nLevit, Mandy R.; Brass, Clinton T.; Nicola, Timothy J.; Nuschler, Dawn. \"Reaching the Debt Limit: Background and Potential Effects on Government Operations\" (PDF).\nMasters, Jonathan. \"U.S. Debt Ceiling: Costs and Consequences\". Renewing America. Council on Foreign Relations. Archived from the original on 2013-09-08. Retrieved 2013-10-09.\nSahadi, Jeanne (7 January 2013). \"Debt Ceiling: 'Chaotic' choices on 100 million payments\". CNNMoney. Retrieved 13 January 2013.\nSurowiecki, James (1 August 2011). \"Smash the Ceiling\". The New Yorker.\nSweet, Ken (8 August 2011). \"Dow plunges after S&amp;P downgrade\". CNNMoney.\nYglesias, Matthew (16 January 2013). \"What if Congress Doesn't Raise the Debt Ceiling?\". Slate.\n\n\n== External links ==\nHistory and Recent Increases (2008)\nHistory and Recent Increases (2010)\nUS Treasury Debt to the Penny (Daily)\nEstimated Debt to the Penny (Real Time)",
"pageid": 32656127
},
{
"title": "2011 United States debt-ceiling crisis",
"content": "In 2011, ongoing political debate in the United States Congress about the appropriate level of government spending and its effect on the national debt and deficit reached a crisis centered on raising the debt ceiling, leading to the passage of the Budget Control Act of 2011.\nThe Republican Party, which gained control of the House of Representatives in January of 2011, demanded that President Obama negotiate over deficit reduction in exchange for an increase in the debt ceiling, the statutory maximum of money the Treasury is allowed to borrow. The debt ceiling had routinely been raised in the past without partisan debate or additional terms or conditions. This reflects the fact that the debt ceiling does not prescribe the amount of spending, but only ensures that the government can pay for the spending to which it has already committed itself. Some use the analogy of an individual \"paying their bills.\"\nIf the United States breached its debt ceiling and were unable to resort to other \"extraordinary measures\", the Treasury would have to either default on payments to bondholders or immediately curtail payment of funds owed to various companies and individuals that had been mandated but not fully funded by Congress. Both situations would likely have led to a significant international financial crisis.\nOn July 31, two days prior to when the Treasury estimated the borrowing authority of the United States would be exhausted, Republicans agreed to raise the debt ceiling in exchange for a complex deal of significant future spending cuts. The crisis did not permanently resolve the potential of future use of the debt ceiling in budgetary disputes, as shown by the subsequent crisis in 2013.\nThe crisis sparked the most volatile week for financial markets since the 2008 crisis, with the stock market trending significantly downward. Prices of government bonds (\"Treasuries\") rose as investors, anxious over the dismal prospects of the US economic future and the ongoing European sovereign-debt crisis, fled into the still-perceived relative safety of US government bonds. Later that week, the credit-rating agency Standard &amp; Poor's downgraded the credit rating of the United States government for the first time in the country's history, though the other two major credit-rating agencies, Moody's and Fitch, retained America's credit rating at AAA. The Government Accountability Office (GAO) estimated that the delay in raising the debt ceiling increased government borrowing costs by $1.3 billion in 2011 and also pointed to unestimated higher costs in later years. The Bipartisan Policy Center extended the GAO's estimates and found that delays in raising the debt ceiling would raise borrowing costs by $18.9 billion.\n\n\n== Context ==\nUnder US law, an administration can spend only if it has sufficient funds to pay for it. These funds can come either from tax receipts or from borrowing by the United States Department of the Treasury. Congress has set a debt ceiling, beyond which the Treasury cannot borrow (this is similar to a credit limit on a credit card). The debt limit does not restrict Congress's ability to enact spending and revenue legislation that affects the level of debt or otherwise constrains fiscal policy; it restricts Treasury's authority to borrow to finance the decisions already enacted by Congress and the President. Congress also usually votes on increasing the debt limit after fiscal policy decisions affecting federal borrowing have begun to take effect. In the absence of sufficient revenue, a failure to raise the debt ceiling would result in the administration being unable to fund all the spending which it is required to do by prior acts of Congress. At that point, the government must cancel or delay some spending, a situation sometimes referred to as a partial government shut down.\nIn addition, the Obama administration stated that, without this increase, the US would enter sovereign default (failure to pay the interest and/or principal of US treasury securities on time) thereby creating an international crisis in the financial markets. Alternatively, default could be averted if the government were to promptly reduce its other spending by about half.An increase in the debt ceiling requires the approval of both houses of Congress. Republicans and some Democrats insisted that an increase in the debt ceiling be coupled with a plan to reduce the growth in debt. There were differences as to how to reduce the expected increase in the debt. Initially, nearly all Republican legislators (who held a majority in the House of Representatives) opposed any increase in taxes and proposed large spending cuts. A large majority of Democratic legislators (who held a majority in the Senate) favored tax increases along with smaller spending cuts. Supporters of the Tea Party movement pushed their fellow Republicans to reject any agreement that failed to incorporate large and immediate spending cuts or a constitutional amendment requiring a balanced budget.\n\n\n== Background ==\n\n\n=== Debt ceiling ===\n\nIn the United States, the federal government can pay for expenditures only if Congress has approved the expenditure in an appropriation bill. If the proposed expenditure exceeds the revenues that have been collected, there is a deficit or shortfall, which can only be financed by the government, through the Department of the Treasury, borrowing the shortfall amount by the issue of debt instruments. Under federal law, the amount that the government can borrow is limited by the debt ceiling, which can only be increased with a separate vote by Congress.\nPrior to 1917, Congress directly authorized the amount of each borrowing. In 1917, in order to provide more flexibility to finance the US involvement in World War I, Congress instituted the concept of a \"debt ceiling\". Since then, the Treasury may borrow any amount needed as long as it keeps the total at or below the authorized ceiling. Some small special classes of debt are not included in this total. To change the debt ceiling, Congress must enact specific legislation, and the President must sign it into law.\nThe process of setting the debt ceiling is separate and distinct from the regular process of financing government operations, and raising the debt ceiling does not have any direct impact on the budget deficit. The US government passes a federal budget every year. This budget details projected tax collections and outlays and, therefore, the amount of borrowing the government would have to do in that fiscal year. A vote to increase the debt ceiling is, therefore, usually seen as a formality, needed to continue spending that has already been approved previously by the Congress and the President. The Government Accountability Office explains: \"The debt limit does not control or limit the ability of the federal government to run deficits or incur obligations. Rather, it is a limit on the ability to pay obligations already incurred.\" The apparent redundancy of the debt ceiling has led to suggestions that it should be abolished altogether. From 1979 to 1995, the House of Representatives followed the \"Gephardt Rule\" which deemed the debt ceiling raised if necessary to cover appropriations.\nThe US has had public debt since its inception. Debts incurred during the American Revolutionary War and under the Articles of Confederation led to the first yearly report on the amount of the debt ($75,463,476.52 on January 1, 1791). Every president since Harry Truman has added to the national debt. The debt ceiling has been raised 74 times since March 1962, including 18 times under Ronald Reagan, eight times under Bill Clinton, seven times under George W. Bush and three times (as of August 2011) under Barack Obama.\nAs of May 2011, approximately 40 percent of US government spending relied on borrowed money. That is, without borrowing, the federal government would have had to cut spending immediately by 40 percent, affecting many daily operations of the government, besides the impact on the domestic and international economies. It is unclear if the Treasury has the technological capability to disburse funds to some individuals it owes money. The Government Accountability Office reported in February 2011 that managing debt when delays in raising the debt limit occur diverts Treasury's resources from other cash and debt management responsibilities and that Treasury's borrowing costs modestly increased during debt limit debates in 2002, 2003, 2010 and 2011. If the interest payments on the national debt are not made, the US would be in default, potentially causing catastrophic economic consequences for the US and the wider world as well. (Effects outside the US would be likely because the United States is a major trading partner with many countries. Other major world powers that hold US government debt could demand immediate repayment.)\nAccording to the Treasury, \"failing to increase the debt limit would . . . cause the government to default on its legal obligations \u2013 an unprecedented event in American history\". These legal obligations include paying Social Security and Medicare benefits, military salaries, interest on the debt, and many other items. Making the promised payments of the principal and interest of US treasury securities on time ensures that the nation does not default on its sovereign debt.Critics have argued that the debt ceiling crisis is \"self-inflicted,\" as treasury bond interest rates were at historical lows, and the US had no market restrictions on its ability to obtain additional credit. The debt ceiling has been raised 68 times since 1960. Sometimes the increase was treated as routine; many times it was used to score political points for the minority party by criticizing the out-of-control spending of the majority. The only other country with a debt limit is Denmark, which has set its debt ceiling so high that it is unlikely to be reached. If raising the limit ceases to be routine, this may create uncertainty for global markets each time a debt ceiling increase is debated. The 2011 debt-ceiling crisis has shown how a party in control of only one chamber of Congress (in this case, Republicans in control of the House of Representatives but not the Senate or the Presidency) can have significant influence if it chooses to block the routine raising of the debt limit.\n\n\n=== Concern about budget deficits and long-term debt ===\n\nUnderlying the contentious debate over raising the debt ceiling has been an anxiety, growing since 2008, about the large United States federal budget deficits and the increasing federal debt. According to the Congressional Budget Office (CBO): \"At the end of 2008, that debt equaled 40 percent of the nation's annual economic output (a little above the 40-year average of 37 percent). Since then, the figure has shot upward: By the end of fiscal year 2011, the Congressional Budget Office (CBO) projects federal debt will reach roughly 70 percent of gross domestic product (GDP) \u2014 the highest percentage since shortly after World War II.\" The sharp rise in debt after 2008 stems largely from lower tax revenues and higher federal spending related to the severe recession and persistently high unemployment in 2008\u201311. Though a balanced budget is ideal, allowing down payment on debt and more flexibility within government budgeting, limiting deficits to within 1% to 2% of GDP is sufficient to stabilize the debt. Deficits in 2009 and 2010 were 10.0 percent and 8.9 percent respectively, and the largest as a share of gross domestic product since 1945.In 2009, the Tea Party movement emerged with a focus on reducing government spending and regulation. The Tea Party movement helped usher in a wave of new Republican office-holders in the 2010 mid-term elections whose major planks during the campaign included cutting federal spending and stopping any tax increases. These new Republicans and the new Republican House majority greatly affected the 2011 debt ceiling political debate.In early 2010, President Obama established the Bowles-Simpson Commission to propose recommendations to balance the budget by 2015. The commission issued a report in December 2010, but the recommendations failed to receive enough votes to allow the report to be passed on to Congress.\nThroughout 2011, Standard &amp; Poor's and Moody's credit rating services issued warnings that US credit rating could be downgraded because of the continued large deficits and increasing debt. According to the CBO's 2011 long-term budget outlook, without major policy changes the large budget deficits and growing debt would continue, which \"would reduce national saving, leading to higher interest rates, more borrowing from abroad, and less domestic investment \u2013 which in turn would lower income growth in the United States\". The European sovereign debt crisis was occurring throughout 2010\u20132011, and there were concerns that the US was on the same trajectory.\n\n\n=== Negative real interest rates ===\nSince 2010, the U.S. Treasury has been obtaining negative real interest rates on government debt. Such low rates, outpaced by the inflation rate, occur when the market believes that there are no alternatives with sufficiently low risk, or when popular institutional investments such as insurance companies, pensions, or bond, money market, and balanced mutual funds are required or choose to invest sufficiently large sums in Treasury securities to hedge against risk. Lawrence Summers and other economists state that at such low rates, government debt borrowing saves taxpayer money, and improves creditworthiness. In the late 1940s and then again in the early 1970s, the US and UK both reduced their debt burden by about 30% to 40% of GDP per decade by taking advantage of negative real interest rates, but there is no guarantee that government debt rates will continue to stay so low. In January 2012, the U.S. Treasury Borrowing Advisory Committee of the Securities Industry and Financial Markets Association unanimously recommended that government debt be allowed to auction even lower, at negative absolute interest rates.This method of negative real interest rates has been claimed to be a form of financial repression by governments as it is \"a transfer from creditors (savers) to borrowers (in the historical episode under study here\u2014the government)\" and \"given that deficit reduction usually involves highly unpopular expenditure reductions and (or) tax increases of one form or another, the relatively 'stealthier' financial repression tax may be a more politically palatable alternative to authorities faced with the need to reduce outstanding debts\".\n\n\n== Resort to extraordinary measures ==\nPrior to the 2011 debt ceiling crisis, the debt ceiling was last raised on February 12, 2010 to $14.294 trillion.On April 15, 2011, Congress passed the last part of the 2011 United States federal budget in the beginning 2012, authorizing federal government spending for the remainder of the 2011 fiscal year, which ended on September 30, 2011. For the 2011 fiscal year, expenditure was estimated at $3.82 trillion, with expected revenues of $2.17 trillion, leaving a deficit of $1.48 trillion. This includes, public and federal debt, as well as the GDP. Leaving a budget deficit of 38.7%, the world's highest.\nHowever, soon after the 2011 budget was passed, the debt ceiling set in February 2010 was reached. In a letter to Congress of April 4, 2011, Treasury Secretary Timothy Geithner explained that when the debt ceiling is reached, the US Treasury can declare a debt issuance suspension period and utilize \"extraordinary measures\" to acquire funds to meet federal obligations but which do not require the issue of new debt, such as the sale of assets from the Civil Service Retirement and Disability Fund and the G Fund of the Thrift Savings Plan. These measures were implemented on May 16, 2011, when Geithner declared a \"debt issuance suspension period\". According to his letter to Congress, this period could \"last until August 2, 2011, when the Department of the Treasury projects that the borrowing authority of the United States will be exhausted\". These methods have been used on several previous occasions in which federal debt neared its statutory limit.\n\n\n=== The August 2, 2011 deadline ===\nThe U.S. Treasury stated on multiple occasions that the US government would exhaust its borrowing authority around August 2, 2011. That date appeared to serve as an effective deadline for Congress to vote to increase the debt ceiling.While the U.S. Treasury's borrowing authority may have been exhausted on August 2, 2011, it retained cash balances that would have enabled it to meet federal obligations for a short time. According to Barclays Capital, Treasury would run out of cash around August 10, when $8.5 billion in Social Security payments were due. According to Wall Street analysts, Treasury would not be able borrow from the capital markets after August 2, but still would have enough incoming cash to meet its obligations until August 15. Analysts also predicted that Treasury would be able to roll over the $90 billion in US debt that matured on August 4, and gain additional time to avert the crisis.Projections required for debt and cash management can be volatile. Outside experts that track Treasury finances had said that announced Treasury estimates were within the range of uncertainty for their analyses. Delaying an increase in the debt limit past August 2 could have risked a delay in Social Security and other benefit checks, and could have led to disruptions in scheduled Treasury auctions.\n\n\n== Implications of not raising the debt ceiling ==\nExperts were divided on how bad the effects of not raising the debt ceiling for a short period would be on the economy. While some leading economists, including Republican adviser Douglas Holtz-Eakin, suggested even a brief failure to meet US obligations could have devastating long-term consequences, others argued that the market would write it off as a Congressional dispute and return to normal once the immediate crisis was resolved.\nSome argued that the worst outcome would be if the US failed to pay interest and/or principal on the national debt to bondholders, thereby defaulting on its sovereign debt. Former Treasury Secretary Lawrence Summers warned in July 2011 that the consequences of such a default would be higher borrowing costs for the US government (as much as one percent or $150 billion/year in additional interest costs) and the equivalent of bank runs on the money markets and other financial markets, potentially as severe as those of September 2008.In January 2011 Treasury Secretary Timothy Geithner warned that \"failure to raise the limit would precipitate a default by the United States. Default would effectively impose a significant and long-lasting tax on all Americans and all American businesses and could lead to the loss of millions of American jobs. Even a very short-term or limited default would have catastrophic economic consequences that would last for decades.\"Senators Pat Toomey and Jim DeMint expressed deep concern that administration officials were stating or implying that failure to raise the nation's debt limit would constitute a default on US debt and precipitate a financial crisis: \"We believe it is irresponsible and harmful for you to sow the seeds of doubt in the market regarding the full faith and credit of the United States and ask that you set the record straight \u2013 that you will use all available Treasury funds necessary to prevent default while Congress addresses the looming debt crisis.\"Geithner responded that prioritizing debt would require \"cutting roughly 40 percent of all government payments\", which could only be achieved by \"selectively defaulting on obligations previously approved by Congress\". He argued that this would harm the reputation of the United States so severely that there is \"no guarantee that investors would continue to re-invest in new Treasury securities\", forcing the government to repay the principal on existing debt as it matured, which it would be unable to do under any conceivable circumstance. He concluded: \"There is no alternative to enactment of a timely increase in the debt limit.\" On January 25, 2011, Senator Toomey introduced The Full Faith And Credit Act bill [S.163] that would require the Treasury to prioritize payments to service the national debt over other obligations. (The bill was cleared by its committee for consideration the next day and added to the Senate \"calendar of business\", but no further action had occurred by mid-August 2011.)\nEven if the Treasury were to prioritize payments on the debt above other spending and avoid formal default on its bonds, failure to raise the debt ceiling would force the government to reduce its spending by as much as ten percent of GDP overnight, leading to a corresponding fall in aggregate demand. Economists believe that such a significant shock, if sustained, would reverse the economic recovery and send the country into a recession.\n\n\n== Proposed resolutions ==\nCongress considered whether and by how much to extend the debt ceiling (or eliminate it), and what long-term policy changes (if any) should be made concurrently.The Republican positions on raising the debt ceiling included:\n\nA Dollar-for-dollar deal; that is, raise the debt ceiling to match corresponding spending cuts\nMore of the budget cuts in the first two years\nSpending caps\nA Balanced Budget Amendment \u2013 to pass Congress and be sent to states for ratification\nNo tax increases but tax reform could be considered(One representative, Ron Paul, proposed transferring $1.6 trillion of Federal Reserve assets to the government and destroying those bonds, thereby reducing the United States gross federal debt by the same amount This would violate the property rights of national banks who own the Federal Reserve Banks.)\nThe Democratic positions on raising the debt ceiling included:\n\nInitially, a \"clean\" increase or unconditional raise to the debt ceiling with no spending cuts attached\nSpending cuts combined with tax increases on some categories of taxpayers, to reduce deficits (For example, a 1:1 spending cut / tax increase ratio initially desired in the Congress versus 3:1 offered by President Obama.)\nA large debt-ceiling increase, to support borrowing into 2013 (after the next election)\nOpposed to any major cuts to Social Security, Medicare, or Medicaid(Some Democratic lawmakers suggested that the President could declare that the debt ceiling violates the US Constitution and issue an Executive Order to direct the Treasury to issue more debt.)\nThe US House of Representatives originally refused to raise the debt ceiling without deficit reduction, voting down a \"clean\" bill to increase the debt ceiling without conditions. The May 31 vote was 318 to 97, with all 236 Republicans and 82 Democrats voting to defeat the bill. The Republicans largely believed a deficit reduction deal should be based solely on spending cuts, including cuts to entitlements, without any tax increases, to reduce or solve the long-term issue of debt. Obama and the Democrats in the US Congress wanted an increase in the debt ceiling to solve the short-term borrowing problem, and in exchange supported a decrease in the budget deficit, to be funded by a combination of spending cuts and revenue increases. Some prominent liberal economists, such as Paul Krugman, Larry Summers, and Brad DeLong, and prominent investors such as Bill Gross, went even further, and argued that not only should the debt ceiling be raised, but federal spending (and, therefore, the deficit) should be increased in the short term (as long as the economy remains in the liquidity trap), which they believed would stimulate the economy, reduce unemployment, and ultimately reduce the deficit in the medium to long term.Some Tea Party Caucus and other Republicans, however, (including, but not limited to, Senators Jim DeMint, Rand Paul, and Mike Lee, and Representatives Michele Bachmann, Ron Paul, and Allen West) expressed skepticism about raising the debt ceiling (with some suggesting the consequences of default are exaggerated), arguing that the debt ceiling should not be raised, and \"instead the federal debt [should] be 'capped' at the current limit,\" \"although that would oblige the government to cut spending by almost half overnight.\"Jack Balkin, the Knight Professor of Constitutional Law and the First Amendment at Yale Law School, suggested two other ways to solve the debt ceiling crisis: he pointed out that the US Treasury has the power to issue platinum coins in any denomination, so it could solve the debt ceiling crisis by simply issuing two platinum coins in denominations of $1 trillion each, depositing them into its account in the Federal Reserve, and writing checks on the proceeds. Another way to solve the debt ceiling crisis, Balkin suggested, would be for the federal government to sell the Federal Reserve an option to purchase government property for $2 trillion. The Federal Reserve would then credit the proceeds to the government's checking account. Once Congress lifted the debt ceiling, the president could buy back the option for a dollar, or the option could simply expire in 90 days.In a report issued by the credit rating agency Moody's, analyst Steven Hess suggested that the government should consider getting rid of the limit altogether, because the difficulty inherent in reaching an agreement to raise the debt ceiling \"creates a high level of uncertainty\" and an increased risk of default. As reported by The Washington Post, \"without a limit dependent on congressional approval, the report said, the agency would worry less about the government's ability to meet its debt obligations.\" Other public figures, including Democratic ex-President Bill Clinton and Republican ex-CBO director Douglas Holtz-Eakin, have suggested eliminating the debt ceiling.\n\n\n=== Possible methods of bypassing the debt ceiling ===\n\n\n==== Fourteenth Amendment ====\nDuring the debate, some scholars, Democratic lawmakers, and Treasury Secretary Tim Geithner suggested that the President could declare that the debt ceiling violates the Constitution and issue an Executive Order to direct the Treasury to issue more debt. They point to Section 4 of the Fourteenth Amendment to the US Constitution, passed in the context of the Civil War Reconstruction, that states that the validity of the public debt shall not be questioned. Others rebutted this argument by pointing to Section 8 of Article 1 and Section 5 of the Fourteenth Amendment, which state that Congress has the power of the purse and the authority to enforce the Fourteenth Amendment.\nArticle I, Section 8. The Congress shall have power . . .To borrow Money on the credit of the United States;Amendment XIV, Section 4. The validity of the public debt of the United States, authorized by law, including debts incurred for payment of pensions and bounties for services in suppressing insurrection or rebellion, shall not be questioned. But neither the United States nor any State shall assume or pay any debt or obligation incurred in aid of insurrection or rebellion against the United States, or any claim for the loss or emancipation of any slave; but all such debts, obligations and claims shall be held illegal and void.Amendment XIV, Section 5. The Congress shall have power to enforce, by appropriate legislation, the provisions of this article.ArgumentsJack Balkin, looking into the Legislative History of the Fourteenth Amendment, argued that Section 4 was adopted to guard against politically determined default. Referencing the sponsor of the provision, Senator Benjamin Wade, Balkin argued that \"the central rationale for Section Four ... was to remove threats of default on federal debts from partisan struggle.\" Balkin quotes Wade: \"every man who has property in the public funds will feel safer when he sees that the national debt is withdrawn from the power of a Congress to repudiate it and placed under the guardianship of the Constitution than he would feel if it were left at loose ends and subject to the varying majorities which may arise in Congress.\" According to Balkin, this reveals \"an important structural principle. The threat of defaulting on government obligations is a powerful weapon, especially in a complex, interconnected world economy. Devoted partisans can use it to disrupt government, to roil ordinary politics, to undermine policies they do not like, even to seek political revenge. Section Four was placed in the Constitution to remove this weapon from ordinary politics.\"\nBruce Bartlett, a former adviser to President Ronald Reagan and columnist for The Fiscal Times, argued that Section 4 renders the debt ceiling unconstitutional, and that the President should disregard the debt limit.\nThe Nation editor Katrina vanden Heuvel argued that the President could use the public debt section of the Fourteenth Amendment to force the Treasury to continue paying its debts if an agreement to raise the debt ceiling was not reached.\nLaurence Tribe, professor of Constitutional Law at Harvard Law School, called the argument that the public debt clause can nullify the debt ceiling \"false hope\" and noted that nothing in the Constitution enabled the President to \"usurp legislative power\" with regards to the debt. Tribe said that since Congress has means other than borrowing to pay the federal debt (including raising taxes, coining money, and selling federal assets), the argument that the President could seize the power to borrow could be extended to give the President the ability to seize those powers as well.Garrett Epps counter-argued that the President would not be usurping Congressional power by invoking Section 4 to declare the debt ceiling unconstitutional, because the debt ceiling exceeds Congressional authority. He called it legislative \"double-counting,\" as paraphrased in The New Republic, \"because Congress already appropriated the funds in question, it is the executive branch's duty to enact those appropriations.\" In other words, given Congress has appropriated money via federal programs, the Executive is obligated to enact and, therefore, fund them, but the debt ceiling's limit on debt prevents the executive from carrying out the instructions given by Congress, on the constitutional authority to set appropriations; essentially, to obey the statutory debt ceiling would require usurping congress' constitutional powers, and hence the statute must be unconstitutional.\nFormer President Bill Clinton endorsed this counter-argument, saying he would eliminate the debt ceiling using the 14th Amendment. He called it \"crazy\" that Congress first appropriates funds and then gets a second vote on whether to pay.\nMatthew Zeitlin added to the counter-argument that, were Section 4 invoked, members of Congress would not have standing to sue the President for allegedly usurping congressional authority, even if they were willing to do so; and those likely to have standing would be people \"designed to elicit zero public sympathy: those who purchased credit default swaps which would pay off in the event of government default\". Matthew Steinglass argued that, because it would come down to the Supreme Court, the Court would not vote in favor of anyone who could and would sue: it would rule the debt ceiling unconstitutional. This is because, for the Court to rule to uphold the debt ceiling, it would, in effect, be voting for the United States to default, with the consequences that would entail; and, Steinglass argues, the Court would not do that.Michael Stern, Senior Counsel to the US House of Representatives from 1996 to 2004, stated that Garrett Epps \"had adopted an overly broad interpretation of the Public Debt Clause and that this interpretation, even if accepted, could not justify invalidating the debt limit\" because \"the President's duty to safeguard the national debt no more enables him to assume Congress's power of the purse than it would enable him to assume the judicial power when (in his opinion) the Supreme Court acts in an unconstitutional manner.\"\nRob Natelson, former Constitutional Law Professor at University of Montana, argued that \"this is not some issue in the disputed boundaries between legislative and executive power.\" He continued, \"That's why the Constitution itself (Article I, Section 8, Clause 2) gives only Congress, not the President, the power \"To borrow Money on the credit of the United States.\" In another argument, Natelson stated that Bruce Bartlett \"deftly omits a crucial part of the quote from the Fourteenth Amendment. It actually says, 'The validity of the public debt of the United States, AUTHORIZED BY LAW ... shall not be questioned.' In other words, Congress has to approve the debt for it not to be questioned. And note that this language refers to existing debt, not to creating new debt. He also neglects to mention that Section 5 of the Fourteenth Amendment specifically grants to Congress, not to the President, authority to enforce the amendment.\"\nTreasury Secretary Tim Geithner implied that the debt ceiling may violate the Constitution; however George Madison, General Counsel to the US Treasury, wrote that \"Secretary Geithner has never argued that the 14th Amendment to the US Constitution allows the President to disregard the statutory debt limit\" (but nor did Madison say that Geithner had argued against the proposition either), and that \"the Constitution explicitly places the borrowing authority with Congress.\" He stated that \"Secretary Geithner has always viewed the debt limit as a binding legal constraint that can only be raised by Congress.\"\n\n\n==== Minting coins in extremely high denominations ====\n\nUS law does not place a limit on the denomination of minted coins, and specifically mentions that the Mint can create platinum coins of arbitrary value under the discretion of the Secretary of the Treasury. Yale law professor Jack Balkin mentioned seigniorage as a solution, although there had been speculation about the option of a \"trillion-dollar coin\" online since at least January 2011. Hence it has been suggested that a coin with a face value of a trillion or more could be minted and deposited with the Federal Reserve and used to buy back debt, thus making funds available.\n\n\n==== Monetizing gold ====\nA similar crisis was faced during the Eisenhower Administration in 1953. The debt ceiling was not raised until the spring of 1954. To accommodate the gap, the Eisenhower administration increased its gold certificate deposits at the Federal Reserve, which it could do because the market price of gold had increased. According to experts, the Secretary of the Treasury is still authorized to monetize 8,000 tons of gold, valued under the old law at approximately $42 per ounce, but with a market value worth over $1,600 per ounce.\n\n\n== Agreement ==\n\nOn July 31, 2011, President Obama announced that the leaders of both parties in both chambers had reached an agreement that would reduce the deficit and avoid default. The same day, Speaker Boehner's office outlined the agreement for House Republicans. According to the statement:\n\nThe agreement cut spending more than it increased the debt limit. In the first installment (\"tranche\"), $917 billion would be cut over 10 years in exchange for increasing the debt limit by $900 billion.\nThe agreement established a Congressional Joint Select Committee that would produce debt reduction legislation by November 23, 2011, that would be immune from amendments or filibuster. The goal of the legislation is to cut at least $1.5 trillion over the coming 10 years and should be passed by December 23, 2011. The committee would have 12 members, 6 from each party.\nProjected revenue from the Joint Select Committee's legislation must not exceed the revenue baseline produced by current law, which assumes the Bush tax cuts will expire entirely at the end of 2012.\nThe agreement specified an incentive for Congress to act. If Congress fails to produce a deficit reduction bill with at least $1.2 trillion in cuts, then Congress can grant a $1.2 trillion increase in the debt ceiling. This would trigger across-the-board cuts (\"sequestration\") of spending, equally split between defense and non-defense programs. The cuts would apply to mandatory and discretionary spending in the years 2013 to 2021 and be in an amount equal to the difference between $1.2 trillion and the amount of deficit reduction enacted from the joint committee. The sequestration mechanism is the same as the Balanced Budget Act of 1997. There are exemptions\u2014across the board cuts would apply to Medicare, but not to Social Security, Medicaid, civil and military employee pay, or veterans.\nCongress must vote on a Balanced Budget Amendment between October 1, 2011, and the end of the year.\nThe debt ceiling may be increased an additional $1.5 trillion if either one of the following two conditions are met:\nA balanced budget amendment is sent to the states\nThe joint committee cuts spending by a greater amount than the requested debt ceiling increaseMost of the $900 billion in cuts occur in future years, and so will not remove significant capital from the economy in the current and following year. The across-the-board cuts could not take place until 2013. If they are triggered, a new Congress could vote to reduce, eliminate, or deepen all or part of them. Under the U.S. Constitution, the President could veto such a future bill passed by Congress; in such a scenario, Congress would have pass a bill to override this veto by a two-thirds majority of each house of Congress.The agreement, entitled the Budget Control Act of 2011, passed the House on August 1, 2011, by a vote of 269\u2013161; 174 Republicans and 95 Democrats voted for it, while 66 Republicans and 95 Democrats voted against it. The Senate passed the agreement on August 2, 2011, by a vote of 74\u201326; 7 Democrats and 19 Republicans voted against it. Obama signed the bill shortly after it was passed by the Senate.\n\n\n== Reaction ==\n\n\n=== US reaction ===\nThe national debt rose $238 billion (or about 60% of the new debt ceiling) on August 3, the largest one-day increase in the history of the United States. The US debt surpassed 100 percent of gross domestic product for the first time since World War II. According to the International Monetary Fund, the US joined a group of countries whose public debt exceeds their GDP. The group includes Japan (229 percent), Greece (152 percent), Jamaica (137 percent), Lebanon (134 percent), Italy (120 percent), Ireland (114 percent), and Iceland (103 percent).\nThe NASDAQ, ASX, and S&amp;P 100 lost up to four percent in value, the largest drop since July 2009, during the global financial crisis that was precipitated in part by the United States housing bubble and the corresponding losses by holders of mortgages and mortgage-backed securities. The commodities market also took losses, with average spot crude oil prices falling below $US86 a barrel. The price of gold fell, as deepening losses on Wall Street prompted investors to sell.On August 5, 2011, Standard &amp; Poor's credit rating agency downgraded the long-term credit rating of the United States government for the first time in its history, from AAA to AA+. In contrast with previous ratings, the agency assumed in the base case scenario that the tax cuts of 2001 and 2003 would not expire at the end of 2012, citing Congressional resistance to revenue raising measures. The downside scenario, the conditions that would likely lead to a further downgrade to AA, assumed that the second round of spending cuts would fail to occur and that yield on Treasury bonds would increase but the dollar would remain the key global reserve currency. The upside scenario, consistent with maintaining the new AA+ rating, included the expiration of the 2001 and 2003 tax cuts and only modest growth in government debt as a percentage of GDP over the coming decade. A week later, S&amp;P senior director Joydeep Mukherji said that one factor was that numerous American politicians expressed skepticism about the serious consequences of a default\u2014an attitude that he said was \"not common\" among countries with a AAA rating. At the end of 2012, the United States fiscal cliff was resolved in a compromise without expiring the 2001 and 2003 tax cuts, but S&amp;P did not downgrade to AA. The other two major credit rating agencies, Moody's and Fitch, continued to rate the federal government's bonds as AAA.In a joint press release on the same day from the Federal Reserve System, the Federal Deposit Insurance Corporation, the National Credit Union Administration, and the Office of the Comptroller of the Currency, federally regulated institutions were told that for risk-based capital purposes, the debt of the United States was still considered to be risk free.\n\n\n==== Congressional reaction ====\nSenate Minority Leader Mitch McConnell, on the GOP: \"I think some of our members may have thought the default issue was a hostage you might take a chance at shooting. Most of us didn't think that. What we did learn is this \u2013 it's a hostage that's worth ransoming. And it focuses the Congress on something that must be done.\"Boehner was reported to be particularly concerned that any defense cuts could not go into effect until after 2013.\n\n\n=== International reaction ===\nThe international community characterized the political brinkmanship in Washington as playing a game of chicken, and criticized the US government for \"dangerously irresponsible\" actions.International reaction to the US credit rating downgrade has been mixed. Australian Prime Minister Julia Gillard urged calm over the downgrade, since only one of the three major credit rating agencies decided to lower its rating. On August 6, 2011, China, the largest foreign holder of United States debt, said that Washington needed to \"cure its addiction to debts\" and \"live within its means\". The Chinese state media outlet Xinhua News Agency was critical of the US government, questioned whether the US dollar should continue to be the global reserve currency, and called for international supervision over the issue of US dollar.The downgrade started a sell-off in every major stock market index around the world, threatening a stock market crash in the international markets. The G7 finance ministers scheduled a meeting to discuss the \"global financial crisis that concerns all countries\".\n\n\n=== Political aftermath ===\nPolitically, the crisis caused support for the Republican Party to drop, whose support for the debt-ceiling deal was needed as it controlled the House. The party saw its approval ratings drop from 41 percent in July to 33 percent in August. Nevertheless, President Obama saw his approval ratings drop to a record low of 40 percent in regards to his handling of the crisis.\n\n\n== Timeline ==\n\nAlthough the US has raised its debt ceiling many times before 2011, these increases were not generally coupled with an ongoing global economic crisis.\nDecember 16, 2009: The debt ceiling was exceeded. To avoid default, the Treasury Department used \"extraordinary accounting tools\" to enable the Treasury to make an additional $150 billion available to meet the necessary federal obligations.\nFebruary 12, 2010: Increase in the debt ceiling signed into law by President Obama, after being passed by the Democratic 111th United States Congress. It increased the debt ceiling by $1.9 trillion from $12.394 trillion to $14.294 trillion.\nFebruary 18, 2010: Obama issued an Executive Order to establish the National Commission on Fiscal Responsibility and Reform, also known as the Bowles-Simpson Commission. The mission of the commission was to propose recommendations designed to balance the budget, excluding interest payments on the debt, by 2015. It was tasked to issue a report with a set of recommendations by December 1, 2010.\nNovember 2, 2010: The Republican Party gained 63 seats in the US House of Representatives in the United States midterm elections, recapturing the majority by 242\u2013193 in the 112th Congress. Major planks for the House Republicans during the election campaign were cutting federal spending and stopping any tax increases.\nDecember 1, 2010: The Bowles-Simpson Commission on Fiscal Responsibility and Reform issued its report, but the recommendations failed to win support of at least 14 of the 18 members necessary to adopt it formally. The recommendations were never adopted by Congress nor President Obama.\nJanuary 6, April 4, and May 2, 2011: Secretary of the Treasury Timothy Geithner sent letters requesting an increase in the debt ceiling.\nJanuary 25, 2011: Senator Pat Toomey introduces the Full Faith And Credit Act bill [S.163] that would require the Treasury to prioritize payments to service the national debt over other obligations. The bill was never debated.\nJanuary 28, 2011: Moody's Investors Service said it may place a \"negative\" outlook on the AAA rating of US debt sooner than anticipated, as the country's budget deficit widened.\nFebruary 14, 2011: Obama released his budget proposal for fiscal year 2012. Republicans criticized the budget for doing too little to rein in the burgeoning US deficit. The CBO analysis, released in April 2011, estimated that the budget would increase total deficits over 10 years by $2.7 trillion: from $6.7 trillion of the March 2011 baseline to $9.4 trillion with the proposed budget. The Senate rejected the budget proposal on May 25, 2011 (see below).\nApril 14, 2011: Both the House of Representatives and the Senate voted in favor of the 2011 US federal budget, 260\u2013167 and 81\u201319 respectively. This budget projected the 2011 deficit to be $1.645 trillion, and therefore ensured that the debt ceiling would be hit during this fiscal year.\nApril 15, 2011: On a party-line vote 235\u2013193, the House of Representatives passed the Republican 2012 budget proposal aimed to reduce total spending by $5.8 trillion and reduce total deficits by $4.4 trillion over 10 years compared to the current-policy baseline. It included reform to Medicare and Medicaid entitlement programs, which the Democrats criticized as an attempt to leave seniors and poor holding the bag on health care costs. The criticism resonated with the many in the public, who voiced opposition to the proposed changes. The Senate rejected the budget proposal on May 25, 2011 (see below).\nApril 18, 2011: Standard &amp; Poor's Ratings Services revised its outlook on the US to negative due to recent and expected further deterioration in the US fiscal profile, and of the ability and willingness of the US to soon reverse this trend. With the negative outlook, S&amp;P believed there is a likelihood of at least one-in-three of a downward rating adjustment within two years.\nMay 16, 2011: The debt ceiling is reached. Treasury Secretary Timothy Geithner issued a debt issuance suspension period, directing the Treasury to utilize \"extraordinary measures\" to fund federal obligations.\nMay 18, 2011: Bipartisan deficit-reduction talks among the \"Gang of Six\" high-profile Senators are suspended when Republican Tom Coburn drops out.\nMay 24, 2011: Vice President Joe Biden and four Democratic lawmakers begin meeting with the Republican House Majority Leader Eric Cantor and the Republican Senate Minority Whip Jon Kyl, in an effort to continue the talks. Cantor said that these talks would lay the groundwork for further discussions between President Obama, Republican Speaker of the House John Boehner, and other leaders of Congress.\nMay 25, 2011: The Senate rejected both the Republican House budget proposal, by a vote of 57\u201340, and the Obama budget proposal, by a vote of 97\u20130.\nMay 31, 2011: The House voted on a bill to raise the debt ceiling without any spending cuts tied to the increase. President Obama asked Congress to raise the debt ceiling in a 'clean' vote that included no other conditions. The bill, which would have raised the debt ceiling by $2.4 trillion, failed by a vote of 97\u2013318. Democrats accused Republicans of playing politics by holding a vote they knew would fail.\nJune 23, 2011: Biden's negotiations on the debt ceiling were cut off when both Eric Cantor and Jon Kyl walk out over disagreements on taxes.\nJuly 19, 2011: The Republican Majority in the House brought the Cut, Cap and Balance Act (H.R.2560), their proposed solution to the crisis, to a vote. They passed the bill by a vote of 234\u2013190, split closely along party lines: 229 Republicans and 5 Democrats 'for', 181 Democrats and 9 Republicans 'against'; it was sent to the Senate for consideration. The Bill authorized that the debt ceiling be raised by $2.4 trillion after a Balanced Budget Amendment was passed by Congress. Since Constitutional amendments require a two-thirds majority vote in both chambers of Congress to pass, a vote for a Balanced Budget Amendment would require more support than the Cut, Cap and Balance Act bill achieved in the House vote.\nJuly 22, 2011: The Senate voted along party lines to table the Cut, Cap and Balance Act; 51 Democrats voting to table it and 46 Republicans voting to bring it to a debate. Senate Majority Leader Harry Reid called the Act \"one of the worst pieces of legislation to ever be placed on the floor of the United States Senate\". Even had it passed Congress, Obama had promised to veto the bill.\nJuly 25, 2011: Republicans and Democrats outlined separate deficit-reduction proposals.\nJuly 25, 2011: Obama and Speaker of the House John Boehner addressed the nation separately over network television with regards to the debt ceiling.\nJuly 25, 2011: The bond market is shaken by a single $850 million futures trade betting on US default.\nJuly 29, 2011: The Budget Control Act of 2011 S. 627, a Republican bill that immediately raised the debt ceiling by $900 billion and reduced spending by $917 billion, passed in the House on a vote of 218\u2013210. No Democrats voted for it, and it also drew 'no' votes from 22 Republicans, who deemed it insufficiently tough on spending cuts. It allows the President to request a second increase in the debt ceiling of up to $1.6 trillion upon passage of the balanced-budget amendment and a separate $1.8 trillion deficit reduction package, to be written by a new \"joint committee of Congress\". Upon introduction into the Senate in the evening, the bill was immediately tabled on a 59\u201341 vote, including some Republican votes.\nJuly 30, 2011: The House of Representatives voted 173\u2013246 to defeat Senate Majority Leader Harry Reid's $2.4 trillion plan to reduce the deficit and raise the debt ceiling.\nJuly 31, 2011: President Barack Obama announced that leaders of both parties had reached an agreement to lift the debt ceiling and reduce the federal deficit. Separately, House Speaker John Boehner told Republicans that they had reached the framework for an agreement. Boehner revealed details of the agreement in a presentation to the House Republicans.\nAugust 1, 2011: The House passed a bipartisan bill by a vote of 269\u2013161. 174 Republicans and 95 Democrats voted 'yes'; 66 Republicans and 95 Democrats voted 'no'.\nAugust 2, 2011: The Senate passed the bill by a vote of 74\u201326. 28 Republicans, 45 Democrats, and 1 independent voted 'yes'; 19 Republicans, 6 Democrats, and 1 independent voted 'no'. President Obama signed the debt ceiling bill the same day, thus ending fears of a default. Obama also declared that the bill is an \"important first step to ensuring that as a nation we live within our means\".\nAugust 2, 2011: The date estimated by the Department of the Treasury that the borrowing authority of the US would be exhausted, if the debt ceiling crisis were not resolved.\nAugust 3, 2011: The Treasury increased the national debt by $238 billion.\nAugust 5, 2011: Standard &amp; Poor's lowered the credit rating of the United States from AAA to AA+, citing Congressional resistance to new revenue measures and uncontrolled growth of entitlement programs. The agency rated the long-term outlook as negative, citing uncertainty in debt growth dynamics.\nAugust 9, 2011. The US Federal Reserve announced it will keep interest rates at \"exceptionally low levels\" at least through mid-2013; it made no commitment for further quantitative easing. (Reuters) The Dow Jones Industrial Average and the New York Stock Exchange as well as other world stock markets, recovered after recent falls. (Wall Street Journal)\nAugust 15, 2011: The date estimated by the Fitch rating agency and the FRBNY primary dealer Jefferies &amp; Co that $29 billion of federal debt interest would have become due, thus triggering a technical sovereign default if the debt ceiling crisis had not been resolved. This, however, did not occur as the debt ceiling crisis was resolved by then.\n\n\n== See also ==\nBudget Control Act of 2011\nEuropean sovereign debt crisis\nHistory of United States debt-ceiling increases\n2007\u20132008 financial crisis\n2013 United States debt-ceiling crisis\n2023 United States debt-ceiling crisis\nUnited States Congress Joint Select Committee on Deficit Reduction\nUnited States federal government credit-rating downgrades\n1995\u20131996 United States federal government shutdowns\nSovereign default\n\n\n== References ==\n\n\n== External links ==\n\"U.S. Debt Ceiling: Costs and Consequences\" Archived September 8, 2013, at the Wayback Machine. Council on Foreign Relations. December 7, 2012.\n\"Obama vs. Boehner: Who Killed the Debt Deal?\". New York Times Magazine. March 28, 2012.\n\"Apple now has more cash than the U.S. government\". CNN. July 29, 2011.\n\"Understanding the Federal Debt Limit\". Concord Coalition. July 8, 2011. Archived from the original on July 27, 2011. Retrieved July 27, 2011.\n\"United States of America Long-Term Rating Lowered To 'AA+' On Political Risks And Rising Debt Burden; Outlook Negative\" (PDF). Standard &amp; Poor's. August 5, 2011.\n\"U.S. debt ceiling: How big is it and how often has it changed?\". the guardian. January 2013.",
"pageid": 32442495
},
{
"title": "2023 United States debt-ceiling crisis",
"content": "On January 19, 2023, the United States hit its debt ceiling, leading to a debt-ceiling crisis, part of an ongoing political debate within Congress about federal government spending and the national debt that the U.S. government accrues. In response, Janet Yellen, the Secretary of the Treasury, began enacting temporary \"extraordinary measures\". On May 1, 2023, Yellen warned these measures could be exhausted as early as June 1, 2023; this date was later pushed to June 5.The debt ceiling had been increased multiple times since the 2013 debt ceiling standoff, all without budgetary preconditions attached; the most recent increase was in December 2021. In the 2023 impasse, Republicans proposed cutting spending back to 2022 levels as a precondition to raising the debt ceiling, while Democrats insisted on a \"clean bill\" without preconditions, as had been the case in raising the ceiling three times during the Donald Trump administration.In the event the government runs out of funds, the Treasury would have to either default on payments to bondholders or immediately curtail payment of funds owed to various companies and individuals that had been mandated but not fully funded by Congress. Both situations would be expected to result in a global economic meltdown. Additionally, if the federal government were unable to issue new debt, it would have to balance its budget by imposing budget cuts that, in total, would equal 5% of the size of the American economy.Constitutional scholar Laurence Tribe said that a default would be unconstitutional due to the 14th Amendment and the government would be required to repay its debts despite hitting the debt ceiling. President Joe Biden said that he was considering invoking the 14th because he felt he had authority to do so, but questioned whether it could be done in time to avoid default given the possibility that it might be appealed.On May 27, Biden and House speaker Kevin McCarthy struck a deal to increase the debt-ceiling but cap federal spending; the resulting bill, the Fiscal Responsibility Act of 2023, passed the House on May 31 and the Senate on June 1. Biden signed it into law on June 3, bringing the crisis to an end.\n\n\n== Background ==\n\n\n=== The deficit and the national debt ===\n\n\n==== Federal budget and deficit ====\n\nIn 2019, just over 60% of the federal budget went to mandatory spending for programs like Social Security, Medicare, and Medicaid, with another 30% going to discretionary spending (half of which went to defense). The remaining 9% went to pay for interest on the debt. Meanwhile, both mandatory spending programs and interest on the debt were expected to take up increasing shares of the federal budget, while tax revenues were expected to be stagnant.In the fiscal year 2022, the federal government brought in $4.90 trillion but spent $6.27 trillion, with a net budget deficit of $1.38 trillion (the fourth-highest of the 21st century). In addition, it has run deficits every year since 2001, when it last ran a surplus. Financing a deficit requires that the government borrow money.However, based on Article 1, Section 8, Clause 2 of the United States Constitution, only Congress has the authority to borrow money \"on the Credit of the United States\".\n\n\n==== Debt ceiling ====\n\nThe United States debt ceiling is a legislative limit that determines how much debt the Treasury Department may incur. It was introduced in 1917, when Congress voted to give Treasury the right to issue bonds for financing America participating in World War I, rather than issuing them for individual projects, as had been the case in the past. In 1939, Congress gave the Treasury the right to issue and manage debt\u2014though it limited how much it could issue. From 1939 to 2018, the Treasury increased the debt ceiling 98 times, decreasing it five times. Whilst the Treasury can borrow money to pay for federal expenditures, it is limited in power by Congress.In other words, the Treasury can borrow money to pay for federal expenditures\u2014but only as much as Congress lets it.\n\n\n==== National debt ====\n\nSince 2009, America's national debt has nearly tripled, with annual federal deficits averaging close to $1 trillion since 2001. During the 21st century, it has gone up for various reasons, including tax cuts under Presidents Bush and Trump, wars in Iraq and Afghanistan, entitlements like Medicare Part D, and spending in response to the Great Recession and the COVID-19 pandemic. Currently, the U.S. is the industrialized country with the fourth highest debt-to-GDP ratio, behind Japan, Italy and Greece. Additionally, the national debt is forecast to be double the United States' GDP by 2051.\n\n\n==== Reducing the deficit and debt ====\nAccording to both policy experts and politicians, dealing with the deficit and debt will ultimately involve both raising taxes and decreasing spending. Past plans for taxes hikes have included reducing the number of deductions, increasing rates on higher earners, and making new taxes, while proposals for reducing spending have included reducing Social Security benefits, lowering payments for Medicaid and Medicare, and cutting defense spending, among others.However, it tends to be difficult to do so in practice, owing to citizens' reluctance to alter large programs like Social Security or the raising of taxes. Historically, no political party has been willing to reduce the deficit or debt when they have held power, although the issue is often a foundation of candidates' election campaigns.\n\n\n=== The U.S. dollar and borrowing ===\nThe United States dollar (used heavily in international trade) is considered to be the world's reserve currency for a variety of reasons, including the sheer magnitude of the American economy, America's geopolitical strength, the dollar's relative stability, and the market for U.S. debt.As well, the Compromise of 1790 (when Treasury Secretary Alexander Hamilton got both Secretary of State Thomas Jefferson and Representative James Madison to agree to take on Revolutionary War debts assumed by the states and the Continental Congress in exchange for locating the capital on the Potomac River by Virginia) played a role with this: Because Revolutionary War bondholders were paid 100 cents on the dollar, America made good on its debt and established good credit. This, in turn, helped contribute to the dollar becoming the world's reserve currency.As a result, foreign creditors (including China, Japan, and the United Kingdom) are large markets for the currency. This makes it easier for the U.S. government to finance the national debt, via being charged lower interest rates for borrowing money.\n\n\n== Reactions ==\n\n\n=== Congress and the president ===\nThe House of Representatives and the White House disagree on how to resolve this crisis. House Speaker Kevin McCarthy (R-CA) has called for negotiations to reduce federal spending in exchange for increasing the debt ceiling, including making possible cuts to Medicare, Medicaid, and Social Security, or otherwise possibly overhauling entitlements. In contrast, the Biden administration has declared that raising the debt ceiling is non-negotiable, and that Congress is obligated to increase it. Senate Minority Leader Mitch McConnell (R-KY) has said that there will be no default, though he has also said that dealing with the debt ceiling will be up to President Biden and Speaker McCarthy.As well, members of the House Freedom Caucus (and a few other Republicans who were not part of it, such as Representative Matt Gaetz) had raised a significant portion of funding for their 2022 election campaigns from small donors, which made it easier for them to resist pressure from business groups to raise the debt ceiling. Indeed, the debt ceiling fight was viewed by some as being an example of widening divisions between corporate America and the Republican Party, which had begun during the Trump presidency. On May 5, 2023 the president's senior advisor, Mitch Landrieu, appeared on TV to field questions on the White House response to the debt-ceiling crisis and the banking crisis. A week later, Landrieu held a press conference at the White House to underscore the serious threat to the national economy of the 'manufactured crisis' of the debt-ceiling standoff.\n\n\n=== Treasury Department ===\n\n\n==== Secretary Yellen's comments ====\nTreasury Secretary Janet Yellen told the Associated Press that, while she expected that Congress would eventually raise the debt ceiling, demanding spending cuts in exchange for doing so would be irresponsible and that increasing it was about ensuring that the federal government could pay for spending that Congress had already approved, rather than about new spending. Yellen made similar points in her January 13, 2023, letter to Congress, also warning that if they did not suspend or raise it, they would harm the American economy, the American people, and the global financial system's stability.\n\n\n==== \"Extraordinary measures\" ====\nAs a result of reaching the debt ceiling, the Treasury Department began considering implementation of \"extraordinary measures\" to prevent a default for a few months, so as to give Congress time to increase the debt ceiling, explained in a memo it issued on January 19, 2023. However, it would only be able to use them for a few months. Extraordinary measures are accounting maneuvers that the Treasury uses to enable the federal government to continue to meet its various financial obligations while there is an impasse over the debt ceiling. Said measures were first used by it in 1985, and Congress granted the Treasury permission to continue using them the following year.Secretary Yellen also initiated a \"debt issuance suspension period\" through June 5, and has rejected the minting of a trillion-dollar coin (which would have created $1 trillion in seigniorage).\n\n\n=== Markets ===\nAnalysts were monitoring the ongoing debate over raising the debt ceiling, and were keeping investors informed of it and similarly warning about the potential consequences of a default. However, as of January 23, 2023, markets were not reacting to the debt ceiling debate, as the expectation was that the debt ceiling would be raised in time to prevent default. Analysts wrote that, with the exception of the 2011 debt ceiling crisis, markets had historically not reacted to debates over raising it. On the other hand, they wrote that if the debt ceiling wasn't increased as the deadline for doing so drew nearer, stock prices would start dropping and interest rates would begin to rise.On May 5, 2023, European credit rating agency Scope placed the United States' AA sovereign rating under review for downgrade.\n\n\n== Responses and analysis ==\n\n\n=== Comparisons to the 2011 debt ceiling crisis ===\n\nThe Associated Press has noted similarities between the 2023 debt ceiling crisis and the one in 2011, including how both involved the GOP-controlled House of Representatives demanding spending cuts in exchange for increasing the debt limit.In 2011, both the House and the Obama administration negotiated for months on it until talks collapsed. As a result, markets experienced turmoil, with the S&amp;P 500 dropping by over 16% in the final month before the deadline. In August 2011, two days before the government would have defaulted, there was a compromise between Democrats and Senate Republicans to create a committee to look into cutting spending, and to also increase the debt ceiling. As a result of the near-default, America's credit rating was downgraded to AA+ by Standard and Poor's, as American borrowing costs went up by $1.3 billion that year.\n\n\n=== Potential consequences of a default ===\nIncreasing political polarization since 2011 has made votes to raise the debt ceiling more contentious than before, with economists now considering what would happen if the federal government defaulted on its loans. One analysis from September 2021 (during a previous debt limit standoff) said that, if the federal government defaulted, America's credit rating would experience a drastic downgrade, interest rates on Treasury bonds would go up sharply, interest rates both in the U.S. and worldwide would spike, and payments on benefits (such as social security) and salaries for the military would be stopped. Other potential consequences of a default would include reduced consumer confidence, a recession, immediately stopping about 10% of the American economy, increasing the cost of a 30-year mortgage, losing three million jobs in the U.S., and increasing the national debt due to higher interest rates.Moody's Analytics warned that Congress may not be able to avoid breaching the debt limit. This warning was based on both the difficulty the House had in electing Kevin McCarthy as Speaker, and how some lawmakers (mostly Republican) were wondering if the Treasury would be able to prioritize paying bondholders if it was breached.\n\n\n=== Fundraising off of the debt ceiling fight ===\nEven with the ongoing fight over raising the debt ceiling, party leaders in Congress were busy raising money, with Republican Congressional leaders raising about $10.4 million and Democratic ones raising $5.7 million during the first three months of 2023.A number of moderate and progressive Democrats in the House and Senate had explicitly brought up the current debt ceiling fight in fundraising appeals to their supporters, and had framed it in terms of warning about potential consequences of a default. Messages about this came from Senate Majority Leader Chuck Schumer, moderates like senators Jon Tester and Sherrod Brown, and progressives like Representative Alexandria Ocasio-Cortez and Senator Elizabeth Warren.Meanwhile, Republican Senator Tim Scott explicitly brought up the debt ceiling fight in his fundraising emails, though he wrote about it in terms of limiting government spending. At the same time, far Right Republicans in Congress had been using the debt ceiling over the past few years to galvanize their supporters and to do fundraising based on it.\n\n\n=== Possible scenarios for how the impasse would end ===\nIn March 2023, economists with Moody's Analytics analyzed five different scenarios for dealing with the debt limit. They included the following in their report on this:\nIncreasing it right before x-date without any conditions (possibly by suspending it until October 1, and then increasing it again to last until sometime in early 2025), thereby avoiding damage to the economy. This would also be what they had done on previous occasions when there was debate over increasing the debt ceiling, and which report indicated would be the most likely possibility for resolving it this time.\nUnilateral action by the executive branch to avert default, which could include:President Biden invoking the 14th Amendment (Section 4) in case no agreement had been made by x-date to increase the debt ceiling. Though it would avert default, it could cause a constitutional crisis and the Supreme Court could have to intervene.\nThe Treasury minting a trillion-dollar coin with its authority under 31 U.S.C. Section 5112, depositing it at the Federal Reserve, and drawing it down to pay the government's bills.\nThe Treasury issuing premium bonds rather than par bonds as Treasury debt comes due, lowering the face amount of debt outstanding and subject to the debt limit.The Treasury prioritizing payments for a few days, which would cause interest rates to spike, would cause chaos in the markets, and would increase the odds of a mild recession starting in late 2023. As well, it is unknown if the Treasury Department would be legally allowed to do this, or if it would be able to, plus effects on the United States' credit rating are unknown.\nAdopting ideas the House Republicans were suggesting in March 2023, including cutting both Medicaid and nondefense-related discretionary spending. Results of this would include a recession and reduced economic growth for the next decade (the borrowing would be significantly reduced, so interest rates would be lower), with people with lower incomes being more likely to suffer financially due to losing both government benefits and jobs.\nA lengthy default that would last for weeks. Results of this would include Treasury debt being downgraded by credit rating agencies, reduced treasury spending, a severe recession, higher interest rates, and a long-term diminution of the U.S. dollar's status as the world's reserve currency, among other effects.\n\n\n== Potential debt ceiling workarounds ==\n\n\n=== Fourteenth Amendment ===\n\nWhile the Fourteenth Amendment, ratified in 1866, is more widely known for its provisions granting citizenship to freed slaves and establishing equal rights, it also contains a long-forgotten provision, Section 4, that states, in part, \"The validity of the public debt of the United States, authorized by law, including debts incurred for payment of pensions and bounties for services in suppressing insurrection or rebellion, shall not be questioned.\" With former Confederate states being admitted back into the Union at the time of the 14th amendment's ratification, many pro-Union members of Congress feared that if the South were to take back a significant amount of Congress, or were to retake the Presidency, they would refuse to pay the debt incurred by the Union during the Civil War, or pay debts incurred by the Confederacy to support its war effort against the United States. Section 4 confirmed the legitimacy of all U.S. debt to stop this from ever happening.\nWhile Section 4's original purpose has long become moot, many constitutional legal scholars believe that Section 4 of the 14th amendment makes the debt ceiling unconstitutional. President Biden could, in theory, end the crisis by avoiding Congress altogether, issuing an executive order invoking Section 4 and ordering the Treasury to continue making payments, even if that pushed the public debt above $31.4 trillion.\nHowever, an invocation of the 14th amendment by President Biden would come with serious pitfalls. Legal scholars are divided as to whether or not it would be legally permissible for Biden to take such an action. His executive order might not be accepted by the courts, and even if it were eventually upheld by the United States Supreme Court, the uncertainty leading up to a decision might cause turmoil in the markets and a spike in interest rates.\n\n\n=== Trillion-dollar coin ===\n\nIn 1997, Congress passed a law that vested power to the Treasury to mint commemorative platinum coins of any denomination. The law, 31 U.S.C. Section 5112, was originally intended to help the Treasury make money off of coin collectors, an idea penned by Delaware's at-large representative, Republican Mike Castle. The text of the statute did not specify any limitations on how high the denomination of the coin could be.An idea, which first emerged just prior to the 2011 debt ceiling crisis, is that the Treasury Secretary could instruct the US Mint to issue a trillion-dollar coin, and deposit it with the Federal Reserve.According to economist Mark Zandi, using the coin in such a way would be inflationary. An opinion article in National Review likened it to the government \"printing money\" to pay off debt. However, according to economist Paul Krugman, the move would not be inflationary, saying on Twitter, \"The Fed would surely sterilize any impact on the monetary base by selling off some of its huge portfolio of US debt.\"Current Treasury Secretary Janet Yellen dismissed the plan as a \"gimmick\", saying that the Federal Reserve isn't required to accept the coin for deposit, and likely would not. Krugman expressed a different opinion, saying on Twitter, \"As for claims that Powell would refuse to accept the coin, or the Supremes would block premium bonds \u2014 well, nobody knows. But my guess is that nobody wants to be the guy who destroys the world economy. Even people happy to see it burn don't want their fingerprints on it.\"\n\n\n== Attempts to raise the debt ceiling ==\nHaving recently regained control of the House, Republicans demanded deep spending cuts as a precondition to raising the debt ceiling, while Democrats insisted on a \"clean bill\" without preconditions, as had been the case in raising the ceiling in 2017, 2018, and 2019, during the Trump administration.\n\n\n=== Meetings between Biden and McCarthy ===\n\n\n==== February ====\nOn Wednesday, February 1, 2023 President Biden and Speaker McCarthy met for an hour in the Oval Office to discuss how to raise the debt ceiling. The two did not reach agreement \u2013 the president called for a clean debt ceiling increase, while the speaker demanded cuts to spending in exchange for raising it \u2013 though both agreed they would continue talking about it.\n\n\n==== May ====\nBiden and McCarthy met several times in May to try and find a way to solve the crisis, ultimately coming to an agreement on May 27.\n\n\n=== March 9 presidential budget ===\nOn March 9, 2023, President Biden released a potential budget for 2023. At 184 pages, this budget included $3 trillion to reduce the deficit, with savings largely coming from increased taxes on the wealthy and corporations.\n\n\n=== Limit, Save, Grow Act ===\nOn April 19, Speaker McCarthy unveiled the Limit, Save, Grow Act, a 320-page House bill which would have raised the debt ceiling by $1.5 trillion (enough to last until at least March 31, 2024), while at the same time providing for significant spending cuts. More specifically, the proposals contained in the draft law included eliminating the partial federal student loan forgiveness program started by the Biden administration, introducing work requirements for Medicaid, eliminating IRS enforcement funding for audits, and getting rid of many clean energy subsidies.In its April 25 analysis of the bill, the Congressional Budget Office estimated that it would reduce federal budget deficits from 2023 to 2033 by a total of around $4.8 trillion, with two-thirds of that coming from reduced discretionary outlays and the rest coming from lower mandatory spending, increased Revenue, and lower interest payments on the national debt.Responses to the bill were mixed. House Budget Committee Chairman Jodey Arrington, who filed the bill, criticized the Biden administration's spending while saying that the plan would address that. Meanwhile, the House Budget Committee's Democratic members referred to it as \"The Default on America Act\", or DOA for short. President Biden said on April 25 that, should the bill pass Congress, he will veto it.It was originally reported that a considerable amount of Republican Representatives would not have supported the bill. However, on April 26, following several days of negotiations and last-minute changes to the bill, the latter managed to pass in the House of Representatives by a vote of 217 to 215, with Republicans Andy Biggs of Arizona, Ken Buck of Colorado, Tim Burchett of Tennessee and Matt Gaetz of Florida joining all Democrats in voting against it.The bill was highly unlikely to pass in the Senate. However, it was viewed by House Republicans as a stepping stone for further negotiations with President Biden on the debt ceiling and spending cuts.\n\n\n=== Discharge petition ===\nOn May 17, Democratic Representative Brendan Boyle introduced a discharge petition to force a vote on House Resolution 350, a special rule providing for immediate consideration of the so-called Breaking the Gridlock Act and of one amendment to the same, which is to be offered by the most senior ranking minority member of the Committee on Ways and Means. Democrats intended to use the amendment to replace the original text of the draft law in its entirety, turning it into a bill raising the debt ceilingBy May 27, all 213 Democratic representatives had signed the petition. Nonetheless, the petition failed to obtain the 218 signatures needed in order for it to be successful because no Republican signed it.\n\n\n== Agreement ==\n\nOn May 29, Patrick McHenry introduced the Fiscal Responsibility Act of 2023, a bipartisan piece of legislation implementing the agreement between Biden and McCarthy. The bill, which was endorsed by both Republican and Democratic leadership, includes the following provisions:\nThe debt limit is suspended until January 1, 2025.\nDiscretionary spending is capped during fiscal years 2024 and 2025.\nAll unused funds appropriated during the COVID-19 pandemic are rescinded.\nAbout a quarter of the $80 billion of additional funding for the Internal Revenue Service provided for in the Inflation Reduction Act of 2022 are rescinded.\nThe administration is required to operate under a PAYGO system: any executive regulation whose implementation costs more money than it brings in can only be made if an equal or greater amount of money is rescinded from other federal programs; this system is waivable by the Office of Management and Budget.\nThe student loans payment moratorium enacted in 2020 ends on September 1, 2023; the partial student loan forgiveness plan introduced by the Biden administration remains unaffected.\nWork requirements for adult SNAP recipients with no dependents are broadened so as to apply to those aged under 51 in fiscal year 2023, to those aged 53 in fiscal year 2024, and to those aged under 55 in fiscal years 2025 to 2030 (currently, only those under 50 are required to work in order to be eligible). Veterans and homeless people are exempt from this provision.\nObtaining a federal permit for energy projects is made easier, especially for what concerns the Mountain Valley Pipeline.On May 30, the Rules Committee agreed to send the bill to the Floor of the House by a vote of 7 to 6, with Republicans Ralph Norman and Chip Roy joining all Democratic members of the Committee in voting against. The bill passed the House on May 31 and the Senate on June 1. Biden signed it into law on June 3.\n\n\n=== Vote summaries ===\n\n\n==== House of Representatives ====\n\n\n==== Senate ====\n\n\n== See also ==\nHistory of the United States debt ceiling\n1995\u20131996 United States federal government shutdowns, which included a dispute about the debt ceiling\n2011 United States debt-ceiling crisis\n2013 United States debt ceiling crisis\n\n\n== Notes ==\n\n\n== References ==\n\n\n== External links ==\nReport: How America Amassed $33 Trillion in Debt",
"pageid": 72793291
},
{
"title": "2013 United States debt-ceiling crisis",
"content": "In January 2013, the United States reached the, at the time, debt ceiling of $16.394 trillion that had been enacted following a crisis in 2011. President Obama and members of the Democratic Party proposed raising the debt ceiling, with some advocating for its complete dismissal. Members of the Republican Party staunchly opposed raising the debt ceiling unless spending cuts would parallel the bill, including defunding the Affordable Care Act. Previous raises of the debt ceiling have been largely bipartisan without conditions.\nThe debt ceiling issue was one of the causes for the 2013 government shutdown, and a lack of a budget bill over the issue forced the government to sequester its budget.\nThe crisis, as well as the government shutdown, ended on October 17, 2013, with the passing of the Continuing Appropriations Act, 2014.\n\n\n== Background ==\n\nAfter the passing in early January 2013 of the American Taxpayer Relief Act of 2012 to avert the projected fiscal cliff, political attention shifted to the debt ceiling. The debt ceiling had technically been reached on December 31, 2012, when the Treasury Department commenced \"extraordinary measures\" to enable the continued financing of the government.The debt ceiling is part of a law (Title 31 of the United States Code, section 3101) created by Congress. According to the Government Accountability Office, \"The debt limit does not control or limit the ability of the federal government to run deficits or incur obligations. Rather, it is a limit on the ability to pay obligations already incurred.\" It does not prohibit Congress from creating further obligations upon the United States. The ceiling was last set at $16.4 trillion in 2011.On January 15, 2013, Fitch Ratings warned that delays in raising the debt ceiling could result in a formal review of its credit rating of the U.S., potentially leading to it being downgraded from AAA. Fitch cautioned that a downgrade could also result from the absence of a plan to bring down the deficit in the medium term. Additionally, the company stated that \"In Fitch's opinion, the debt ceiling is an ineffective and potentially dangerous mechanism for enforcing fiscal discipline.\"\n\n\n== Debate ==\nIn a press conference held on January 14, 2013, President Obama stated that not raising the debt ceiling would cause delays in payments including benefits and government employees' salaries and lead to default on government debt. President Obama urged Congress to raise the debt ceiling without conditions to avoid a default by the United States on government debt. Raising the debt ceiling was also supported by Ben Bernanke, chairman of the Federal Reserve.\nRepublican Speaker of the House, John Boehner and the Senate Republican minority leader, Mitch McConnell as well as other Republicans argued that the debt ceiling should not be raised unless spending is cut by an amount equal to or greater than the debt ceiling increase. Republicans also argued that the Treasury can avoid debt default by prioritizing interest payments on government debt over other obligations. Heritage Action for America, the Family Research Council and the Club for Growth argued that a rise in the debt ceiling should be accompanied by a plan to balance the budget within ten years, through reduced spending in the discretionary budget as well as for entitlements.Several Democratic House members, including Peter Welch, proposed removing the debt ceiling altogether. This proposal found support from some economists such as Jacob Funk Kirkegaard, a senior fellow at the Peterson Institute for International Economics. A survey of 38 economists found that 84% agreed that a separate debt ceiling that is periodically increased could lead to uncertainty and poor fiscal outcomes.\n\n\n== Debt ceiling suspension ==\nIn mid-January, Paul Ryan, Chairman of the House Budget Committee, floated the idea of a short-term debt ceiling increase. He argued that giving Treasury enough borrowing power to postpone default until mid-March would allow Republicans to gain an advantage over Obama and Democrats in debt ceiling negotiations. This advantage would be due to the fact that postponing default until mid-March would allow for a triple deadline to be in March: the sequester on March 1, the default in the middle of the month, and the expiration of the current continuing resolution and the resulting federal government shutdown on March 27. This was supposed to provide extra pressure on the Senate and the President to work out a deal with the Republican-led House.Shortly after that, the House learned that the Senate had not passed an independent budget plan since April 2009. House Republicans quickly came up with an idea that would suspend the debt ceiling enough to allow time for both chambers of Congress to pass a budget.On February 4, 2013, President Obama signed into law the \"No Budget, No Pay Act of 2013\", which suspended the U.S. debt ceiling through May 18, 2013. The bill was passed in the Senate one week previously by a vote of 64\u201334, with all \"no\" votes from Republican senators, who were critical of the lack of spending cuts that accompanied an increase in the limit. In the House, the bill passed the week before by a vote of 285\u2013144, with both parties voting in favor. In the House, Republican representatives attached a provision to mandate the temporary withholding of pay to members of Congress if they did not produce a budget plan by April 15. Pay would be reinstated once a budget was passed or on January 2, 2015 (the last day of the 113th Congress), whichever came first. Under the law, the debt ceiling would be set on May 19, 2013, to a level \"necessary to fund commitment incurred by the Federal Government that required payment.\"\n\n\n=== Developments during suspension ===\n\nOn March 1, the sequester, cutting $1.2 trillion over the next decade, went into effect after the parties failed to reach a deal. On March 21, the House passed a FY 2014 budget that would balance the United States budget in 2023. This was a shorter period than envisaged in their 2013 budget, which balanced in 2035, and the 2012 budget, which balanced in 2063. It passed the House on a mostly party-line 221\u2013207 vote. However, later that day, the Senate voted 59\u201340 to reject the House Republican budget. On March 23, the Senate passed its own 2014 budget on a 50\u201349 vote. The House refused to hold a vote on the Senate budget. On April 10, the President released his own 2014 budget, which was not voted on in either house of Congress. Throughout March and April, there were several developments that reduced the sequester's impact. The bill that extended the government's continuing resolution to September 30 lessened the sequester's effect on defense, and later bills removed furloughs for air traffic control and food service industries.\n\n\n=== Debt ceiling reached again ===\nOn May 19, the debt ceiling was reinstated at just under $16.7 trillion to reflect borrowing during the suspension period. As there was no provision made for further commitments after the ceiling's reinstatement, Treasury began applying extraordinary measures once again.Despite earlier estimates of late July, Treasury announced that default would not happen \"until sometime after Labor Day\". Other organizations, including the Congressional Budget Office (CBO), projected exhaustion of the extraordinary measures in October or possibly November.On August 26, 2013, Treasury informed Congress that if the debt ceiling was not raised in time, the United States would be forced to default on its debt sometime in mid-October.On September 25, Treasury announced that extraordinary measures would be exhausted no later than October 17, leaving Treasury with about $30 billion in cash, plus incoming revenue, but no ability to borrow money. The CBO estimated that the exact date on which Treasury would have had to begin prioritizing/delaying bills and/or actually defaulting on some obligations would fall between October 22 and November 1.\n\n\n== October 2013 debt ceiling debate ==\nObama and Republicans disagreed on the terms of raising the nation's debt limit, and even as to whether the debt limit should even be a subject of negotiation.\nHouse Republicans described a number of policies they wanted to enact before they would agree to increasing the debt ceiling beyond October 2013:\nLong term debt ceiling increase (allowing Treasury to borrow for the rest of Obama's term): privatize Medicare and/or Social Security.\nMedium term debt ceiling increase (allowing Treasury to borrow until sometime in 2015): cut food stamps, use the chained consumer price index (CPI), tax reform, agree to enact block-grant Medicaid or a large raise in the retirement age.\nShort term debt ceiling increase (postponing default until sometime in the first half of 2014): means testing of Social Security, a small raise in the retirement age or ending agricultural subsidies.Obama, in turn, asserted that the 2013 sequestration cuts already represented a budget compromise, and that he did not intend to negotiate further on the issue of debt repayment. However, the president said that he would be willing to negotiate on almost any issue after a clean bill to reopen the government and increase the debt ceiling had been passed.In September 2013 the House of Representatives drafted a bill that would postpone default for approximately twelve months from its passage. The bill also included a one-year delay in implementation of the Patient Protection and Affordable Care Act, a requirement for both houses of Congress to vote on tax reform plans by the end of 2013, and a fast-track process to begin construction of the Keystone XL Pipeline. However, the bill was not voted on by the House or Senate due to some members of the House Republican caucus believing that the bill did not make deep enough spending cuts to be worthy of Republican support.\nThe US Government went into a partial shutdown on October 1, 2013, with about 800,000 Federal employees being put on temporary leave. Treasury Secretary Jack Lew reiterated that the debt ceiling would need to be raised by October 17.In early October 2013, the House drafted a bill that would raise the debt ceiling without conditions through November 22, but keep the partial government shutdown in place. However, it died due to insufficient support among both House Republicans and House Democrats.\n\n\n== Resolution ==\nOn October 16, the Senate passed the Continuing Appropriations Act, 2014, a continuing resolution, to fund the government until January 15, 2014, and suspending the debt ceiling until February 7, 2014, thus ending the 2013 United States federal government shutdown and debt-ceiling crisis.\nIt set up a House\u2013Senate budget conference to negotiate a long-term spending agreement, and strengthened income verification for subsidies under the Patient Protection and Affordable Care Act. The Senate vote was 81\u201318 in favor, with 1 member absent due to illness. The House passed the bill unamended later that day, by a vote of 285\u2013144, with 3 members absent due to illness. The President signed the bill early the next morning on October 17. Under the resolution, the debt ceiling debate and partial government shutdown were postponed, with federal workers returning to work on October 17.On January 14, 2014, the House and the Senate Appropriations Committees agreed on a spending plan that would fund the federal government for two years. A bill extending the previous continuing resolution through January 18 was also passed. On January 16, 2014, Congress passed a $1.1 trillion appropriations bill that will keep the federal government funded until October 2014. President Obama signed the appropriations bill into law on January 18.On February 7, 2014, the debt limit suspension expired and treasury began applying extraordinary measures once again, warning that such measures would not last beyond February 27 due to large tax refunds that would need to be paid during February. On February 11, after finding insufficient support for various conditions for increasing the debt ceiling, the House passed a bill suspending the debt ceiling without conditions through March 15, 2015. The Senate passed the bill unamended on February 12, 2014, and it was signed into law as Public Law 113-83 by the President on February 15.\n\n\n== Reaction ==\n\n\n=== Effect on United States debt rating ===\nJust as during the 2011 debt ceiling crisis, the 2013 crisis caused rating agencies to re-evaluate the rating of US government debt. On October 15, Fitch Ratings placed the United States under a \"Rating watch negative\" in response to the crisis. On October 17, Dagong Global Credit Rating downgraded the United States from A to A\u2212, and maintained a negative outlook on the country's credit.\n\n\n=== Effect on the U.S. Stock Market ===\nAccording to a Morningstar analysis of debt-ceiling and government shutdown situations, the U.S. stock market remained relatively unchanged during the 2013 crisis period.\n\n\n=== Political aftermath ===\nIn the immediate aftermath of the crisis opinion polls showed approval to drop for the Republican Party. Polls showed that Americans blamed the Republicans more for the shutdown than President Barack Obama by a margin of 22 points (53 percent to 31 percent). Another poll showed a 74% disapproval rating of the way Republicans handled the crisis while 61% disapproved of the way Democrats handled the budget talks. According to a Gallup Poll, \"60 percent of respondents said that a third major party is needed to represent the American people\", an all-time high.\n\n\n== See also ==\nBudget Control Act of 2011\nEuropean sovereign debt crisis\nHistory of United States debt ceiling\n2007\u20132008 financial crisis\nUnited States Congress Joint Select Committee on Deficit Reduction\nUnited States federal government credit-rating downgrades\n2011 United States debt-ceiling crisis\n2023 United States debt-ceiling crisis\n2013 United States federal government shutdown\n1995\u20131996 United States federal government shutdowns\n\n\n== References ==",
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"content": "In the United States, the debt ceiling or debt limit is a legislative limit on the amount of national debt that can be incurred by the U.S. Treasury, thus limiting how much money the federal government may pay by borrowing more money, on the debt it already borrowed. The debt ceiling is an aggregate figure that applies to gross debt, which includes debt in the hands of the public and intra-government accounts. About 0.5 percent of the debt is not covered by the ceiling (as of 10/2013). Because expenditures are authorized by separate legislation, the debt ceiling does not directly limit government deficits. In effect, it can only restrain the Treasury from paying for expenditures and other financial obligations after the limit has been reached, but which have already been approved (in the budget) and appropriated.\nThere is a debate among legal scholars regarding the constitutionality of the debt ceiling. Some scholars argue that the debt ceiling does not provide the legal authority for the United States to default on its debt. Some also argue that the debt ceiling itself is unconstitutional since it does not provide a clear mechanism for the government to meet its constitutional obligation to repay its debts once it meets the borrowing limit.When the debt ceiling is reached without an increase in the limit having been enacted, Treasury will need to resort to \"extraordinary measures\" to temporarily finance government expenditures and obligations until a resolution can be reached. The Treasury has never reached the point of exhausting extraordinary measures, resulting in a constitutionally questionable default, although, on some occasions, it appeared that Congress might allow a default to take place. If this situation were to occur, it is unclear whether the Treasury would be able to prioritize debt payments to avoid a default on its bond obligations. A protracted default could trigger a variety of economic problems including a financial crisis, and a decline in output that would put the country into an economic recession.Management of the United States public debt is an important part of the macroeconomics of the United States economy and finance system, and the debt ceiling is designed to be a constraint on the executive's ability to manage the U.S. economy. There is debate, however, on how the U.S. economy should be managed, and whether a debt ceiling is an appropriate or constitutional mechanism for restraining government spending.The most recent time that the debt ceiling was raised was on June 3, 2023, when U.S. president Joe Biden signed the Fiscal Responsibility Act of 2023 into law ending the 2023 United States debt-ceiling crisis that began on January 19, 2023. The debt limit extends into 2025. Previously, in December 2021, the debt ceiling was raised when it was increased by $2.5 trillion, to $31.381 trillion, which lasted until January 2023.\n\n\n== Background ==\nUnder Article I Section 8 of the United States Constitution, only Congress can authorize the borrowing of money on the credit of the United States. From the founding of the U.S. until 1917, Congress directly authorized each debt issued. To provide more flexibility to finance the United States' involvement in World War I, Congress modified the method by which it authorized debt in the Second Liberty Bond Act of 1917. Under this Act, Congress established an aggregate limit, or \"ceiling,\" on the total amount of new bonds that could be issued.\nThe present debt ceiling is an aggregate limit applied to nearly all federal debt, which was substantially established by the Public Debt Acts of 1939 and 1941 which have subsequently been amended to change the ceiling amount.\nFrom time to time, political disputes arise when the Treasury advises Congress that the debt ceiling is about to be reached and indicates that a default is imminent. When the debt ceiling is reached, and pending an increase in the limit, Treasury may resort to \"extraordinary measures\" to buy more time before the ceiling can be raised by Congress. The U.S. has never reached the point of default where the Treasury was incapable of paying U.S. debt obligations, though it has been close on several occasions. The only exception was during the War of 1812 when parts of Washington D.C. including the Treasury were burned.In 2011, the U.S. reached a crisis point of near default on public debt. The delay in raising the debt ceiling resulted in the first downgrade in the United States credit rating, a sharp drop in the stock market, and an increase in borrowing costs. Congress raised the debt limit with the Budget Control Act of 2011, which added to the fiscal cliff when the new ceiling was reached on December 31, 2012.\n\n\n== Relationship to federal budget ==\nThe process of setting the debt ceiling is separate and distinct from the United States budget process, and raising the debt ceiling neither directly increases nor decreases the budget deficit, and vice versa. The Government Accountability Office explains, \"the debt limit does not control or limit the ability of the federal government to run deficits or incur obligations. Rather, it is a limit on the ability to pay obligations already incurred.\"The President formulates a federal budget every year, which Congress must pass, sometimes with amendments, in a concurrent resolution, which does not require the President's signature and is not binding. The budget details projected tax collections and expenditures and, therefore, specifies the estimated amount of borrowing the government would have to do in that fiscal year.\n\n\n=== Debt not covered by ceiling ===\nIn December 2012, the Treasury calculated that $239 million in United States Notes were in circulation, which in accordance with the debt ceiling legislation, are excluded from the statutory debt limit. The $239 million excludes $25 million in U.S. Notes issued prior to July 1, 1929, determined pursuant to Act of June 30, 1961, 31 U.S.C. 5119, to have been destroyed or irretrievably lost.Debts of the Federal Financing Bank are not debts of the government per se and therefore are also not subject to the ceiling, but have a separate limit of $15 billion.\n\n\n== Legislative history ==\n\nBefore 1917, the U.S. had no debt ceiling. Congress either authorized specific loans or allowed the Treasury to issue certain debt instruments and individual debt issues for specific purposes. Sometimes Congress gave the Treasury discretion over what type of debt instrument would be issued. 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.In 1953, the U.S. Treasury risked reaching the debt ceiling of $275 billion. Though President Eisenhower requested that Congress increase it on July 30, 1953, the Senate refused to act on it. As a result, the president asked federal agencies to reduce how much they spent, plus the Treasury Department used its cash balances with banks to stay under the debt ceiling. And, starting in November 1953, Treasury monetized close to $1 billion of gold left over in its vaults, which helped keep it from exceeding the $275 billion limit. During spring and summer 1954, the Senate and the executive branch negotiated on a debt ceiling increase, and a $6 billion one was passed on August 28, 1954.Before the Budget and Impoundment Control Act of 1974, the debt ceiling played an important role in enabling Congress to hold hearings and debates on the budget. James Surowiecki argued that the debt ceiling lost its usefulness after these reforms to the budget process.In 1979, noting the potential problems of hitting a default, Dick Gephardt imposed the \"Gephardt Rule,\" a parliamentary rule that deemed the debt ceiling was 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-controlled Congress in 1995.A vote to increase the debt ceiling has usually been (since the 1950s) a legal budgetary formality between the President and Congress. As of 1993 the debt ceiling had not historically been a political issue that would make the elected government fail to pass a yearly budget.\n\n\n=== Debt ceiling increases under Presidents Ronald Reagan and George H. W. Bush ===\nUnder the two terms of President Ronald Reagan, the House was controlled by Democrats, and the Senate was, at various points, under the control of both parties. Early in his term, Reagan faced some bipartisan resistance from Congress for a 1981 raising of the debt limit. But Democrats, using the Gephardt Rule, joined with Republicans to increase the debt ceiling eighteen separate times.Under President George H.W. Bush, Democrats controlled both the House and Senate. Again using the Gephardt Rule, Congress increased the debt ceiling nine times without controversy.\n\n\n=== Debt ceiling increases under President Bill Clinton ===\n\nThe debt-ceiling debate of 1995 led to a showdown on the federal budget and resulted in the U.S. federal government shutdowns of 1995 and 1996.\n\n\n=== Debt ceiling increases under President George W. Bush ===\nWhile George W. Bush was President, both Republicans and Democrats controlled the House and the Senate at various points during his term. Congress increased the debt ceiling eight times in 2002, 2003, 2004, 2006, 2007, and twice in 2008.When Republicans were in the majority, they consistently voted to increase the debt ceiling. While some Democrats did vote against the debt ceiling when the process was controlled by a Republican majority, Democrats did not filibuster debt limit increases in 2003, 2004 and 2006, allowing Senate Republicans to raise the debt limit with a simple majority.When Democrats controlled the House and the Senate in the last two years of George W. Bush's term, Democratic majorities in the House and the Senate reinstated the automatic Gephardt Rule and increased the debt ceiling three times without attaching preconditions.\n\n\n=== Debt ceiling increases under President Barack Obama ===\n\nIn 2011, Republicans took control of Congress and again suspended the Gephardt Rule as they had under Clinton. The Republican majority in Congress demanded deficit reduction as part of raising the debt ceiling. The resulting contention was resolved on August 2, 2011, by the Budget Control Act of 2011. Under the \"McConnell Rule,\" the president was allowed to unilaterally raise the debt ceiling. This action could be overturned by an act of Congress, but this would require a 2\u20443 majority vote in both houses assuming that the president vetoed the act.On August 5, 2011, Standard &amp; Poors issued the first ever downgrade in the federal government's credit rating, citing their April warnings, the difficulty of bridging the parties and that the resulting agreement fell well short of the hoped-for comprehensive 'grand bargain'. The credit downgrade and debt ceiling debacle contributed to the Dow Jones Industrial Average (DJIA) falling nearly 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.Following the increase in the debt ceiling to $16.394 trillion in 2011, the U.S. 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. Extraordinary measures were expected to be exhausted by February 15.Another debt ceiling crisis arose in early 2013 when the ceiling was reached again, and the Treasury adopted extraordinary measures to avoid a default. The Treasury said it was not set up to prioritize payments and had given the opinion that it is unclear whether 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 was not raised. Economists estimated that such an action would cause GDP to contract by 7 percent, which is larger than the contraction during 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 the freeze in their revenue.The 2013 crisis was temporarily resolved on February 4, 2013, when President Barack Obama signed the No Budget, No Pay Act of 2013 which suspended the debt ceiling 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. During the suspension period, the Treasury was authorized to borrow to the extent that it \"is required to meet existing commitments\". On May 19, the debt ceiling was raised by $306 billion to cover the borrowings done during the suspension period, as well as commitments that accrued in the preceding period that extraordinary measures were in place, which commenced on December 31, 2012.Treasury Secretary Jack Lew notified Congress that these measures would be exhausted by October 17, 2013 and that a default would occur on October 17 when interest payments came due. From October 17, 2013 until February 7, 2014, the debt ceiling was again suspended. On February 12, 2014, the Temporary Debt Limit Extension Act was passed, suspending the debt ceiling until March 15, 2015. At that time, the Treasury Department took extraordinary measures.The debt ceiling would again have been reached on November 3, 2015. But on October 30, 2015, the debt ceiling was again suspended to March 2017.\n\n\n=== Debt ceiling increases under President Donald Trump ===\nWhen Donald Trump was President, the debt ceiling was subject to less partisan controversy. The administration and the Republicans who controlled the House and the Senate prioritized tax cuts over a balanced budget.\nThe ceiling was suspended three times: from September 30, 2017, to December 8, 2017; from December 8, 2017 to March 1, 2019; and, after concerns were raised from Treasury in July 2019 of an unexpected shortfall due to reduced tax receipts under Trump's tax legislation, from August 2, 2019 to July 31, 2021.Congress did not impose any preconditions or significant spending cuts. Democrats in the Senate could have threatened to stop the debt ceiling increase by use of the filibuster but declined to do so.\n\n\n=== Debt ceiling increases under President Joe Biden ===\n\nDuring Biden's first two years as president, the House and Senate were both controlled by the Democratic Party. In October 2021, the debt ceiling was increased by $480 billion, as a temporary measure requiring fresh legislation by December 3, 2021. That month, Congress voted to increase it by $2.5 trillion, which President Biden signed into effect on December 16, 2021. At that point, it was set at about $31.4 trillion.On January 19, 2023, the United States hit its debt ceiling of $31.4 trillion. By this time, Republicans had taken control of the House during the 2022 midterm elections. Although Republicans were a minority in the Senate, they threatened for the first time in American history to use the filibuster to stop the debt ceiling increase. The crisis was resolved by negotiation of the Fiscal Responsibility Act of 2023.\n\n\n== Extraordinary measures ==\nThe Treasury Department is permitted to borrow funds needed to fund government operations, as had been authorized by congressional appropriations, up to the debt ceiling, with some small exceptions. In a letter to Congress on April 4, 2011, Treasury Secretary Timothy Geithner explained that when the debt ceiling is reached, the Treasury can declare a \"debt issuance suspension period\" during which it can take \"extraordinary measures\" to continue meeting federal obligations provided that it does not involve the issue of new debt. These measures are taken to avoid, as far as resources permit, a partial government shutdown or a default on the debt. These methods have been used on several previous occasions in which federal debt neared its statutory limit.Extraordinary measures can include suspending investments in the G Fund of the Thrift Savings Plan of individual retirement funds of federal employees. In 2011, extraordinary measures included suspending investments in the Civil Service Retirement and Disability Fund (CSRDF), the Postal Service Retiree Health Benefits Fund (Postal Benefits Fund), and the Exchange Stabilization Fund (ESF). In addition, certain CSRDF investments were also redeemed early. In 1985, the Treasury had also exchanged Treasury securities for non-Treasury securities held by the Federal Financing Bank.However, these amounts are not sufficient to cover government operations for extended periods. Treasury first implemented these measures on December 16, 2009, to avoid a government shutdown. These measures were implemented again on May 16, 2011, when Treasury Secretary Geithner declared a \"debt issuance suspension period\". According to his letter to Congress, this period could \"last until August 2, 2011, when the Department of the Treasury projects that the borrowing authority of the United States will be exhausted\".The measures were again implemented on December 31, 2012, the start of the debt ceiling crisis of 2013 with the default trigger date ticking to February 2013. The crisis was deferred with the suspension of the limit on February 4, and the cancellation of the extraordinary measures. The measures were again invoked at the end of the ceiling's suspension on May 19, 2013, with the date of exhaustion of the resources and the default trigger date being estimated by the Treasury as October 17. The ceiling was again suspended by legislation on that date until February 4, 2014.\n\n\n== Default on financial obligations ==\nAccording to the text of the debt ceiling law, if the debt ceiling is not raised and extraordinary measures are exhausted, the U.S. government is legally unable to borrow money to pay its financial obligations. At that point, the law indicates that the government must cease making payments unless the treasury has cash on hand to cover them. In addition, the law indicates that the government would not have the resources to pay the interest on (and some time redeem) government securities when due, which would be characterized as a default. A default may affect the United States' sovereign risk rating and the interest rate that it will be required to pay on future debt. As of 2012, the U.S. defaulted on its financial obligations once in 1979, due to a computer backlog, but the periodic crises relating to the debt ceiling have led several rating agencies to United States federal government credit-rating downgrades. As of 2012, the GAO estimated that the delay in raising the debt ceiling during the debt ceiling crisis of 2011 raised borrowing costs for the government by $1.3 billion in the fiscal year 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.As of 2012, some writers expressed the view that if extraordinary measures are exhausted, the executive branch has the authority to determine which obligations are paid and which are not, though the Treasury has argued that all obligations are on equal footing under the law. The writers have argued that the executive branch can choose to prioritize interest payments on bonds, which would avoid an immediate, direct default on sovereign debt. During the debt ceiling crisis of 2011, Treasury Secretary Timothy Geitner argued that prioritization of interest payments would not help since government expenditures would have needed to be cut by an unrealistic 40% if the debt ceiling is not raised. Also, a default on non-debt obligations would still undermine American creditworthiness according to at least one rating agency. In 2011, the Treasury suggested that it could not prioritize certain types of expenditures because all expenditures are on equal footing under the law. In this view, when extraordinary measures are exhausted, no payments could be made except when money (such as tax receipts) is in the treasury, at all and the U.S. would be in default on all of its obligations. The CBO notes, that prioritization would not avoid the technical definition found in Black's Law Dictionary where default is defined as \u201cthe failure to make a payment when due.\u201dMany scholars argue that debt ceiling law is unconstitutional and there is no legal basis by which the U.S. government may default on any of its debt. They point to Section Four of the 14th Amendment of the United States Constitution, which states that \"the validity of the public debt of the United States...shall not be questioned.\" They argue that it was unconstitutional for the U.S. Congress to pass the debt ceiling law in the first place, since the law does not provide a clear way for the U.S. to pay its debts and implicitly requires a default. Harvard University legal scholar Laurence Tribe argues that \"using the ceiling to make us default on our debts clearly would be unconstitutional.\" This argument has also been endorsed by various politicians, including President Bill Clinton, former labor secretary Robert Reich, Representative Jerry Nadler, and Representative James Clyburn. In 2023, a group of lawmakers from the Senate and House of Representatives sent a letter to President Biden encouraging him to consider invoking the 14th Amendment to pay government debts. However, there are scholars who argue that even if the law itself is unconstitutional, that determination must be made by the courts and the President does not have the authority to unilaterally ignore the debt ceiling law. In practice, the administrations of Presidents Barack Obama and Joe Biden have rejected relying on legal arguments against the constitutionality of the debt ceiling. Obama said in 2011 that his lawyers \"were not persuaded that that is a winning argument.\" In 2023, Biden's Treasury Secretary Janet Yellen called this strategy \"legally questionable.\" Biden himself said \"I think we have the authority\" to invoke the 14th Amendment to pay government debts, suggesting that he would explore this question in the future, but he questioned the practicality of relying on this approach to defuse a debt ceiling standoff. In May 2023, the National Association of Government Employees filed a lawsuit in federal court alleging that the debt ceiling law is unconstitutional.\n\n\n== Debate on debt ceiling ==\nReports to Congress from the OMB and other sources in the 1990s have repeatedly stated that the debt limit is an ineffective means to restrain the growth of debt.In 2011, James Surowiecki argued that the debt ceiling originally served a useful purpose. When introduced, presidents had stronger authority to borrow and spend as they pleased. However, after 1974 the Congress began passing comprehensive budget resolutions which specified exactly how much money the government could spend.The apparent redundancy of the debt ceiling has led to suggestions that it should be abolished altogether. Several Democratic House members, including Peter Welch, proposed abolishing the debt ceiling. The proposal found support from some economists such as Jacob Funk Kirkegaard, a senior fellow at the Peterson Institute for International Economics.\nIn January 2013, a survey of 38 highly regarded economists found that 84 percent agreed that, since Congress already approves spending and taxation, \"a separate debt ceiling that has to be increased periodically creates unneeded uncertainty and can potentially lead to worse fiscal outcomes.\" Only one member of the panel, Luigi Zingales, disagreed with the statement. Rating agency Moody's has stated that \"the debt limit creates a high level of uncertainty\" and that the government should change \"its framework for managing government debt to lessen or eliminate that uncertainty\".In 2021, the U.S. debt ceiling has been described as \"anachronistic\", with the two major parties criticized for utilizing the debt ceiling to play a dangerous game of chicken for purely partisan political purposes.\n\n\n=== Modern Monetary Theory ===\nProponents of Modern Monetary Theory (MMT), a heterodox, post-Keynesian economic theory which arose in the late 20th century, have critiqued the concept of the debt ceiling and its theoretical and practical uses. A core tenet of MMT is that currency arose from and is wholly controlled as fiat money by governments, the latter claim is dependent on the government as the sovereign issuer of the given currency. As of 2019, MMT theorists believed that governments have the power to create and spend money within a limit of reason without creating hyperinflation, as well as the ability to forgive its debt or repay itself; in contrast, as of 2020, orthodox economic theorists tended to focus on national deficit as a debt that needs to be repaid eventually. As a result, MMT theorists argue the debt ceiling is largely a symbolic limit on government spending; in 2020 Stephanie Kelton, a prominent supporter of MMT, wrote that \"there are no constraints on the federal budget.\"After the turn of the 20th century, and particularly during and since the Great Recession (2007-2009) political landscape, MMT has been the subject of political debate between post-Keynsian, mainstream, and free-market economic theorists and politicians alike. As of 2019, MMT debates on the debt ceiling have pervaded Congress, with progressive representatives, prominently Alexandria Ocasio-Cortez, boosting the theory to the mainstream, while conservative representatives have been critiquing MMT's potential impacts on government spending and inflation.As of January 2023 Treasury Secretary Janet Yellen supported legislation to abolish the debt limit, which President Biden has ruled out.\n\n\n== References ==\n\n\n== Sources ==\n\"Amerikanere kan l\u00e6re af dansk g\u00e6ldsloft\" (in Danish). DR Nyheder. August 3, 2011. Retrieved May 6, 2013.\n\"Analysis of 2011-2012 Actions Taken and Effect of Delayed Increase on Borrowing Costs\" (PDF). GAO. July 2012. Retrieved January 13, 2013.\nAustin, D. Andrew (August 9, 2017). The Debt Limit Since 2011 (PDF). Washington, DC: Congressional Research Service. Retrieved November 22, 2017.\nMurray, Justin (November 6, 2017). Votes on Measures to Adjust the Statutory Debt Limit, 1978 to Present (PDF). Washington, DC: Congressional Research Service. Retrieved November 22, 2017.\n\"Federal Debt and the Statutory Limit, November 2012\" (PDF). Congressional Budget Office. November 2012.\n\"Delays Create Debt Management Challenges and Increase Uncertainty in the Treasury Market\" (PDF). GAO-11-203. GAO. February 2011. Retrieved January 13, 2013.\nGreen, Joshua (May 9, 2011). \"How Dick Gephardt Fixed the Debt-Ceiling Problem\". The Atlantic.\nKowalcky, Linda W.; LeLoup, Lance T. (1993). \"Congress and the Politics of Statutory Debt Limitation\". Public Administration Review. 53 (1): 14. CiteSeerX 10.1.1.397.5755. doi:10.2307/977272. JSTOR 977272.\nLawder, David (June 29, 2011). \"Prioritizing debt payments won't work: Geithner\". Reuters.\nLevit, Mandy R.; Brass, Clinton T.; Nicola, Timothy J.; Nuschler, Dawn (January 4, 2013). \"Reaching the Debt Limit: Background and Potential Effects on Government Operations\" (PDF). Archived from the original (PDF) on January 23, 2013.\nMasters, Jonathan. \"U.S. Debt Ceiling: Costs and Consequences\". Renewing America. Council on Foreign Relations.\nSahadi, Jeanne (January 7, 2013). \"Debt Ceiling: 'Chaotic' choices on 100 million payments\". CNNMoney. Retrieved January 13, 2013.\nSahadi, Jeanne (May 17, 2013). \"Debt ceiling: Treasury starts juggling act\". CNNMoney. Archived from the original on June 7, 2013.\nSurowiecki, James (August 1, 2011). \"Smash the Ceiling\". The New Yorker.\nSweet, Ken (August 8, 2011). \"Dow plunges after S&amp;P downgrade\". CNNMoney.\nYglesias, Matthew (January 16, 2013). \"What if Congress Doesn't Raise the Debt Ceiling?\". Slate.\n\n\n== Further reading ==\nEisner, Robert (1993). \"Federal Debt\". In David R. Henderson (ed.). Concise Encyclopedia of Economics (1st ed.). Library of Economics and Liberty. OCLC 317650570, 50016270, 163149563\nGeorge J. Hall and Thomas J. Sargent. 2018. \"Brief history of US debt limits before 1939.\" PNAS March 20, 2018. 115 (12) 2942-2945",
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"extract": "In the United States, the debt ceiling or debt limit is a legislative limit on the amount of national debt that can be incurred by the U.S. Treasury, thus limiting how much money the federal government may pay by borrowing more money, on the debt it already borrowed. The debt ceiling is an aggregate figure that applies to gross debt, which includes debt in the hands of the public and intra-government accounts. About 0.5 percent of the debt is not covered by the ceiling (as of 10/2013). Because expenditures are authorized by separate legislation, the debt ceiling does not directly limit government deficits. In effect, it can only restrain the Treasury from paying for expenditures and other financial obligations after the limit has been reached, but which have already been approved (in the budget) and appropriated.\nThere is a debate among legal scholars regarding the constitutionality of the debt ceiling. Some scholars argue that the debt ceiling does not provide the legal authority for the United States to default on its debt. Some also argue that the debt ceiling itself is unconstitutional since it does not provide a clear mechanism for the government to meet its constitutional obligation to repay its debts once it meets the borrowing limit.When the debt ceiling is reached without an increase in the limit having been enacted, Treasury will need to resort to \"extraordinary measures\" to temporarily finance government expenditures and obligations until a resolution can be reached. The Treasury has never reached the point of exhausting extraordinary measures, resulting in a constitutionally questionable default, although, on some occasions, it appeared that Congress might allow a default to take place. If this situation were to occur, it is unclear whether the Treasury would be able to prioritize debt payments to avoid a default on its bond obligations. A protracted default could trigger a variety of economic problems including a financial crisis, and a decline in output that would put the country into an economic recession.Management of the United States public debt is an important part of the macroeconomics of the United States economy and finance system, and the debt ceiling is designed to be a constraint on the executive's ability to manage the U.S. economy. There is debate, however, on how the U.S. economy should be managed, and whether a debt ceiling is an appropriate or constitutional mechanism for restraining government spending.The most recent time that the debt ceiling was raised was on June 3, 2023, when U.S. president Joe Biden signed the Fiscal Responsibility Act of 2023 into law ending the 2023 United States debt-ceiling crisis that began on January 19, 2023. The debt limit extends into 2025. Previously, in December 2021, the debt ceiling was raised when it was increased by $2.5 trillion, to $31.381 trillion, which lasted until January 2023.\n\n\n== Background ==\nUnder Article I Section 8 of the United States Constitution, only Congress can authorize the borrowing of money on the credit of the United States. From the founding of the U.S. until 1917, Congress directly authorized each debt issued. To provide more flexibility to finance the United States' involvement in World War I, Congress modified the method by which it authorized debt in the Second Liberty Bond Act of 1917. Under this Act, Congress established an aggregate limit, or \"ceiling,\" on the total amount of new bonds that could be issued.\nThe present debt ceiling is an aggregate limit applied to nearly all federal debt, which was substantially established by the Public Debt Acts of 1939 and 1941 which have subsequently been amended to change the ceiling amount.\nFrom time to time, political disputes arise when the Treasury advises Congress that the debt ceiling is about to be reached and indicates that a default is imminent. When the debt ceiling is reached, and pending an increase in the limit, Treasury may resort to \"extraordinary measures\" to buy more time before the ceiling can be raised by Congress. The U.S. has never reached the point of default where the Treasury was incapable of paying U.S. debt obligations, though it has been close on several occasions. The only exception was during the War of 1812 when parts of Washington D.C. including the Treasury were burned.In 2011, the U.S. reached a crisis point of near default on public debt. The delay in raising the debt ceiling resulted in the first downgrade in the United States credit rating, a sharp drop in the stock market, and an increase in borrowing costs. Congress raised the debt limit with the Budget Control Act of 2011, which added to the fiscal cliff when the new ceiling was reached on December 31, 2012.\n\n\n== Relationship to federal budget ==\nThe process of setting the debt ceiling is separate and distinct from the United States budget process, and raising the debt ceiling neither directly increases nor decreases the budget deficit, and vice versa. The Government Accountability Office explains, \"the debt limit does not control or limit the ability of the federal government to run deficits or incur obligations. Rather, it is a limit on the ability to pay obligations already incurred.\"The President formulates a federal budget every year, which Congress must pass, sometimes with amendments, in a concurrent resolution, which does not require the President's signature and is not binding. The budget details projected tax collections and expenditures and, therefore, specifies the estimated amount of borrowing the government would have to do in that fiscal year.\n\n\n=== Debt not covered by ceiling ===\nIn December 2012, the Treasury calculated that $239 million in United States Notes were in circulation, which in accordance with the debt ceiling legislation, are excluded from the statutory debt limit. The $239 million excludes $25 million in U.S. Notes issued prior to July 1, 1929, determined pursuant to Act of June 30, 1961, 31 U.S.C. 5119, to have been destroyed or irretrievably lost.Debts of the Federal Financing Bank are not debts of the government per se and therefore are also not subject to the ceiling, but have a separate limit of $15 billion.\n\n\n== Legislative history ==\n\nBefore 1917, the U.S. had no debt ceiling. Congress either authorized specific loans or allowed the Treasury to issue certain debt instruments and individual debt issues for specific purposes. Sometimes Congress gave the Treasury discretion over what type of debt instrument would be issued. 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.In 1953, the U.S. Treasury risked reaching the debt ceiling of $275 billion. Though President Eisenhower requested that Congress increase it on July 30, 1953, the Senate refused to act on it. As a result, the president asked federal agencies to reduce how much they spent, plus the Treasury Department used its cash balances with banks to stay under the debt ceiling. And, starting in November 1953, Treasury monetized close to $1 billion of gold left over in its vaults, which helped keep it from exceeding the $275 billion limit. During spring and summer 1954, the Senate and the executive branch negotiated on a debt ceiling increase, and a $6 billion one was passed on August 28, 1954.Before the Budget and Impoundment Control Act of 1974, the debt ceiling played an important role in enabling Congress to hold hearings and debates on the budget. James Surowiecki argued that the debt ceiling lost its usefulness after these reforms to the budget process.In 1979, noting the potential problems of hitting a default, Dick Gephardt imposed the \"Gephardt Rule,\" a parliamentary rule that deemed the debt ceiling was 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-controlled Congress in 1995.A vote to increase the debt ceiling has usually been (since the 1950s) a legal budgetary formality between the President and Congress. As of 1993 the debt ceiling had not historically been a political issue that would make the elected government fail to pass a yearly budget.\n\n\n=== Debt ceiling increases under Presidents Ronald Reagan and George H. W. Bush ===\nUnder the two terms of President Ronald Reagan, the House was controlled by Democrats, and the Senate was, at various points, under the control of both parties. Early in his term, Reagan faced some bipartisan resistance from Congress for a 1981 raising of the debt limit. But Democrats, using the Gephardt Rule, joined with Republicans to increase the debt ceiling eighteen separate times.Under President George H.W. Bush, Democrats controlled both the House and Senate. Again using the Gephardt Rule, Congress increased the debt ceiling nine times without controversy.\n\n\n=== Debt ceiling increases under President Bill Clinton ===\n\nThe debt-ceiling debate of 1995 led to a showdown on the federal budget and resulted in the U.S. federal government shutdowns of 1995 and 1996.\n\n\n=== Debt ceiling increases under President George W. Bush ===\nWhile George W. Bush was President, both Republicans and Democrats controlled the House and the Senate at various points during his term. Congress increased the debt ceiling eight times in 2002, 2003, 2004, 2006, 2007, and twice in 2008.When Republicans were in the majority, they consistently voted to increase the debt ceiling. While some Democrats did vote against the debt ceiling when the process was controlled by a Republican majority, Democrats did not filibuster debt limit increases in 2003, 2004 and 2006, allowing Senate Republicans to raise the debt limit with a simple majority.When Democrats controlled the House and the Senate in the last two years of George W. Bush's term, Democratic majorities in the House and the Senate reinstated the automatic Gephardt Rule and increased the debt ceiling three times without attaching preconditions.\n\n\n=== Debt ceiling increases under President Barack Obama ===\n\nIn 2011, Republicans took control of Congress and again suspended the Gephardt Rule as they had under Clinton. The Republican majority in Congress demanded deficit reduction as part of raising the debt ceiling. The resulting contention was resolved on August 2, 2011, by the Budget Control Act of 2011. Under the \"McConnell Rule,\" the president was allowed to unilaterally raise the debt ceiling. This action could be overturned by an act of Congress, but this would require a 2\u20443 majority vote in both houses assuming that the president vetoed the act.On August 5, 2011, Standard &amp; Poors issued the first ever downgrade in the federal government's credit rating, citing their April warnings, the difficulty of bridging the parties and that the resulting agreement fell well short of the hoped-for comprehensive 'grand bargain'. The credit downgrade and debt ceiling debacle contributed to the Dow Jones Industrial Average (DJIA) falling nearly 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.Following the increase in the debt ceiling to $16.394 trillion in 2011, the U.S. 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. Extraordinary measures were expected to be exhausted by February 15.Another debt ceiling crisis arose in early 2013 when the ceiling was reached again, and the Treasury adopted extraordinary measures to avoid a default. The Treasury said it was not set up to prioritize payments and had given the opinion that it is unclear whether 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 was not raised. Economists estimated that such an action would cause GDP to contract by 7 percent, which is larger than the contraction during 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 the freeze in their revenue.The 2013 crisis was temporarily resolved on February 4, 2013, when President Barack Obama signed the No Budget, No Pay Act of 2013 which suspended the debt ceiling 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. During the suspension period, the Treasury was authorized to borrow to the extent that it \"is required to meet existing commitments\". On May 19, the debt ceiling was raised by $306 billion to cover the borrowings done during the suspension period, as well as commitments that accrued in the preceding period that extraordinary measures were in place, which commenced on December 31, 2012.Treasury Secretary Jack Lew notified Congress that these measures would be exhausted by October 17, 2013 and that a default would occur on October 17 when interest payments came due. From October 17, 2013 until February 7, 2014, the debt ceiling was again suspended. On February 12, 2014, the Temporary Debt Limit Extension Act was passed, suspending the debt ceiling until March 15, 2015. At that time, the Treasury Department took extraordinary measures.The debt ceiling would again have been reached on November 3, 2015. But on October 30, 2015, the debt ceiling was again suspended to March 2017.\n\n\n=== Debt ceiling increases under President Donald Trump ===\nWhen Donald Trump was President, the debt ceiling was subject to less partisan controversy. The administration and the Republicans who controlled the House and the Senate prioritized tax cuts over a balanced budget.\nThe ceiling was suspended three times: from September 30, 2017, to December 8, 2017; from December 8, 2017 to March 1, 2019; and, after concerns were raised from Treasury in July 2019 of an unexpected shortfall due to reduced tax receipts under Trump's tax legislation, from August 2, 2019 to July 31, 2021.Congress did not impose any preconditions or significant spending cuts. Democrats in the Senate could have threatened to stop the debt ceiling increase by use of the filibuster but declined to do so.\n\n\n=== Debt ceiling increases under President Joe Biden ===\n\nDuring Biden's first two years as president, the House and Senate were both controlled by the Democratic Party. In October 2021, the debt ceiling was increased by $480 billion, as a temporary measure requiring fresh legislation by December 3, 2021. That month, Congress voted to increase it by $2.5 trillion, which President Biden signed into effect on December 16, 2021. At that point, it was set at about $31.4 trillion.On January 19, 2023, the United States hit its debt ceiling of $31.4 trillion. By this time, Republicans had taken control of the House during the 2022 midterm elections. Although Republicans were a minority in the Senate, they threatened for the first time in American history to use the filibuster to stop the debt ceiling increase. The crisis was resolved by negotiation of the Fiscal Responsibility Act of 2023.\n\n\n== Extraordinary measures ==\nThe Treasury Department is permitted to borrow funds needed to fund government operations, as had been authorized by congressional appropriations, up to the debt ceiling, with some small exceptions. In a letter to Congress on April 4, 2011, Treasury Secretary Timothy Geithner explained that when the debt ceiling is reached, the Treasury can declare a \"debt issuance suspension period\" during which it can take \"extraordinary measures\" to continue meeting federal obligations provided that it does not involve the issue of new debt. These measures are taken to avoid, as far as resources permit, a partial government shutdown or a default on the debt. These methods have been used on several previous occasions in which federal debt neared its statutory limit.Extraordinary measures can include suspending investments in the G Fund of the Thrift Savings Plan of individual retirement funds of federal employees. In 2011, extraordinary measures included suspending investments in the Civil Service Retirement and Disability Fund (CSRDF), the Postal Service Retiree Health Benefits Fund (Postal Benefits Fund), and the Exchange Stabilization Fund (ESF). In addition, certain CSRDF investments were also redeemed early. In 1985, the Treasury had also exchanged Treasury securities for non-Treasury securities held by the Federal Financing Bank.However, these amounts are not sufficient to cover government operations for extended periods. Treasury first implemented these measures on December 16, 2009, to avoid a government shutdown. These measures were implemented again on May 16, 2011, when Treasury Secretary Geithner declared a \"debt issuance suspension period\". According to his letter to Congress, this period could \"last until August 2, 2011, when the Department of the Treasury projects that the borrowing authority of the United States will be exhausted\".The measures were again implemented on December 31, 2012, the start of the debt ceiling crisis of 2013 with the default trigger date ticking to February 2013. The crisis was deferred with the suspension of the limit on February 4, and the cancellation of the extraordinary measures. The measures were again invoked at the end of the ceiling's suspension on May 19, 2013, with the date of exhaustion of the resources and the default trigger date being estimated by the Treasury as October 17. The ceiling was again suspended by legislation on that date until February 4, 2014.\n\n\n== Default on financial obligations ==\nAccording to the text of the debt ceiling law, if the debt ceiling is not raised and extraordinary measures are exhausted, the U.S. government is legally unable to borrow money to pay its financial obligations. At that point, the law indicates that the government must cease making payments unless the treasury has cash on hand to cover them. In addition, the law indicates that the government would not have the resources to pay the interest on (and some time redeem) government securities when due, which would be characterized as a default. A default may affect the United States' sovereign risk rating and the interest rate that it will be required to pay on future debt. As of 2012, the U.S. defaulted on its financial obligations once in 1979, due to a computer backlog, but the periodic crises relating to the debt ceiling have led several rating agencies to United States federal government credit-rating downgrades. As of 2012, the GAO estimated that the delay in raising the debt ceiling during the debt ceiling crisis of 2011 raised borrowing costs for the government by $1.3 billion in the fiscal year 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.As of 2012, some writers expressed the view that if extraordinary measures are exhausted, the executive branch has the authority to determine which obligations are paid and which are not, though the Treasury has argued that all obligations are on equal footing under the law. The writers have argued that the executive branch can choose to prioritize interest payments on bonds, which would avoid an immediate, direct default on sovereign debt. During the debt ceiling crisis of 2011, Treasury Secretary Timothy Geitner argued that prioritization of interest payments would not help since government expenditures would have needed to be cut by an unrealistic 40% if the debt ceiling is not raised. Also, a default on non-debt obligations would still undermine American creditworthiness according to at least one rating agency. In 2011, the Treasury suggested that it could not prioritize certain types of expenditures because all expenditures are on equal footing under the law. In this view, when extraordinary measures are exhausted, no payments could be made except when money (such as tax receipts) is in the treasury, at all and the U.S. would be in default on all of its obligations. The CBO notes, that prioritization would not avoid the technical definition found in Black's Law Dictionary where default is defined as \u201cthe failure to make a payment when due.\u201dMany scholars argue that debt ceiling law is unconstitutional and there is no legal basis by which the U.S. government may default on any of its debt. They point to Section Four of the 14th Amendment of the United States Constitution, which states that \"the validity of the public debt of the United States...shall not be questioned.\" They argue that it was unconstitutional for the U.S. Congress to pass the debt ceiling law in the first place, since the law does not provide a clear way for the U.S. to pay its debts and implicitly requires a default. Harvard University legal scholar Laurence Tribe argues that \"using the ceiling to make us default on our debts clearly would be unconstitutional.\" This argument has also been endorsed by various politicians, including President Bill Clinton, former labor secretary Robert Reich, Representative Jerry Nadler, and Representative James Clyburn. In 2023, a group of lawmakers from the Senate and House of Representatives sent a letter to President Biden encouraging him to consider invoking the 14th Amendment to pay government debts. However, there are scholars who argue that even if the law itself is unconstitutional, that determination must be made by the courts and the President does not have the authority to unilaterally ignore the debt ceiling law. In practice, the administrations of Presidents Barack Obama and Joe Biden have rejected relying on legal arguments against the constitutionality of the debt ceiling. Obama said in 2011 that his lawyers \"were not persuaded that that is a winning argument.\" In 2023, Biden's Treasury Secretary Janet Yellen called this strategy \"legally questionable.\" Biden himself said \"I think we have the authority\" to invoke the 14th Amendment to pay government debts, suggesting that he would explore this question in the future, but he questioned the practicality of relying on this approach to defuse a debt ceiling standoff. In May 2023, the National Association of Government Employees filed a lawsuit in federal court alleging that the debt ceiling law is unconstitutional.\n\n\n== Debate on debt ceiling ==\nReports to Congress from the OMB and other sources in the 1990s have repeatedly stated that the debt limit is an ineffective means to restrain the growth of debt.In 2011, James Surowiecki argued that the debt ceiling originally served a useful purpose. When introduced, presidents had stronger authority to borrow and spend as they pleased. However, after 1974 the Congress began passing comprehensive budget resolutions which specified exactly how much money the government could spend.The apparent redundancy of the debt ceiling has led to suggestions that it should be abolished altogether. Several Democratic House members, including Peter Welch, proposed abolishing the debt ceiling. The proposal found support from some economists such as Jacob Funk Kirkegaard, a senior fellow at the Peterson Institute for International Economics.\nIn January 2013, a survey of 38 highly regarded economists found that 84 percent agreed that, since Congress already approves spending and taxation, \"a separate debt ceiling that has to be increased periodically creates unneeded uncertainty and can potentially lead to worse fiscal outcomes.\" Only one member of the panel, Luigi Zingales, disagreed with the statement. Rating agency Moody's has stated that \"the debt limit creates a high level of uncertainty\" and that the government should change \"its framework for managing government debt to lessen or eliminate that uncertainty\".In 2021, the U.S. debt ceiling has been described as \"anachronistic\", with the two major parties criticized for utilizing the debt ceiling to play a dangerous game of chicken for purely partisan political purposes.\n\n\n=== Modern Monetary Theory ===\nProponents of Modern Monetary Theory (MMT), a heterodox, post-Keynesian economic theory which arose in the late 20th century, have critiqued the concept of the debt ceiling and its theoretical and practical uses. A core tenet of MMT is that currency arose from and is wholly controlled as fiat money by governments, the latter claim is dependent on the government as the sovereign issuer of the given currency. As of 2019, MMT theorists believed that governments have the power to create and spend money within a limit of reason without creating hyperinflation, as well as the ability to forgive its debt or repay itself; in contrast, as of 2020, orthodox economic theorists tended to focus on national deficit as a debt that needs to be repaid eventually. As a result, MMT theorists argue the debt ceiling is largely a symbolic limit on government spending; in 2020 Stephanie Kelton, a prominent supporter of MMT, wrote that \"there are no constraints on the federal budget.\"After the turn of the 20th century, and particularly during and since the Great Recession (2007-2009) political landscape, MMT has been the subject of political debate between post-Keynsian, mainstream, and free-market economic theorists and politicians alike. As of 2019, MMT debates on the debt ceiling have pervaded Congress, with progressive representatives, prominently Alexandria Ocasio-Cortez, boosting the theory to the mainstream, while conservative representatives have been critiquing MMT's potential impacts on government spending and inflation.As of January 2023 Treasury Secretary Janet Yellen supported legislation to abolish the debt limit, which President Biden has ruled out.\n\n\n== References ==\n\n\n== Sources ==\n\"Amerikanere kan l\u00e6re af dansk g\u00e6ldsloft\" (in Danish). DR Nyheder. August 3, 2011. Retrieved May 6, 2013.\n\"Analysis of 2011-2012 Actions Taken and Effect of Delayed Increase on Borrowing Costs\" (PDF). GAO. July 2012. Retrieved January 13, 2013.\nAustin, D. Andrew (August 9, 2017). The Debt Limit Since 2011 (PDF). Washington, DC: Congressional Research Service. Retrieved November 22, 2017.\nMurray, Justin (November 6, 2017). Votes on Measures to Adjust the Statutory Debt Limit, 1978 to Present (PDF). Washington, DC: Congressional Research Service. Retrieved November 22, 2017.\n\"Federal Debt and the Statutory Limit, November 2012\" (PDF). Congressional Budget Office. November 2012.\n\"Delays Create Debt Management Challenges and Increase Uncertainty in the Treasury Market\" (PDF). GAO-11-203. GAO. February 2011. Retrieved January 13, 2013.\nGreen, Joshua (May 9, 2011). \"How Dick Gephardt Fixed the Debt-Ceiling Problem\". The Atlantic.\nKowalcky, Linda W.; LeLoup, Lance T. (1993). \"Congress and the Politics of Statutory Debt Limitation\". Public Administration Review. 53 (1): 14. CiteSeerX 10.1.1.397.5755. doi:10.2307/977272. JSTOR 977272.\nLawder, David (June 29, 2011). \"Prioritizing debt payments won't work: Geithner\". Reuters.\nLevit, Mandy R.; Brass, Clinton T.; Nicola, Timothy J.; Nuschler, Dawn (January 4, 2013). \"Reaching the Debt Limit: Background and Potential Effects on Government Operations\" (PDF). Archived from the original (PDF) on January 23, 2013.\nMasters, Jonathan. \"U.S. Debt Ceiling: Costs and Consequences\". Renewing America. Council on Foreign Relations.\nSahadi, Jeanne (January 7, 2013). \"Debt Ceiling: 'Chaotic' choices on 100 million payments\". CNNMoney. Retrieved January 13, 2013.\nSahadi, Jeanne (May 17, 2013). \"Debt ceiling: Treasury starts juggling act\". CNNMoney. Archived from the original on June 7, 2013.\nSurowiecki, James (August 1, 2011). \"Smash the Ceiling\". The New Yorker.\nSweet, Ken (August 8, 2011). \"Dow plunges after S&amp;P downgrade\". CNNMoney.\nYglesias, Matthew (January 16, 2013). \"What if Congress Doesn't Raise the Debt Ceiling?\". Slate.\n\n\n== Further reading ==\nEisner, Robert (1993). \"Federal Debt\". In David R. Henderson (ed.). Concise Encyclopedia of Economics (1st ed.). Library of Economics and Liberty. OCLC 317650570, 50016270, 163149563\nGeorge J. Hall and Thomas J. Sargent. 2018. \"Brief history of US debt limits before 1939.\" PNAS March 20, 2018. 115 (12) 2942-2945"
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"content": "The history of the United States debt ceiling deals with movements in the United States debt ceiling since it was created in 1917. Management of the United States public debt is an important part of the macroeconomics of the United States economy and finance system, and the debt ceiling is a limitation on the federal government's ability to manage the economy and finance system. The debt ceiling is also a limitation on the federal government's ability to finance government operations, and the failure of Congress to authorize an increase in the debt ceiling has resulted in crises, especially in recent years. \n\n\n== Overview ==\nA statutorily imposed debt ceiling has been in effect since 1917 when the US Congress passed the Second Liberty Bond Act. Before 1917 there was no debt ceiling in force, but there were parliamentary procedural limitations on the amount of debt that could be issued by the government.\nExcept for about a year during 1835\u20131836, the United States has continuously had a fluctuating public debt since the US Constitution legally went into effect on March 4, 1789. Debts incurred during the American Revolutionary War and under the Articles of Confederation led to the first yearly report on the amount of the debt ($75,463,476.52 on January 1, 1791). The national debt, as expressed in absolute dollars, has increased under every presidential administration since Herbert Hoover.\n\n\n== Early history ==\nPrior to 1917, the United States did not have a debt ceiling, with Congress either authorizing specific loans or allowing the Treasury to issue certain debt instruments and individual debt issues for specific purposes. Sometimes Congress gave the Treasury discretion over what type of debt instrument would be issued.Between 1788 and 1917, Congress would authorize each bond issue by the United States Treasury by passing a legislative act that approved the issue and the amount.\nIn 1917, during World War I, Congress created the debt ceiling with the Second Liberty Bond Act of 1917, which allowed the Treasury to issue bonds and take on other debt without specific Congressional approval, as long as the total debt fell under the statutory debt ceiling. The 1917 legislation set limits on the aggregate amount of debt that could be accumulated through individual categories of debt (such as bonds and bills).\n\n\n=== Public Debt Acts ===\nIn 1939, Congress instituted the first limit on total accumulated debt over all kinds of instruments. The debt ceiling, in which an aggregate limit is applied to nearly all federal debt, was substantially established by Public Debt Acts passed in 1939 and 1941 and subsequently amended. The United States Public Debt Act of 1939 eliminated separate limits on different types of debt. The Public Debt Act of 1941 raised the aggregate debt limit on all obligations to $65 billion, and consolidated nearly all federal borrowing under the U.S. Treasury and eliminated the tax-exemption of interest and profit on government debt.Subsequent Public Debt Acts amended the aggregate debt limit: the 1942, 1943, 1944, and 1945 acts raised the limit to $125 billion, $210 billion, $260 billion, and $300 billion respectively. In 1946, the Public Debt Act was amended to reduce the debt limit to $275 billion. The limit stayed unchanged until 1954, the Korean War being financed through taxation. The U.S. Treasury nearly hit the debt ceiling in fall 1953, plus the Senate refused to raise it until summer 1954, but the federal government managed to avoid reaching it through using various measures, such as monetizing leftover gold.A feature of the Public Debt Acts, unlike the 1919 Victory Liberty Bond Act which financed American costs in the First World War, was that the new ceiling was set about 10% above the actual federal debt at the time.\n\n\n== 1970s ==\nPrior 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. James Surowiecki argued that the debt ceiling lost its usefulness after these reforms to the budget process.In 1979, noting the potential problems of hitting a default, Dick Gephardt (Rep, D-MO) 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 Congress in 1995.\n\n\n== Number of requests for increase ==\nDepending on who is doing the research, it is said that the US has raised its debt ceiling (in some form or other) at least 90 times in the 20th century.The debt ceiling was raised 74 times from March 1962 to May 2011, including 18 times under Ronald Reagan, eight times under Bill Clinton, and seven times under George W. Bush.\nCongress has raised the debt ceiling 14 times from 2001 to 2016. The debt ceiling was raised a total of 7 times (total increase of $5365bil) during Pres. Bush's eight-year term and it was raised 11 times (as of 03/2015 a total increase of $6498bil) during Pres. Obama's eight years in office.\n\n\n== 1995 debt ceiling crisis ==\n\nThe 1995 request for a debt ceiling increase led to debate in Congress on reduction of the size of the federal government, which led to the non-passage of the federal budget, and the United States federal government shutdown of 1995\u201396. The ceiling was eventually increased and the government shutdown resolved.\n\n\n== 2011 debt ceiling crisis ==\n\nIn 2011, Republicans in Congress used the debt ceiling as leverage for deficit reduction because of the lack of Congressional normal order for fiscal year budget votes on the chamber floors and subsequent conference reconciliations between the House and the Senate for final budgets. 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. The GAO estimated that the delay in raising the debt ceiling raised borrowing costs for the government by $1.3 billion (~$1.57 billion in 2021) 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.\n\n\n== 2013 debt ceiling crisis ==\n\nFollowing the increase in the debt ceiling to $16.394 trillion in 2011, 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. With the ATRA tax cuts, the government indicated that the debt ceiling needed to raise by $700 billion (~$814 billion in 2021) for it to continue financing operations for the rest of the 2013 fiscal year and that extraordinary measures were expected to be exhausted by February 15. 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, 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.The No Budget, No Pay Act of 2013 suspended the debt ceiling from February 4, 2013 until May 19, 2013. On May 19, the debt ceiling was formally raised to approximately $16.699 trillion to accommodate the borrowing done during the suspension period. However, after the end of the suspension, the ceiling was raised only to the actual debt at that time, and Treasury needed to activate extraordinary measures to avoid a default. With the impacts of the American Taxpayer Relief Act of 2012 tax increases on those who make $400,000 per year, the 2013 sequester, and a $60 billion payment from Fannie Mae and Freddie Mac that reached the Treasury on June 28, 2013, the extraordinary measures were predicted to last until October 17 by the Treasury, but financial firms suggested funds might have lasted a little longer. Jefferies Group said extraordinary measures might have lasted until the end of October while Credit Suisse estimated mid-November.The US Treasury began taking extraordinary measures to enable payments, and stated that it would delay payments if funds could not be raised through extraordinary measures, and the debt ceiling was not raised. During the crisis, approval ratings for the Republican Party declined.\n\n\n== 2021 debt ceiling crisis ==\nFollowing the July 2021 expiration of the debt ceiling suspension, the U.S. Treasury began taking \"extraordinary measures\" which were set to expire around October 18. Senate Republicans blocked attempts to raise the ceiling using the filibuster, insisting that Democrats should act on their own and use reconciliation to raise the limit. The Senate voted to raise it on October 7, 2021, but only to grant the U.S. Treasury authority to borrow money until that December. That month, Congress voted to increase it by $2.5 (~$2.5 trillion in 2021) trillion, which President Biden signed into effect on December 16, 2021. At that point, it was set at about $31.4 trillion.\n\n\n== 2023 debt ceiling crisis ==\n\nOn January 19, 2023, the United States again reached the debt ceiling.\nPresident Biden at first refused to negotiate, instead insisting on a clean debt ceiling raise. Many news outlets and pundits have talked about this leading to a significant risk that the US defaults on its obligations, though default is not the only possible outcome of the debt ceiling not being raised, the alternative being shutting down portions of government operations. The Treasury has, however, explicitly stated that this would be technically impossible. Many news outlets have also claimed that the federal government has not defaulted on financial obligations before, including President Biden calling such a situation \"unprecedented\", however a more accurate statement is that the US has defaulted on obgliations several times in history, but never because of the debt ceiling. These included late interest payments in 1814 due to the financial strain of the War of 1812 (the last time the US experienced a \u201cmajor default on its financial obligations\"), and briefly in 1979, due to technical glitches.\n\n\n== Historical debt ceiling levels ==\nNote that this table does not go back to 1917 when the debt ceiling started.\n\nReference for values between 1993 and 2015:Note that:\n\nThe figures are unadjusted for the time value of money, such as interest and inflation and the size of the economy that generated a debt.\nThe debt ceiling is an aggregate of gross debt, which includes debt in hands of public and in intragovernment accounts.\nThe debt ceiling does not necessarily reflect the level of actual debt.\nFrom March 15 to October 30, 2015 there was a de facto debt limit of $18.153 trillion, due to use of extraordinary measures.\n\n\n== Notes ==\n\n\n== References ==\n\n\n== Sources ==\n\"Amerikanere kan l\u00e6re af dansk g\u00e6ldsloft\". DR Nyheder. 3 August 2011. Retrieved 6 May 2013.\n\"Analysis of 2011-2012 Actions Taken and Effect of Delayed Increase on Borrowing Costs\" (PDF). GAO. July 2012. Retrieved 13 January 2013.\nAustin, D. Andrew (29 April 2008). \"The Debt Limit: History and Recent Increases\" (PDF). Congressional Research Service.\nAustin, D. Andrew; Levit, Mindy R. (27 December 2012). \"The Debt Limit: History and Recent Increases\" (PDF). Congressional Research Service.\nAustin, D. Andrew (5 June 2017). \"The Debt Limit Since 2011\" Congressional Research Service.\n\"Debt ceiling\". IGM Forum. Chicago Booth. 15 January 2013. Retrieved 19 January 2013.\n\"Federal Debt and the Statutory Limit, November 2012\" (PDF). Congressional Budget Office. November 2012.\n\"Debt Limit Analysis\" (PDF). Bipartisan Policy Center. 27 November 2012. Retrieved 13 January 2013.\n\"Delays Create Debt Management Challenges and Increase Uncertainty in the Treasury Market\" (PDF). GAO-11-203. GAO. February 2011. Retrieved 13 January 2013.\nGreen, Joshua (9 May 2011). \"How Dick Gephardt Fixed the Debt-Ceiling Problem\". The Atlantic.\nKowalcky, Linda W.; LeLoup, Lance T. (1993). \"Congress and the Politics of Statutory Debt Limitation\". Public Administration Review. 53 (1): 14. CiteSeerX 10.1.1.397.5755. doi:10.2307/977272. JSTOR 977272.\nLawder, David (29 June 2011). \"Prioritizing debt payments won't work: Geithner\". Reuters.\nLevit, Mandy R.; Brass, Clinton T.; Nicola, Timothy J.; Nuschler, Dawn. \"Reaching the Debt Limit: Background and Potential Effects on Government Operations\" (PDF).\nMasters, Jonathan. \"U.S. Debt Ceiling: Costs and Consequences\". Renewing America. Council on Foreign Relations. Archived from the original on 2013-09-08. Retrieved 2013-10-09.\nSahadi, Jeanne (7 January 2013). \"Debt Ceiling: 'Chaotic' choices on 100 million payments\". CNNMoney. Retrieved 13 January 2013.\nSurowiecki, James (1 August 2011). \"Smash the Ceiling\". The New Yorker.\nSweet, Ken (8 August 2011). \"Dow plunges after S&amp;P downgrade\". CNNMoney.\nYglesias, Matthew (16 January 2013). \"What if Congress Doesn't Raise the Debt Ceiling?\". Slate.\n\n\n== External links ==\nHistory and Recent Increases (2008)\nHistory and Recent Increases (2010)\nUS Treasury Debt to the Penny (Daily)\nEstimated Debt to the Penny (Real Time)",
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"extract": "The history of the United States debt ceiling deals with movements in the United States debt ceiling since it was created in 1917. Management of the United States public debt is an important part of the macroeconomics of the United States economy and finance system, and the debt ceiling is a limitation on the federal government's ability to manage the economy and finance system. The debt ceiling is also a limitation on the federal government's ability to finance government operations, and the failure of Congress to authorize an increase in the debt ceiling has resulted in crises, especially in recent years. \n\n\n== Overview ==\nA statutorily imposed debt ceiling has been in effect since 1917 when the US Congress passed the Second Liberty Bond Act. Before 1917 there was no debt ceiling in force, but there were parliamentary procedural limitations on the amount of debt that could be issued by the government.\nExcept for about a year during 1835\u20131836, the United States has continuously had a fluctuating public debt since the US Constitution legally went into effect on March 4, 1789. Debts incurred during the American Revolutionary War and under the Articles of Confederation led to the first yearly report on the amount of the debt ($75,463,476.52 on January 1, 1791). The national debt, as expressed in absolute dollars, has increased under every presidential administration since Herbert Hoover.\n\n\n== Early history ==\nPrior to 1917, the United States did not have a debt ceiling, with Congress either authorizing specific loans or allowing the Treasury to issue certain debt instruments and individual debt issues for specific purposes. Sometimes Congress gave the Treasury discretion over what type of debt instrument would be issued.Between 1788 and 1917, Congress would authorize each bond issue by the United States Treasury by passing a legislative act that approved the issue and the amount.\nIn 1917, during World War I, Congress created the debt ceiling with the Second Liberty Bond Act of 1917, which allowed the Treasury to issue bonds and take on other debt without specific Congressional approval, as long as the total debt fell under the statutory debt ceiling. The 1917 legislation set limits on the aggregate amount of debt that could be accumulated through individual categories of debt (such as bonds and bills).\n\n\n=== Public Debt Acts ===\nIn 1939, Congress instituted the first limit on total accumulated debt over all kinds of instruments. The debt ceiling, in which an aggregate limit is applied to nearly all federal debt, was substantially established by Public Debt Acts passed in 1939 and 1941 and subsequently amended. The United States Public Debt Act of 1939 eliminated separate limits on different types of debt. The Public Debt Act of 1941 raised the aggregate debt limit on all obligations to $65 billion, and consolidated nearly all federal borrowing under the U.S. Treasury and eliminated the tax-exemption of interest and profit on government debt.Subsequent Public Debt Acts amended the aggregate debt limit: the 1942, 1943, 1944, and 1945 acts raised the limit to $125 billion, $210 billion, $260 billion, and $300 billion respectively. In 1946, the Public Debt Act was amended to reduce the debt limit to $275 billion. The limit stayed unchanged until 1954, the Korean War being financed through taxation. The U.S. Treasury nearly hit the debt ceiling in fall 1953, plus the Senate refused to raise it until summer 1954, but the federal government managed to avoid reaching it through using various measures, such as monetizing leftover gold.A feature of the Public Debt Acts, unlike the 1919 Victory Liberty Bond Act which financed American costs in the First World War, was that the new ceiling was set about 10% above the actual federal debt at the time.\n\n\n== 1970s ==\nPrior 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. James Surowiecki argued that the debt ceiling lost its usefulness after these reforms to the budget process.In 1979, noting the potential problems of hitting a default, Dick Gephardt (Rep, D-MO) 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 Congress in 1995.\n\n\n== Number of requests for increase ==\nDepending on who is doing the research, it is said that the US has raised its debt ceiling (in some form or other) at least 90 times in the 20th century.The debt ceiling was raised 74 times from March 1962 to May 2011, including 18 times under Ronald Reagan, eight times under Bill Clinton, and seven times under George W. Bush.\nCongress has raised the debt ceiling 14 times from 2001 to 2016. The debt ceiling was raised a total of 7 times (total increase of $5365bil) during Pres. Bush's eight-year term and it was raised 11 times (as of 03/2015 a total increase of $6498bil) during Pres. Obama's eight years in office.\n\n\n== 1995 debt ceiling crisis ==\n\nThe 1995 request for a debt ceiling increase led to debate in Congress on reduction of the size of the federal government, which led to the non-passage of the federal budget, and the United States federal government shutdown of 1995\u201396. The ceiling was eventually increased and the government shutdown resolved.\n\n\n== 2011 debt ceiling crisis ==\n\nIn 2011, Republicans in Congress used the debt ceiling as leverage for deficit reduction because of the lack of Congressional normal order for fiscal year budget votes on the chamber floors and subsequent conference reconciliations between the House and the Senate for final budgets. 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. The GAO estimated that the delay in raising the debt ceiling raised borrowing costs for the government by $1.3 billion (~$1.57 billion in 2021) 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.\n\n\n== 2013 debt ceiling crisis ==\n\nFollowing the increase in the debt ceiling to $16.394 trillion in 2011, 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. With the ATRA tax cuts, the government indicated that the debt ceiling needed to raise by $700 billion (~$814 billion in 2021) for it to continue financing operations for the rest of the 2013 fiscal year and that extraordinary measures were expected to be exhausted by February 15. 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, 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.The No Budget, No Pay Act of 2013 suspended the debt ceiling from February 4, 2013 until May 19, 2013. On May 19, the debt ceiling was formally raised to approximately $16.699 trillion to accommodate the borrowing done during the suspension period. However, after the end of the suspension, the ceiling was raised only to the actual debt at that time, and Treasury needed to activate extraordinary measures to avoid a default. With the impacts of the American Taxpayer Relief Act of 2012 tax increases on those who make $400,000 per year, the 2013 sequester, and a $60 billion payment from Fannie Mae and Freddie Mac that reached the Treasury on June 28, 2013, the extraordinary measures were predicted to last until October 17 by the Treasury, but financial firms suggested funds might have lasted a little longer. Jefferies Group said extraordinary measures might have lasted until the end of October while Credit Suisse estimated mid-November.The US Treasury began taking extraordinary measures to enable payments, and stated that it would delay payments if funds could not be raised through extraordinary measures, and the debt ceiling was not raised. During the crisis, approval ratings for the Republican Party declined.\n\n\n== 2021 debt ceiling crisis ==\nFollowing the July 2021 expiration of the debt ceiling suspension, the U.S. Treasury began taking \"extraordinary measures\" which were set to expire around October 18. Senate Republicans blocked attempts to raise the ceiling using the filibuster, insisting that Democrats should act on their own and use reconciliation to raise the limit. The Senate voted to raise it on October 7, 2021, but only to grant the U.S. Treasury authority to borrow money until that December. That month, Congress voted to increase it by $2.5 (~$2.5 trillion in 2021) trillion, which President Biden signed into effect on December 16, 2021. At that point, it was set at about $31.4 trillion.\n\n\n== 2023 debt ceiling crisis ==\n\nOn January 19, 2023, the United States again reached the debt ceiling.\nPresident Biden at first refused to negotiate, instead insisting on a clean debt ceiling raise. Many news outlets and pundits have talked about this leading to a significant risk that the US defaults on its obligations, though default is not the only possible outcome of the debt ceiling not being raised, the alternative being shutting down portions of government operations. The Treasury has, however, explicitly stated that this would be technically impossible. Many news outlets have also claimed that the federal government has not defaulted on financial obligations before, including President Biden calling such a situation \"unprecedented\", however a more accurate statement is that the US has defaulted on obgliations several times in history, but never because of the debt ceiling. These included late interest payments in 1814 due to the financial strain of the War of 1812 (the last time the US experienced a \u201cmajor default on its financial obligations\"), and briefly in 1979, due to technical glitches.\n\n\n== Historical debt ceiling levels ==\nNote that this table does not go back to 1917 when the debt ceiling started.\n\nReference for values between 1993 and 2015:Note that:\n\nThe figures are unadjusted for the time value of money, such as interest and inflation and the size of the economy that generated a debt.\nThe debt ceiling is an aggregate of gross debt, which includes debt in hands of public and in intragovernment accounts.\nThe debt ceiling does not necessarily reflect the level of actual debt.\nFrom March 15 to October 30, 2015 there was a de facto debt limit of $18.153 trillion, due to use of extraordinary measures.\n\n\n== Notes ==\n\n\n== References ==\n\n\n== Sources ==\n\"Amerikanere kan l\u00e6re af dansk g\u00e6ldsloft\". DR Nyheder. 3 August 2011. Retrieved 6 May 2013.\n\"Analysis of 2011-2012 Actions Taken and Effect of Delayed Increase on Borrowing Costs\" (PDF). GAO. July 2012. Retrieved 13 January 2013.\nAustin, D. Andrew (29 April 2008). \"The Debt Limit: History and Recent Increases\" (PDF). Congressional Research Service.\nAustin, D. Andrew; Levit, Mindy R. (27 December 2012). \"The Debt Limit: History and Recent Increases\" (PDF). Congressional Research Service.\nAustin, D. Andrew (5 June 2017). \"The Debt Limit Since 2011\" Congressional Research Service.\n\"Debt ceiling\". IGM Forum. Chicago Booth. 15 January 2013. Retrieved 19 January 2013.\n\"Federal Debt and the Statutory Limit, November 2012\" (PDF). Congressional Budget Office. November 2012.\n\"Debt Limit Analysis\" (PDF). Bipartisan Policy Center. 27 November 2012. Retrieved 13 January 2013.\n\"Delays Create Debt Management Challenges and Increase Uncertainty in the Treasury Market\" (PDF). GAO-11-203. GAO. February 2011. Retrieved 13 January 2013.\nGreen, Joshua (9 May 2011). \"How Dick Gephardt Fixed the Debt-Ceiling Problem\". The Atlantic.\nKowalcky, Linda W.; LeLoup, Lance T. (1993). \"Congress and the Politics of Statutory Debt Limitation\". Public Administration Review. 53 (1): 14. CiteSeerX 10.1.1.397.5755. doi:10.2307/977272. JSTOR 977272.\nLawder, David (29 June 2011). \"Prioritizing debt payments won't work: Geithner\". Reuters.\nLevit, Mandy R.; Brass, Clinton T.; Nicola, Timothy J.; Nuschler, Dawn. \"Reaching the Debt Limit: Background and Potential Effects on Government Operations\" (PDF).\nMasters, Jonathan. \"U.S. Debt Ceiling: Costs and Consequences\". Renewing America. Council on Foreign Relations. Archived from the original on 2013-09-08. Retrieved 2013-10-09.\nSahadi, Jeanne (7 January 2013). \"Debt Ceiling: 'Chaotic' choices on 100 million payments\". CNNMoney. Retrieved 13 January 2013.\nSurowiecki, James (1 August 2011). \"Smash the Ceiling\". The New Yorker.\nSweet, Ken (8 August 2011). \"Dow plunges after S&amp;P downgrade\". CNNMoney.\nYglesias, Matthew (16 January 2013). \"What if Congress Doesn't Raise the Debt Ceiling?\". Slate.\n\n\n== External links ==\nHistory and Recent Increases (2008)\nHistory and Recent Increases (2010)\nUS Treasury Debt to the Penny (Daily)\nEstimated Debt to the Penny (Real Time)"
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"title": "2011 United States debt-ceiling crisis",
"content": "In 2011, ongoing political debate in the United States Congress about the appropriate level of government spending and its effect on the national debt and deficit reached a crisis centered on raising the debt ceiling, leading to the passage of the Budget Control Act of 2011.\nThe Republican Party, which gained control of the House of Representatives in January of 2011, demanded that President Obama negotiate over deficit reduction in exchange for an increase in the debt ceiling, the statutory maximum of money the Treasury is allowed to borrow. The debt ceiling had routinely been raised in the past without partisan debate or additional terms or conditions. This reflects the fact that the debt ceiling does not prescribe the amount of spending, but only ensures that the government can pay for the spending to which it has already committed itself. Some use the analogy of an individual \"paying their bills.\"\nIf the United States breached its debt ceiling and were unable to resort to other \"extraordinary measures\", the Treasury would have to either default on payments to bondholders or immediately curtail payment of funds owed to various companies and individuals that had been mandated but not fully funded by Congress. Both situations would likely have led to a significant international financial crisis.\nOn July 31, two days prior to when the Treasury estimated the borrowing authority of the United States would be exhausted, Republicans agreed to raise the debt ceiling in exchange for a complex deal of significant future spending cuts. The crisis did not permanently resolve the potential of future use of the debt ceiling in budgetary disputes, as shown by the subsequent crisis in 2013.\nThe crisis sparked the most volatile week for financial markets since the 2008 crisis, with the stock market trending significantly downward. Prices of government bonds (\"Treasuries\") rose as investors, anxious over the dismal prospects of the US economic future and the ongoing European sovereign-debt crisis, fled into the still-perceived relative safety of US government bonds. Later that week, the credit-rating agency Standard &amp; Poor's downgraded the credit rating of the United States government for the first time in the country's history, though the other two major credit-rating agencies, Moody's and Fitch, retained America's credit rating at AAA. The Government Accountability Office (GAO) estimated that the delay in raising the debt ceiling increased government borrowing costs by $1.3 billion in 2011 and also pointed to unestimated higher costs in later years. The Bipartisan Policy Center extended the GAO's estimates and found that delays in raising the debt ceiling would raise borrowing costs by $18.9 billion.\n\n\n== Context ==\nUnder US law, an administration can spend only if it has sufficient funds to pay for it. These funds can come either from tax receipts or from borrowing by the United States Department of the Treasury. Congress has set a debt ceiling, beyond which the Treasury cannot borrow (this is similar to a credit limit on a credit card). The debt limit does not restrict Congress's ability to enact spending and revenue legislation that affects the level of debt or otherwise constrains fiscal policy; it restricts Treasury's authority to borrow to finance the decisions already enacted by Congress and the President. Congress also usually votes on increasing the debt limit after fiscal policy decisions affecting federal borrowing have begun to take effect. In the absence of sufficient revenue, a failure to raise the debt ceiling would result in the administration being unable to fund all the spending which it is required to do by prior acts of Congress. At that point, the government must cancel or delay some spending, a situation sometimes referred to as a partial government shut down.\nIn addition, the Obama administration stated that, without this increase, the US would enter sovereign default (failure to pay the interest and/or principal of US treasury securities on time) thereby creating an international crisis in the financial markets. Alternatively, default could be averted if the government were to promptly reduce its other spending by about half.An increase in the debt ceiling requires the approval of both houses of Congress. Republicans and some Democrats insisted that an increase in the debt ceiling be coupled with a plan to reduce the growth in debt. There were differences as to how to reduce the expected increase in the debt. Initially, nearly all Republican legislators (who held a majority in the House of Representatives) opposed any increase in taxes and proposed large spending cuts. A large majority of Democratic legislators (who held a majority in the Senate) favored tax increases along with smaller spending cuts. Supporters of the Tea Party movement pushed their fellow Republicans to reject any agreement that failed to incorporate large and immediate spending cuts or a constitutional amendment requiring a balanced budget.\n\n\n== Background ==\n\n\n=== Debt ceiling ===\n\nIn the United States, the federal government can pay for expenditures only if Congress has approved the expenditure in an appropriation bill. If the proposed expenditure exceeds the revenues that have been collected, there is a deficit or shortfall, which can only be financed by the government, through the Department of the Treasury, borrowing the shortfall amount by the issue of debt instruments. Under federal law, the amount that the government can borrow is limited by the debt ceiling, which can only be increased with a separate vote by Congress.\nPrior to 1917, Congress directly authorized the amount of each borrowing. In 1917, in order to provide more flexibility to finance the US involvement in World War I, Congress instituted the concept of a \"debt ceiling\". Since then, the Treasury may borrow any amount needed as long as it keeps the total at or below the authorized ceiling. Some small special classes of debt are not included in this total. To change the debt ceiling, Congress must enact specific legislation, and the President must sign it into law.\nThe process of setting the debt ceiling is separate and distinct from the regular process of financing government operations, and raising the debt ceiling does not have any direct impact on the budget deficit. The US government passes a federal budget every year. This budget details projected tax collections and outlays and, therefore, the amount of borrowing the government would have to do in that fiscal year. A vote to increase the debt ceiling is, therefore, usually seen as a formality, needed to continue spending that has already been approved previously by the Congress and the President. The Government Accountability Office explains: \"The debt limit does not control or limit the ability of the federal government to run deficits or incur obligations. Rather, it is a limit on the ability to pay obligations already incurred.\" The apparent redundancy of the debt ceiling has led to suggestions that it should be abolished altogether. From 1979 to 1995, the House of Representatives followed the \"Gephardt Rule\" which deemed the debt ceiling raised if necessary to cover appropriations.\nThe US has had public debt since its inception. Debts incurred during the American Revolutionary War and under the Articles of Confederation led to the first yearly report on the amount of the debt ($75,463,476.52 on January 1, 1791). Every president since Harry Truman has added to the national debt. The debt ceiling has been raised 74 times since March 1962, including 18 times under Ronald Reagan, eight times under Bill Clinton, seven times under George W. Bush and three times (as of August 2011) under Barack Obama.\nAs of May 2011, approximately 40 percent of US government spending relied on borrowed money. That is, without borrowing, the federal government would have had to cut spending immediately by 40 percent, affecting many daily operations of the government, besides the impact on the domestic and international economies. It is unclear if the Treasury has the technological capability to disburse funds to some individuals it owes money. The Government Accountability Office reported in February 2011 that managing debt when delays in raising the debt limit occur diverts Treasury's resources from other cash and debt management responsibilities and that Treasury's borrowing costs modestly increased during debt limit debates in 2002, 2003, 2010 and 2011. If the interest payments on the national debt are not made, the US would be in default, potentially causing catastrophic economic consequences for the US and the wider world as well. (Effects outside the US would be likely because the United States is a major trading partner with many countries. Other major world powers that hold US government debt could demand immediate repayment.)\nAccording to the Treasury, \"failing to increase the debt limit would . . . cause the government to default on its legal obligations \u2013 an unprecedented event in American history\". These legal obligations include paying Social Security and Medicare benefits, military salaries, interest on the debt, and many other items. Making the promised payments of the principal and interest of US treasury securities on time ensures that the nation does not default on its sovereign debt.Critics have argued that the debt ceiling crisis is \"self-inflicted,\" as treasury bond interest rates were at historical lows, and the US had no market restrictions on its ability to obtain additional credit. The debt ceiling has been raised 68 times since 1960. Sometimes the increase was treated as routine; many times it was used to score political points for the minority party by criticizing the out-of-control spending of the majority. The only other country with a debt limit is Denmark, which has set its debt ceiling so high that it is unlikely to be reached. If raising the limit ceases to be routine, this may create uncertainty for global markets each time a debt ceiling increase is debated. The 2011 debt-ceiling crisis has shown how a party in control of only one chamber of Congress (in this case, Republicans in control of the House of Representatives but not the Senate or the Presidency) can have significant influence if it chooses to block the routine raising of the debt limit.\n\n\n=== Concern about budget deficits and long-term debt ===\n\nUnderlying the contentious debate over raising the debt ceiling has been an anxiety, growing since 2008, about the large United States federal budget deficits and the increasing federal debt. According to the Congressional Budget Office (CBO): \"At the end of 2008, that debt equaled 40 percent of the nation's annual economic output (a little above the 40-year average of 37 percent). Since then, the figure has shot upward: By the end of fiscal year 2011, the Congressional Budget Office (CBO) projects federal debt will reach roughly 70 percent of gross domestic product (GDP) \u2014 the highest percentage since shortly after World War II.\" The sharp rise in debt after 2008 stems largely from lower tax revenues and higher federal spending related to the severe recession and persistently high unemployment in 2008\u201311. Though a balanced budget is ideal, allowing down payment on debt and more flexibility within government budgeting, limiting deficits to within 1% to 2% of GDP is sufficient to stabilize the debt. Deficits in 2009 and 2010 were 10.0 percent and 8.9 percent respectively, and the largest as a share of gross domestic product since 1945.In 2009, the Tea Party movement emerged with a focus on reducing government spending and regulation. The Tea Party movement helped usher in a wave of new Republican office-holders in the 2010 mid-term elections whose major planks during the campaign included cutting federal spending and stopping any tax increases. These new Republicans and the new Republican House majority greatly affected the 2011 debt ceiling political debate.In early 2010, President Obama established the Bowles-Simpson Commission to propose recommendations to balance the budget by 2015. The commission issued a report in December 2010, but the recommendations failed to receive enough votes to allow the report to be passed on to Congress.\nThroughout 2011, Standard &amp; Poor's and Moody's credit rating services issued warnings that US credit rating could be downgraded because of the continued large deficits and increasing debt. According to the CBO's 2011 long-term budget outlook, without major policy changes the large budget deficits and growing debt would continue, which \"would reduce national saving, leading to higher interest rates, more borrowing from abroad, and less domestic investment \u2013 which in turn would lower income growth in the United States\". The European sovereign debt crisis was occurring throughout 2010\u20132011, and there were concerns that the US was on the same trajectory.\n\n\n=== Negative real interest rates ===\nSince 2010, the U.S. Treasury has been obtaining negative real interest rates on government debt. Such low rates, outpaced by the inflation rate, occur when the market believes that there are no alternatives with sufficiently low risk, or when popular institutional investments such as insurance companies, pensions, or bond, money market, and balanced mutual funds are required or choose to invest sufficiently large sums in Treasury securities to hedge against risk. Lawrence Summers and other economists state that at such low rates, government debt borrowing saves taxpayer money, and improves creditworthiness. In the late 1940s and then again in the early 1970s, the US and UK both reduced their debt burden by about 30% to 40% of GDP per decade by taking advantage of negative real interest rates, but there is no guarantee that government debt rates will continue to stay so low. In January 2012, the U.S. Treasury Borrowing Advisory Committee of the Securities Industry and Financial Markets Association unanimously recommended that government debt be allowed to auction even lower, at negative absolute interest rates.This method of negative real interest rates has been claimed to be a form of financial repression by governments as it is \"a transfer from creditors (savers) to borrowers (in the historical episode under study here\u2014the government)\" and \"given that deficit reduction usually involves highly unpopular expenditure reductions and (or) tax increases of one form or another, the relatively 'stealthier' financial repression tax may be a more politically palatable alternative to authorities faced with the need to reduce outstanding debts\".\n\n\n== Resort to extraordinary measures ==\nPrior to the 2011 debt ceiling crisis, the debt ceiling was last raised on February 12, 2010 to $14.294 trillion.On April 15, 2011, Congress passed the last part of the 2011 United States federal budget in the beginning 2012, authorizing federal government spending for the remainder of the 2011 fiscal year, which ended on September 30, 2011. For the 2011 fiscal year, expenditure was estimated at $3.82 trillion, with expected revenues of $2.17 trillion, leaving a deficit of $1.48 trillion. This includes, public and federal debt, as well as the GDP. Leaving a budget deficit of 38.7%, the world's highest.\nHowever, soon after the 2011 budget was passed, the debt ceiling set in February 2010 was reached. In a letter to Congress of April 4, 2011, Treasury Secretary Timothy Geithner explained that when the debt ceiling is reached, the US Treasury can declare a debt issuance suspension period and utilize \"extraordinary measures\" to acquire funds to meet federal obligations but which do not require the issue of new debt, such as the sale of assets from the Civil Service Retirement and Disability Fund and the G Fund of the Thrift Savings Plan. These measures were implemented on May 16, 2011, when Geithner declared a \"debt issuance suspension period\". According to his letter to Congress, this period could \"last until August 2, 2011, when the Department of the Treasury projects that the borrowing authority of the United States will be exhausted\". These methods have been used on several previous occasions in which federal debt neared its statutory limit.\n\n\n=== The August 2, 2011 deadline ===\nThe U.S. Treasury stated on multiple occasions that the US government would exhaust its borrowing authority around August 2, 2011. That date appeared to serve as an effective deadline for Congress to vote to increase the debt ceiling.While the U.S. Treasury's borrowing authority may have been exhausted on August 2, 2011, it retained cash balances that would have enabled it to meet federal obligations for a short time. According to Barclays Capital, Treasury would run out of cash around August 10, when $8.5 billion in Social Security payments were due. According to Wall Street analysts, Treasury would not be able borrow from the capital markets after August 2, but still would have enough incoming cash to meet its obligations until August 15. Analysts also predicted that Treasury would be able to roll over the $90 billion in US debt that matured on August 4, and gain additional time to avert the crisis.Projections required for debt and cash management can be volatile. Outside experts that track Treasury finances had said that announced Treasury estimates were within the range of uncertainty for their analyses. Delaying an increase in the debt limit past August 2 could have risked a delay in Social Security and other benefit checks, and could have led to disruptions in scheduled Treasury auctions.\n\n\n== Implications of not raising the debt ceiling ==\nExperts were divided on how bad the effects of not raising the debt ceiling for a short period would be on the economy. While some leading economists, including Republican adviser Douglas Holtz-Eakin, suggested even a brief failure to meet US obligations could have devastating long-term consequences, others argued that the market would write it off as a Congressional dispute and return to normal once the immediate crisis was resolved.\nSome argued that the worst outcome would be if the US failed to pay interest and/or principal on the national debt to bondholders, thereby defaulting on its sovereign debt. Former Treasury Secretary Lawrence Summers warned in July 2011 that the consequences of such a default would be higher borrowing costs for the US government (as much as one percent or $150 billion/year in additional interest costs) and the equivalent of bank runs on the money markets and other financial markets, potentially as severe as those of September 2008.In January 2011 Treasury Secretary Timothy Geithner warned that \"failure to raise the limit would precipitate a default by the United States. Default would effectively impose a significant and long-lasting tax on all Americans and all American businesses and could lead to the loss of millions of American jobs. Even a very short-term or limited default would have catastrophic economic consequences that would last for decades.\"Senators Pat Toomey and Jim DeMint expressed deep concern that administration officials were stating or implying that failure to raise the nation's debt limit would constitute a default on US debt and precipitate a financial crisis: \"We believe it is irresponsible and harmful for you to sow the seeds of doubt in the market regarding the full faith and credit of the United States and ask that you set the record straight \u2013 that you will use all available Treasury funds necessary to prevent default while Congress addresses the looming debt crisis.\"Geithner responded that prioritizing debt would require \"cutting roughly 40 percent of all government payments\", which could only be achieved by \"selectively defaulting on obligations previously approved by Congress\". He argued that this would harm the reputation of the United States so severely that there is \"no guarantee that investors would continue to re-invest in new Treasury securities\", forcing the government to repay the principal on existing debt as it matured, which it would be unable to do under any conceivable circumstance. He concluded: \"There is no alternative to enactment of a timely increase in the debt limit.\" On January 25, 2011, Senator Toomey introduced The Full Faith And Credit Act bill [S.163] that would require the Treasury to prioritize payments to service the national debt over other obligations. (The bill was cleared by its committee for consideration the next day and added to the Senate \"calendar of business\", but no further action had occurred by mid-August 2011.)\nEven if the Treasury were to prioritize payments on the debt above other spending and avoid formal default on its bonds, failure to raise the debt ceiling would force the government to reduce its spending by as much as ten percent of GDP overnight, leading to a corresponding fall in aggregate demand. Economists believe that such a significant shock, if sustained, would reverse the economic recovery and send the country into a recession.\n\n\n== Proposed resolutions ==\nCongress considered whether and by how much to extend the debt ceiling (or eliminate it), and what long-term policy changes (if any) should be made concurrently.The Republican positions on raising the debt ceiling included:\n\nA Dollar-for-dollar deal; that is, raise the debt ceiling to match corresponding spending cuts\nMore of the budget cuts in the first two years\nSpending caps\nA Balanced Budget Amendment \u2013 to pass Congress and be sent to states for ratification\nNo tax increases but tax reform could be considered(One representative, Ron Paul, proposed transferring $1.6 trillion of Federal Reserve assets to the government and destroying those bonds, thereby reducing the United States gross federal debt by the same amount This would violate the property rights of national banks who own the Federal Reserve Banks.)\nThe Democratic positions on raising the debt ceiling included:\n\nInitially, a \"clean\" increase or unconditional raise to the debt ceiling with no spending cuts attached\nSpending cuts combined with tax increases on some categories of taxpayers, to reduce deficits (For example, a 1:1 spending cut / tax increase ratio initially desired in the Congress versus 3:1 offered by President Obama.)\nA large debt-ceiling increase, to support borrowing into 2013 (after the next election)\nOpposed to any major cuts to Social Security, Medicare, or Medicaid(Some Democratic lawmakers suggested that the President could declare that the debt ceiling violates the US Constitution and issue an Executive Order to direct the Treasury to issue more debt.)\nThe US House of Representatives originally refused to raise the debt ceiling without deficit reduction, voting down a \"clean\" bill to increase the debt ceiling without conditions. The May 31 vote was 318 to 97, with all 236 Republicans and 82 Democrats voting to defeat the bill. The Republicans largely believed a deficit reduction deal should be based solely on spending cuts, including cuts to entitlements, without any tax increases, to reduce or solve the long-term issue of debt. Obama and the Democrats in the US Congress wanted an increase in the debt ceiling to solve the short-term borrowing problem, and in exchange supported a decrease in the budget deficit, to be funded by a combination of spending cuts and revenue increases. Some prominent liberal economists, such as Paul Krugman, Larry Summers, and Brad DeLong, and prominent investors such as Bill Gross, went even further, and argued that not only should the debt ceiling be raised, but federal spending (and, therefore, the deficit) should be increased in the short term (as long as the economy remains in the liquidity trap), which they believed would stimulate the economy, reduce unemployment, and ultimately reduce the deficit in the medium to long term.Some Tea Party Caucus and other Republicans, however, (including, but not limited to, Senators Jim DeMint, Rand Paul, and Mike Lee, and Representatives Michele Bachmann, Ron Paul, and Allen West) expressed skepticism about raising the debt ceiling (with some suggesting the consequences of default are exaggerated), arguing that the debt ceiling should not be raised, and \"instead the federal debt [should] be 'capped' at the current limit,\" \"although that would oblige the government to cut spending by almost half overnight.\"Jack Balkin, the Knight Professor of Constitutional Law and the First Amendment at Yale Law School, suggested two other ways to solve the debt ceiling crisis: he pointed out that the US Treasury has the power to issue platinum coins in any denomination, so it could solve the debt ceiling crisis by simply issuing two platinum coins in denominations of $1 trillion each, depositing them into its account in the Federal Reserve, and writing checks on the proceeds. Another way to solve the debt ceiling crisis, Balkin suggested, would be for the federal government to sell the Federal Reserve an option to purchase government property for $2 trillion. The Federal Reserve would then credit the proceeds to the government's checking account. Once Congress lifted the debt ceiling, the president could buy back the option for a dollar, or the option could simply expire in 90 days.In a report issued by the credit rating agency Moody's, analyst Steven Hess suggested that the government should consider getting rid of the limit altogether, because the difficulty inherent in reaching an agreement to raise the debt ceiling \"creates a high level of uncertainty\" and an increased risk of default. As reported by The Washington Post, \"without a limit dependent on congressional approval, the report said, the agency would worry less about the government's ability to meet its debt obligations.\" Other public figures, including Democratic ex-President Bill Clinton and Republican ex-CBO director Douglas Holtz-Eakin, have suggested eliminating the debt ceiling.\n\n\n=== Possible methods of bypassing the debt ceiling ===\n\n\n==== Fourteenth Amendment ====\nDuring the debate, some scholars, Democratic lawmakers, and Treasury Secretary Tim Geithner suggested that the President could declare that the debt ceiling violates the Constitution and issue an Executive Order to direct the Treasury to issue more debt. They point to Section 4 of the Fourteenth Amendment to the US Constitution, passed in the context of the Civil War Reconstruction, that states that the validity of the public debt shall not be questioned. Others rebutted this argument by pointing to Section 8 of Article 1 and Section 5 of the Fourteenth Amendment, which state that Congress has the power of the purse and the authority to enforce the Fourteenth Amendment.\nArticle I, Section 8. The Congress shall have power . . .To borrow Money on the credit of the United States;Amendment XIV, Section 4. The validity of the public debt of the United States, authorized by law, including debts incurred for payment of pensions and bounties for services in suppressing insurrection or rebellion, shall not be questioned. But neither the United States nor any State shall assume or pay any debt or obligation incurred in aid of insurrection or rebellion against the United States, or any claim for the loss or emancipation of any slave; but all such debts, obligations and claims shall be held illegal and void.Amendment XIV, Section 5. The Congress shall have power to enforce, by appropriate legislation, the provisions of this article.ArgumentsJack Balkin, looking into the Legislative History of the Fourteenth Amendment, argued that Section 4 was adopted to guard against politically determined default. Referencing the sponsor of the provision, Senator Benjamin Wade, Balkin argued that \"the central rationale for Section Four ... was to remove threats of default on federal debts from partisan struggle.\" Balkin quotes Wade: \"every man who has property in the public funds will feel safer when he sees that the national debt is withdrawn from the power of a Congress to repudiate it and placed under the guardianship of the Constitution than he would feel if it were left at loose ends and subject to the varying majorities which may arise in Congress.\" According to Balkin, this reveals \"an important structural principle. The threat of defaulting on government obligations is a powerful weapon, especially in a complex, interconnected world economy. Devoted partisans can use it to disrupt government, to roil ordinary politics, to undermine policies they do not like, even to seek political revenge. Section Four was placed in the Constitution to remove this weapon from ordinary politics.\"\nBruce Bartlett, a former adviser to President Ronald Reagan and columnist for The Fiscal Times, argued that Section 4 renders the debt ceiling unconstitutional, and that the President should disregard the debt limit.\nThe Nation editor Katrina vanden Heuvel argued that the President could use the public debt section of the Fourteenth Amendment to force the Treasury to continue paying its debts if an agreement to raise the debt ceiling was not reached.\nLaurence Tribe, professor of Constitutional Law at Harvard Law School, called the argument that the public debt clause can nullify the debt ceiling \"false hope\" and noted that nothing in the Constitution enabled the President to \"usurp legislative power\" with regards to the debt. Tribe said that since Congress has means other than borrowing to pay the federal debt (including raising taxes, coining money, and selling federal assets), the argument that the President could seize the power to borrow could be extended to give the President the ability to seize those powers as well.Garrett Epps counter-argued that the President would not be usurping Congressional power by invoking Section 4 to declare the debt ceiling unconstitutional, because the debt ceiling exceeds Congressional authority. He called it legislative \"double-counting,\" as paraphrased in The New Republic, \"because Congress already appropriated the funds in question, it is the executive branch's duty to enact those appropriations.\" In other words, given Congress has appropriated money via federal programs, the Executive is obligated to enact and, therefore, fund them, but the debt ceiling's limit on debt prevents the executive from carrying out the instructions given by Congress, on the constitutional authority to set appropriations; essentially, to obey the statutory debt ceiling would require usurping congress' constitutional powers, and hence the statute must be unconstitutional.\nFormer President Bill Clinton endorsed this counter-argument, saying he would eliminate the debt ceiling using the 14th Amendment. He called it \"crazy\" that Congress first appropriates funds and then gets a second vote on whether to pay.\nMatthew Zeitlin added to the counter-argument that, were Section 4 invoked, members of Congress would not have standing to sue the President for allegedly usurping congressional authority, even if they were willing to do so; and those likely to have standing would be people \"designed to elicit zero public sympathy: those who purchased credit default swaps which would pay off in the event of government default\". Matthew Steinglass argued that, because it would come down to the Supreme Court, the Court would not vote in favor of anyone who could and would sue: it would rule the debt ceiling unconstitutional. This is because, for the Court to rule to uphold the debt ceiling, it would, in effect, be voting for the United States to default, with the consequences that would entail; and, Steinglass argues, the Court would not do that.Michael Stern, Senior Counsel to the US House of Representatives from 1996 to 2004, stated that Garrett Epps \"had adopted an overly broad interpretation of the Public Debt Clause and that this interpretation, even if accepted, could not justify invalidating the debt limit\" because \"the President's duty to safeguard the national debt no more enables him to assume Congress's power of the purse than it would enable him to assume the judicial power when (in his opinion) the Supreme Court acts in an unconstitutional manner.\"\nRob Natelson, former Constitutional Law Professor at University of Montana, argued that \"this is not some issue in the disputed boundaries between legislative and executive power.\" He continued, \"That's why the Constitution itself (Article I, Section 8, Clause 2) gives only Congress, not the President, the power \"To borrow Money on the credit of the United States.\" In another argument, Natelson stated that Bruce Bartlett \"deftly omits a crucial part of the quote from the Fourteenth Amendment. It actually says, 'The validity of the public debt of the United States, AUTHORIZED BY LAW ... shall not be questioned.' In other words, Congress has to approve the debt for it not to be questioned. And note that this language refers to existing debt, not to creating new debt. He also neglects to mention that Section 5 of the Fourteenth Amendment specifically grants to Congress, not to the President, authority to enforce the amendment.\"\nTreasury Secretary Tim Geithner implied that the debt ceiling may violate the Constitution; however George Madison, General Counsel to the US Treasury, wrote that \"Secretary Geithner has never argued that the 14th Amendment to the US Constitution allows the President to disregard the statutory debt limit\" (but nor did Madison say that Geithner had argued against the proposition either), and that \"the Constitution explicitly places the borrowing authority with Congress.\" He stated that \"Secretary Geithner has always viewed the debt limit as a binding legal constraint that can only be raised by Congress.\"\n\n\n==== Minting coins in extremely high denominations ====\n\nUS law does not place a limit on the denomination of minted coins, and specifically mentions that the Mint can create platinum coins of arbitrary value under the discretion of the Secretary of the Treasury. Yale law professor Jack Balkin mentioned seigniorage as a solution, although there had been speculation about the option of a \"trillion-dollar coin\" online since at least January 2011. Hence it has been suggested that a coin with a face value of a trillion or more could be minted and deposited with the Federal Reserve and used to buy back debt, thus making funds available.\n\n\n==== Monetizing gold ====\nA similar crisis was faced during the Eisenhower Administration in 1953. The debt ceiling was not raised until the spring of 1954. To accommodate the gap, the Eisenhower administration increased its gold certificate deposits at the Federal Reserve, which it could do because the market price of gold had increased. According to experts, the Secretary of the Treasury is still authorized to monetize 8,000 tons of gold, valued under the old law at approximately $42 per ounce, but with a market value worth over $1,600 per ounce.\n\n\n== Agreement ==\n\nOn July 31, 2011, President Obama announced that the leaders of both parties in both chambers had reached an agreement that would reduce the deficit and avoid default. The same day, Speaker Boehner's office outlined the agreement for House Republicans. According to the statement:\n\nThe agreement cut spending more than it increased the debt limit. In the first installment (\"tranche\"), $917 billion would be cut over 10 years in exchange for increasing the debt limit by $900 billion.\nThe agreement established a Congressional Joint Select Committee that would produce debt reduction legislation by November 23, 2011, that would be immune from amendments or filibuster. The goal of the legislation is to cut at least $1.5 trillion over the coming 10 years and should be passed by December 23, 2011. The committee would have 12 members, 6 from each party.\nProjected revenue from the Joint Select Committee's legislation must not exceed the revenue baseline produced by current law, which assumes the Bush tax cuts will expire entirely at the end of 2012.\nThe agreement specified an incentive for Congress to act. If Congress fails to produce a deficit reduction bill with at least $1.2 trillion in cuts, then Congress can grant a $1.2 trillion increase in the debt ceiling. This would trigger across-the-board cuts (\"sequestration\") of spending, equally split between defense and non-defense programs. The cuts would apply to mandatory and discretionary spending in the years 2013 to 2021 and be in an amount equal to the difference between $1.2 trillion and the amount of deficit reduction enacted from the joint committee. The sequestration mechanism is the same as the Balanced Budget Act of 1997. There are exemptions\u2014across the board cuts would apply to Medicare, but not to Social Security, Medicaid, civil and military employee pay, or veterans.\nCongress must vote on a Balanced Budget Amendment between October 1, 2011, and the end of the year.\nThe debt ceiling may be increased an additional $1.5 trillion if either one of the following two conditions are met:\nA balanced budget amendment is sent to the states\nThe joint committee cuts spending by a greater amount than the requested debt ceiling increaseMost of the $900 billion in cuts occur in future years, and so will not remove significant capital from the economy in the current and following year. The across-the-board cuts could not take place until 2013. If they are triggered, a new Congress could vote to reduce, eliminate, or deepen all or part of them. Under the U.S. Constitution, the President could veto such a future bill passed by Congress; in such a scenario, Congress would have pass a bill to override this veto by a two-thirds majority of each house of Congress.The agreement, entitled the Budget Control Act of 2011, passed the House on August 1, 2011, by a vote of 269\u2013161; 174 Republicans and 95 Democrats voted for it, while 66 Republicans and 95 Democrats voted against it. The Senate passed the agreement on August 2, 2011, by a vote of 74\u201326; 7 Democrats and 19 Republicans voted against it. Obama signed the bill shortly after it was passed by the Senate.\n\n\n== Reaction ==\n\n\n=== US reaction ===\nThe national debt rose $238 billion (or about 60% of the new debt ceiling) on August 3, the largest one-day increase in the history of the United States. The US debt surpassed 100 percent of gross domestic product for the first time since World War II. According to the International Monetary Fund, the US joined a group of countries whose public debt exceeds their GDP. The group includes Japan (229 percent), Greece (152 percent), Jamaica (137 percent), Lebanon (134 percent), Italy (120 percent), Ireland (114 percent), and Iceland (103 percent).\nThe NASDAQ, ASX, and S&amp;P 100 lost up to four percent in value, the largest drop since July 2009, during the global financial crisis that was precipitated in part by the United States housing bubble and the corresponding losses by holders of mortgages and mortgage-backed securities. The commodities market also took losses, with average spot crude oil prices falling below $US86 a barrel. The price of gold fell, as deepening losses on Wall Street prompted investors to sell.On August 5, 2011, Standard &amp; Poor's credit rating agency downgraded the long-term credit rating of the United States government for the first time in its history, from AAA to AA+. In contrast with previous ratings, the agency assumed in the base case scenario that the tax cuts of 2001 and 2003 would not expire at the end of 2012, citing Congressional resistance to revenue raising measures. The downside scenario, the conditions that would likely lead to a further downgrade to AA, assumed that the second round of spending cuts would fail to occur and that yield on Treasury bonds would increase but the dollar would remain the key global reserve currency. The upside scenario, consistent with maintaining the new AA+ rating, included the expiration of the 2001 and 2003 tax cuts and only modest growth in government debt as a percentage of GDP over the coming decade. A week later, S&amp;P senior director Joydeep Mukherji said that one factor was that numerous American politicians expressed skepticism about the serious consequences of a default\u2014an attitude that he said was \"not common\" among countries with a AAA rating. At the end of 2012, the United States fiscal cliff was resolved in a compromise without expiring the 2001 and 2003 tax cuts, but S&amp;P did not downgrade to AA. The other two major credit rating agencies, Moody's and Fitch, continued to rate the federal government's bonds as AAA.In a joint press release on the same day from the Federal Reserve System, the Federal Deposit Insurance Corporation, the National Credit Union Administration, and the Office of the Comptroller of the Currency, federally regulated institutions were told that for risk-based capital purposes, the debt of the United States was still considered to be risk free.\n\n\n==== Congressional reaction ====\nSenate Minority Leader Mitch McConnell, on the GOP: \"I think some of our members may have thought the default issue was a hostage you might take a chance at shooting. Most of us didn't think that. What we did learn is this \u2013 it's a hostage that's worth ransoming. And it focuses the Congress on something that must be done.\"Boehner was reported to be particularly concerned that any defense cuts could not go into effect until after 2013.\n\n\n=== International reaction ===\nThe international community characterized the political brinkmanship in Washington as playing a game of chicken, and criticized the US government for \"dangerously irresponsible\" actions.International reaction to the US credit rating downgrade has been mixed. Australian Prime Minister Julia Gillard urged calm over the downgrade, since only one of the three major credit rating agencies decided to lower its rating. On August 6, 2011, China, the largest foreign holder of United States debt, said that Washington needed to \"cure its addiction to debts\" and \"live within its means\". The Chinese state media outlet Xinhua News Agency was critical of the US government, questioned whether the US dollar should continue to be the global reserve currency, and called for international supervision over the issue of US dollar.The downgrade started a sell-off in every major stock market index around the world, threatening a stock market crash in the international markets. The G7 finance ministers scheduled a meeting to discuss the \"global financial crisis that concerns all countries\".\n\n\n=== Political aftermath ===\nPolitically, the crisis caused support for the Republican Party to drop, whose support for the debt-ceiling deal was needed as it controlled the House. The party saw its approval ratings drop from 41 percent in July to 33 percent in August. Nevertheless, President Obama saw his approval ratings drop to a record low of 40 percent in regards to his handling of the crisis.\n\n\n== Timeline ==\n\nAlthough the US has raised its debt ceiling many times before 2011, these increases were not generally coupled with an ongoing global economic crisis.\nDecember 16, 2009: The debt ceiling was exceeded. To avoid default, the Treasury Department used \"extraordinary accounting tools\" to enable the Treasury to make an additional $150 billion available to meet the necessary federal obligations.\nFebruary 12, 2010: Increase in the debt ceiling signed into law by President Obama, after being passed by the Democratic 111th United States Congress. It increased the debt ceiling by $1.9 trillion from $12.394 trillion to $14.294 trillion.\nFebruary 18, 2010: Obama issued an Executive Order to establish the National Commission on Fiscal Responsibility and Reform, also known as the Bowles-Simpson Commission. The mission of the commission was to propose recommendations designed to balance the budget, excluding interest payments on the debt, by 2015. It was tasked to issue a report with a set of recommendations by December 1, 2010.\nNovember 2, 2010: The Republican Party gained 63 seats in the US House of Representatives in the United States midterm elections, recapturing the majority by 242\u2013193 in the 112th Congress. Major planks for the House Republicans during the election campaign were cutting federal spending and stopping any tax increases.\nDecember 1, 2010: The Bowles-Simpson Commission on Fiscal Responsibility and Reform issued its report, but the recommendations failed to win support of at least 14 of the 18 members necessary to adopt it formally. The recommendations were never adopted by Congress nor President Obama.\nJanuary 6, April 4, and May 2, 2011: Secretary of the Treasury Timothy Geithner sent letters requesting an increase in the debt ceiling.\nJanuary 25, 2011: Senator Pat Toomey introduces the Full Faith And Credit Act bill [S.163] that would require the Treasury to prioritize payments to service the national debt over other obligations. The bill was never debated.\nJanuary 28, 2011: Moody's Investors Service said it may place a \"negative\" outlook on the AAA rating of US debt sooner than anticipated, as the country's budget deficit widened.\nFebruary 14, 2011: Obama released his budget proposal for fiscal year 2012. Republicans criticized the budget for doing too little to rein in the burgeoning US deficit. The CBO analysis, released in April 2011, estimated that the budget would increase total deficits over 10 years by $2.7 trillion: from $6.7 trillion of the March 2011 baseline to $9.4 trillion with the proposed budget. The Senate rejected the budget proposal on May 25, 2011 (see below).\nApril 14, 2011: Both the House of Representatives and the Senate voted in favor of the 2011 US federal budget, 260\u2013167 and 81\u201319 respectively. This budget projected the 2011 deficit to be $1.645 trillion, and therefore ensured that the debt ceiling would be hit during this fiscal year.\nApril 15, 2011: On a party-line vote 235\u2013193, the House of Representatives passed the Republican 2012 budget proposal aimed to reduce total spending by $5.8 trillion and reduce total deficits by $4.4 trillion over 10 years compared to the current-policy baseline. It included reform to Medicare and Medicaid entitlement programs, which the Democrats criticized as an attempt to leave seniors and poor holding the bag on health care costs. The criticism resonated with the many in the public, who voiced opposition to the proposed changes. The Senate rejected the budget proposal on May 25, 2011 (see below).\nApril 18, 2011: Standard &amp; Poor's Ratings Services revised its outlook on the US to negative due to recent and expected further deterioration in the US fiscal profile, and of the ability and willingness of the US to soon reverse this trend. With the negative outlook, S&amp;P believed there is a likelihood of at least one-in-three of a downward rating adjustment within two years.\nMay 16, 2011: The debt ceiling is reached. Treasury Secretary Timothy Geithner issued a debt issuance suspension period, directing the Treasury to utilize \"extraordinary measures\" to fund federal obligations.\nMay 18, 2011: Bipartisan deficit-reduction talks among the \"Gang of Six\" high-profile Senators are suspended when Republican Tom Coburn drops out.\nMay 24, 2011: Vice President Joe Biden and four Democratic lawmakers begin meeting with the Republican House Majority Leader Eric Cantor and the Republican Senate Minority Whip Jon Kyl, in an effort to continue the talks. Cantor said that these talks would lay the groundwork for further discussions between President Obama, Republican Speaker of the House John Boehner, and other leaders of Congress.\nMay 25, 2011: The Senate rejected both the Republican House budget proposal, by a vote of 57\u201340, and the Obama budget proposal, by a vote of 97\u20130.\nMay 31, 2011: The House voted on a bill to raise the debt ceiling without any spending cuts tied to the increase. President Obama asked Congress to raise the debt ceiling in a 'clean' vote that included no other conditions. The bill, which would have raised the debt ceiling by $2.4 trillion, failed by a vote of 97\u2013318. Democrats accused Republicans of playing politics by holding a vote they knew would fail.\nJune 23, 2011: Biden's negotiations on the debt ceiling were cut off when both Eric Cantor and Jon Kyl walk out over disagreements on taxes.\nJuly 19, 2011: The Republican Majority in the House brought the Cut, Cap and Balance Act (H.R.2560), their proposed solution to the crisis, to a vote. They passed the bill by a vote of 234\u2013190, split closely along party lines: 229 Republicans and 5 Democrats 'for', 181 Democrats and 9 Republicans 'against'; it was sent to the Senate for consideration. The Bill authorized that the debt ceiling be raised by $2.4 trillion after a Balanced Budget Amendment was passed by Congress. Since Constitutional amendments require a two-thirds majority vote in both chambers of Congress to pass, a vote for a Balanced Budget Amendment would require more support than the Cut, Cap and Balance Act bill achieved in the House vote.\nJuly 22, 2011: The Senate voted along party lines to table the Cut, Cap and Balance Act; 51 Democrats voting to table it and 46 Republicans voting to bring it to a debate. Senate Majority Leader Harry Reid called the Act \"one of the worst pieces of legislation to ever be placed on the floor of the United States Senate\". Even had it passed Congress, Obama had promised to veto the bill.\nJuly 25, 2011: Republicans and Democrats outlined separate deficit-reduction proposals.\nJuly 25, 2011: Obama and Speaker of the House John Boehner addressed the nation separately over network television with regards to the debt ceiling.\nJuly 25, 2011: The bond market is shaken by a single $850 million futures trade betting on US default.\nJuly 29, 2011: The Budget Control Act of 2011 S. 627, a Republican bill that immediately raised the debt ceiling by $900 billion and reduced spending by $917 billion, passed in the House on a vote of 218\u2013210. No Democrats voted for it, and it also drew 'no' votes from 22 Republicans, who deemed it insufficiently tough on spending cuts. It allows the President to request a second increase in the debt ceiling of up to $1.6 trillion upon passage of the balanced-budget amendment and a separate $1.8 trillion deficit reduction package, to be written by a new \"joint committee of Congress\". Upon introduction into the Senate in the evening, the bill was immediately tabled on a 59\u201341 vote, including some Republican votes.\nJuly 30, 2011: The House of Representatives voted 173\u2013246 to defeat Senate Majority Leader Harry Reid's $2.4 trillion plan to reduce the deficit and raise the debt ceiling.\nJuly 31, 2011: President Barack Obama announced that leaders of both parties had reached an agreement to lift the debt ceiling and reduce the federal deficit. Separately, House Speaker John Boehner told Republicans that they had reached the framework for an agreement. Boehner revealed details of the agreement in a presentation to the House Republicans.\nAugust 1, 2011: The House passed a bipartisan bill by a vote of 269\u2013161. 174 Republicans and 95 Democrats voted 'yes'; 66 Republicans and 95 Democrats voted 'no'.\nAugust 2, 2011: The Senate passed the bill by a vote of 74\u201326. 28 Republicans, 45 Democrats, and 1 independent voted 'yes'; 19 Republicans, 6 Democrats, and 1 independent voted 'no'. President Obama signed the debt ceiling bill the same day, thus ending fears of a default. Obama also declared that the bill is an \"important first step to ensuring that as a nation we live within our means\".\nAugust 2, 2011: The date estimated by the Department of the Treasury that the borrowing authority of the US would be exhausted, if the debt ceiling crisis were not resolved.\nAugust 3, 2011: The Treasury increased the national debt by $238 billion.\nAugust 5, 2011: Standard &amp; Poor's lowered the credit rating of the United States from AAA to AA+, citing Congressional resistance to new revenue measures and uncontrolled growth of entitlement programs. The agency rated the long-term outlook as negative, citing uncertainty in debt growth dynamics.\nAugust 9, 2011. The US Federal Reserve announced it will keep interest rates at \"exceptionally low levels\" at least through mid-2013; it made no commitment for further quantitative easing. (Reuters) The Dow Jones Industrial Average and the New York Stock Exchange as well as other world stock markets, recovered after recent falls. (Wall Street Journal)\nAugust 15, 2011: The date estimated by the Fitch rating agency and the FRBNY primary dealer Jefferies &amp; Co that $29 billion of federal debt interest would have become due, thus triggering a technical sovereign default if the debt ceiling crisis had not been resolved. This, however, did not occur as the debt ceiling crisis was resolved by then.\n\n\n== See also ==\nBudget Control Act of 2011\nEuropean sovereign debt crisis\nHistory of United States debt-ceiling increases\n2007\u20132008 financial crisis\n2013 United States debt-ceiling crisis\n2023 United States debt-ceiling crisis\nUnited States Congress Joint Select Committee on Deficit Reduction\nUnited States federal government credit-rating downgrades\n1995\u20131996 United States federal government shutdowns\nSovereign default\n\n\n== References ==\n\n\n== External links ==\n\"U.S. Debt Ceiling: Costs and Consequences\" Archived September 8, 2013, at the Wayback Machine. Council on Foreign Relations. December 7, 2012.\n\"Obama vs. Boehner: Who Killed the Debt Deal?\". New York Times Magazine. March 28, 2012.\n\"Apple now has more cash than the U.S. government\". CNN. July 29, 2011.\n\"Understanding the Federal Debt Limit\". Concord Coalition. July 8, 2011. Archived from the original on July 27, 2011. Retrieved July 27, 2011.\n\"United States of America Long-Term Rating Lowered To 'AA+' On Political Risks And Rising Debt Burden; Outlook Negative\" (PDF). Standard &amp; Poor's. August 5, 2011.\n\"U.S. debt ceiling: How big is it and how often has it changed?\". the guardian. January 2013.",
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"extract": "In 2011, ongoing political debate in the United States Congress about the appropriate level of government spending and its effect on the national debt and deficit reached a crisis centered on raising the debt ceiling, leading to the passage of the Budget Control Act of 2011.\nThe Republican Party, which gained control of the House of Representatives in January of 2011, demanded that President Obama negotiate over deficit reduction in exchange for an increase in the debt ceiling, the statutory maximum of money the Treasury is allowed to borrow. The debt ceiling had routinely been raised in the past without partisan debate or additional terms or conditions. This reflects the fact that the debt ceiling does not prescribe the amount of spending, but only ensures that the government can pay for the spending to which it has already committed itself. Some use the analogy of an individual \"paying their bills.\"\nIf the United States breached its debt ceiling and were unable to resort to other \"extraordinary measures\", the Treasury would have to either default on payments to bondholders or immediately curtail payment of funds owed to various companies and individuals that had been mandated but not fully funded by Congress. Both situations would likely have led to a significant international financial crisis.\nOn July 31, two days prior to when the Treasury estimated the borrowing authority of the United States would be exhausted, Republicans agreed to raise the debt ceiling in exchange for a complex deal of significant future spending cuts. The crisis did not permanently resolve the potential of future use of the debt ceiling in budgetary disputes, as shown by the subsequent crisis in 2013.\nThe crisis sparked the most volatile week for financial markets since the 2008 crisis, with the stock market trending significantly downward. Prices of government bonds (\"Treasuries\") rose as investors, anxious over the dismal prospects of the US economic future and the ongoing European sovereign-debt crisis, fled into the still-perceived relative safety of US government bonds. Later that week, the credit-rating agency Standard &amp; Poor's downgraded the credit rating of the United States government for the first time in the country's history, though the other two major credit-rating agencies, Moody's and Fitch, retained America's credit rating at AAA. The Government Accountability Office (GAO) estimated that the delay in raising the debt ceiling increased government borrowing costs by $1.3 billion in 2011 and also pointed to unestimated higher costs in later years. The Bipartisan Policy Center extended the GAO's estimates and found that delays in raising the debt ceiling would raise borrowing costs by $18.9 billion.\n\n\n== Context ==\nUnder US law, an administration can spend only if it has sufficient funds to pay for it. These funds can come either from tax receipts or from borrowing by the United States Department of the Treasury. Congress has set a debt ceiling, beyond which the Treasury cannot borrow (this is similar to a credit limit on a credit card). The debt limit does not restrict Congress's ability to enact spending and revenue legislation that affects the level of debt or otherwise constrains fiscal policy; it restricts Treasury's authority to borrow to finance the decisions already enacted by Congress and the President. Congress also usually votes on increasing the debt limit after fiscal policy decisions affecting federal borrowing have begun to take effect. In the absence of sufficient revenue, a failure to raise the debt ceiling would result in the administration being unable to fund all the spending which it is required to do by prior acts of Congress. At that point, the government must cancel or delay some spending, a situation sometimes referred to as a partial government shut down.\nIn addition, the Obama administration stated that, without this increase, the US would enter sovereign default (failure to pay the interest and/or principal of US treasury securities on time) thereby creating an international crisis in the financial markets. Alternatively, default could be averted if the government were to promptly reduce its other spending by about half.An increase in the debt ceiling requires the approval of both houses of Congress. Republicans and some Democrats insisted that an increase in the debt ceiling be coupled with a plan to reduce the growth in debt. There were differences as to how to reduce the expected increase in the debt. Initially, nearly all Republican legislators (who held a majority in the House of Representatives) opposed any increase in taxes and proposed large spending cuts. A large majority of Democratic legislators (who held a majority in the Senate) favored tax increases along with smaller spending cuts. Supporters of the Tea Party movement pushed their fellow Republicans to reject any agreement that failed to incorporate large and immediate spending cuts or a constitutional amendment requiring a balanced budget.\n\n\n== Background ==\n\n\n=== Debt ceiling ===\n\nIn the United States, the federal government can pay for expenditures only if Congress has approved the expenditure in an appropriation bill. If the proposed expenditure exceeds the revenues that have been collected, there is a deficit or shortfall, which can only be financed by the government, through the Department of the Treasury, borrowing the shortfall amount by the issue of debt instruments. Under federal law, the amount that the government can borrow is limited by the debt ceiling, which can only be increased with a separate vote by Congress.\nPrior to 1917, Congress directly authorized the amount of each borrowing. In 1917, in order to provide more flexibility to finance the US involvement in World War I, Congress instituted the concept of a \"debt ceiling\". Since then, the Treasury may borrow any amount needed as long as it keeps the total at or below the authorized ceiling. Some small special classes of debt are not included in this total. To change the debt ceiling, Congress must enact specific legislation, and the President must sign it into law.\nThe process of setting the debt ceiling is separate and distinct from the regular process of financing government operations, and raising the debt ceiling does not have any direct impact on the budget deficit. The US government passes a federal budget every year. This budget details projected tax collections and outlays and, therefore, the amount of borrowing the government would have to do in that fiscal year. A vote to increase the debt ceiling is, therefore, usually seen as a formality, needed to continue spending that has already been approved previously by the Congress and the President. The Government Accountability Office explains: \"The debt limit does not control or limit the ability of the federal government to run deficits or incur obligations. Rather, it is a limit on the ability to pay obligations already incurred.\" The apparent redundancy of the debt ceiling has led to suggestions that it should be abolished altogether. From 1979 to 1995, the House of Representatives followed the \"Gephardt Rule\" which deemed the debt ceiling raised if necessary to cover appropriations.\nThe US has had public debt since its inception. Debts incurred during the American Revolutionary War and under the Articles of Confederation led to the first yearly report on the amount of the debt ($75,463,476.52 on January 1, 1791). Every president since Harry Truman has added to the national debt. The debt ceiling has been raised 74 times since March 1962, including 18 times under Ronald Reagan, eight times under Bill Clinton, seven times under George W. Bush and three times (as of August 2011) under Barack Obama.\nAs of May 2011, approximately 40 percent of US government spending relied on borrowed money. That is, without borrowing, the federal government would have had to cut spending immediately by 40 percent, affecting many daily operations of the government, besides the impact on the domestic and international economies. It is unclear if the Treasury has the technological capability to disburse funds to some individuals it owes money. The Government Accountability Office reported in February 2011 that managing debt when delays in raising the debt limit occur diverts Treasury's resources from other cash and debt management responsibilities and that Treasury's borrowing costs modestly increased during debt limit debates in 2002, 2003, 2010 and 2011. If the interest payments on the national debt are not made, the US would be in default, potentially causing catastrophic economic consequences for the US and the wider world as well. (Effects outside the US would be likely because the United States is a major trading partner with many countries. Other major world powers that hold US government debt could demand immediate repayment.)\nAccording to the Treasury, \"failing to increase the debt limit would . . . cause the government to default on its legal obligations \u2013 an unprecedented event in American history\". These legal obligations include paying Social Security and Medicare benefits, military salaries, interest on the debt, and many other items. Making the promised payments of the principal and interest of US treasury securities on time ensures that the nation does not default on its sovereign debt.Critics have argued that the debt ceiling crisis is \"self-inflicted,\" as treasury bond interest rates were at historical lows, and the US had no market restrictions on its ability to obtain additional credit. The debt ceiling has been raised 68 times since 1960. Sometimes the increase was treated as routine; many times it was used to score political points for the minority party by criticizing the out-of-control spending of the majority. The only other country with a debt limit is Denmark, which has set its debt ceiling so high that it is unlikely to be reached. If raising the limit ceases to be routine, this may create uncertainty for global markets each time a debt ceiling increase is debated. The 2011 debt-ceiling crisis has shown how a party in control of only one chamber of Congress (in this case, Republicans in control of the House of Representatives but not the Senate or the Presidency) can have significant influence if it chooses to block the routine raising of the debt limit.\n\n\n=== Concern about budget deficits and long-term debt ===\n\nUnderlying the contentious debate over raising the debt ceiling has been an anxiety, growing since 2008, about the large United States federal budget deficits and the increasing federal debt. According to the Congressional Budget Office (CBO): \"At the end of 2008, that debt equaled 40 percent of the nation's annual economic output (a little above the 40-year average of 37 percent). Since then, the figure has shot upward: By the end of fiscal year 2011, the Congressional Budget Office (CBO) projects federal debt will reach roughly 70 percent of gross domestic product (GDP) \u2014 the highest percentage since shortly after World War II.\" The sharp rise in debt after 2008 stems largely from lower tax revenues and higher federal spending related to the severe recession and persistently high unemployment in 2008\u201311. Though a balanced budget is ideal, allowing down payment on debt and more flexibility within government budgeting, limiting deficits to within 1% to 2% of GDP is sufficient to stabilize the debt. Deficits in 2009 and 2010 were 10.0 percent and 8.9 percent respectively, and the largest as a share of gross domestic product since 1945.In 2009, the Tea Party movement emerged with a focus on reducing government spending and regulation. The Tea Party movement helped usher in a wave of new Republican office-holders in the 2010 mid-term elections whose major planks during the campaign included cutting federal spending and stopping any tax increases. These new Republicans and the new Republican House majority greatly affected the 2011 debt ceiling political debate.In early 2010, President Obama established the Bowles-Simpson Commission to propose recommendations to balance the budget by 2015. The commission issued a report in December 2010, but the recommendations failed to receive enough votes to allow the report to be passed on to Congress.\nThroughout 2011, Standard &amp; Poor's and Moody's credit rating services issued warnings that US credit rating could be downgraded because of the continued large deficits and increasing debt. According to the CBO's 2011 long-term budget outlook, without major policy changes the large budget deficits and growing debt would continue, which \"would reduce national saving, leading to higher interest rates, more borrowing from abroad, and less domestic investment \u2013 which in turn would lower income growth in the United States\". The European sovereign debt crisis was occurring throughout 2010\u20132011, and there were concerns that the US was on the same trajectory.\n\n\n=== Negative real interest rates ===\nSince 2010, the U.S. Treasury has been obtaining negative real interest rates on government debt. Such low rates, outpaced by the inflation rate, occur when the market believes that there are no alternatives with sufficiently low risk, or when popular institutional investments such as insurance companies, pensions, or bond, money market, and balanced mutual funds are required or choose to invest sufficiently large sums in Treasury securities to hedge against risk. Lawrence Summers and other economists state that at such low rates, government debt borrowing saves taxpayer money, and improves creditworthiness. In the late 1940s and then again in the early 1970s, the US and UK both reduced their debt burden by about 30% to 40% of GDP per decade by taking advantage of negative real interest rates, but there is no guarantee that government debt rates will continue to stay so low. In January 2012, the U.S. Treasury Borrowing Advisory Committee of the Securities Industry and Financial Markets Association unanimously recommended that government debt be allowed to auction even lower, at negative absolute interest rates.This method of negative real interest rates has been claimed to be a form of financial repression by governments as it is \"a transfer from creditors (savers) to borrowers (in the historical episode under study here\u2014the government)\" and \"given that deficit reduction usually involves highly unpopular expenditure reductions and (or) tax increases of one form or another, the relatively 'stealthier' financial repression tax may be a more politically palatable alternative to authorities faced with the need to reduce outstanding debts\".\n\n\n== Resort to extraordinary measures ==\nPrior to the 2011 debt ceiling crisis, the debt ceiling was last raised on February 12, 2010 to $14.294 trillion.On April 15, 2011, Congress passed the last part of the 2011 United States federal budget in the beginning 2012, authorizing federal government spending for the remainder of the 2011 fiscal year, which ended on September 30, 2011. For the 2011 fiscal year, expenditure was estimated at $3.82 trillion, with expected revenues of $2.17 trillion, leaving a deficit of $1.48 trillion. This includes, public and federal debt, as well as the GDP. Leaving a budget deficit of 38.7%, the world's highest.\nHowever, soon after the 2011 budget was passed, the debt ceiling set in February 2010 was reached. In a letter to Congress of April 4, 2011, Treasury Secretary Timothy Geithner explained that when the debt ceiling is reached, the US Treasury can declare a debt issuance suspension period and utilize \"extraordinary measures\" to acquire funds to meet federal obligations but which do not require the issue of new debt, such as the sale of assets from the Civil Service Retirement and Disability Fund and the G Fund of the Thrift Savings Plan. These measures were implemented on May 16, 2011, when Geithner declared a \"debt issuance suspension period\". According to his letter to Congress, this period could \"last until August 2, 2011, when the Department of the Treasury projects that the borrowing authority of the United States will be exhausted\". These methods have been used on several previous occasions in which federal debt neared its statutory limit.\n\n\n=== The August 2, 2011 deadline ===\nThe U.S. Treasury stated on multiple occasions that the US government would exhaust its borrowing authority around August 2, 2011. That date appeared to serve as an effective deadline for Congress to vote to increase the debt ceiling.While the U.S. Treasury's borrowing authority may have been exhausted on August 2, 2011, it retained cash balances that would have enabled it to meet federal obligations for a short time. According to Barclays Capital, Treasury would run out of cash around August 10, when $8.5 billion in Social Security payments were due. According to Wall Street analysts, Treasury would not be able borrow from the capital markets after August 2, but still would have enough incoming cash to meet its obligations until August 15. Analysts also predicted that Treasury would be able to roll over the $90 billion in US debt that matured on August 4, and gain additional time to avert the crisis.Projections required for debt and cash management can be volatile. Outside experts that track Treasury finances had said that announced Treasury estimates were within the range of uncertainty for their analyses. Delaying an increase in the debt limit past August 2 could have risked a delay in Social Security and other benefit checks, and could have led to disruptions in scheduled Treasury auctions.\n\n\n== Implications of not raising the debt ceiling ==\nExperts were divided on how bad the effects of not raising the debt ceiling for a short period would be on the economy. While some leading economists, including Republican adviser Douglas Holtz-Eakin, suggested even a brief failure to meet US obligations could have devastating long-term consequences, others argued that the market would write it off as a Congressional dispute and return to normal once the immediate crisis was resolved.\nSome argued that the worst outcome would be if the US failed to pay interest and/or principal on the national debt to bondholders, thereby defaulting on its sovereign debt. Former Treasury Secretary Lawrence Summers warned in July 2011 that the consequences of such a default would be higher borrowing costs for the US government (as much as one percent or $150 billion/year in additional interest costs) and the equivalent of bank runs on the money markets and other financial markets, potentially as severe as those of September 2008.In January 2011 Treasury Secretary Timothy Geithner warned that \"failure to raise the limit would precipitate a default by the United States. Default would effectively impose a significant and long-lasting tax on all Americans and all American businesses and could lead to the loss of millions of American jobs. Even a very short-term or limited default would have catastrophic economic consequences that would last for decades.\"Senators Pat Toomey and Jim DeMint expressed deep concern that administration officials were stating or implying that failure to raise the nation's debt limit would constitute a default on US debt and precipitate a financial crisis: \"We believe it is irresponsible and harmful for you to sow the seeds of doubt in the market regarding the full faith and credit of the United States and ask that you set the record straight \u2013 that you will use all available Treasury funds necessary to prevent default while Congress addresses the looming debt crisis.\"Geithner responded that prioritizing debt would require \"cutting roughly 40 percent of all government payments\", which could only be achieved by \"selectively defaulting on obligations previously approved by Congress\". He argued that this would harm the reputation of the United States so severely that there is \"no guarantee that investors would continue to re-invest in new Treasury securities\", forcing the government to repay the principal on existing debt as it matured, which it would be unable to do under any conceivable circumstance. He concluded: \"There is no alternative to enactment of a timely increase in the debt limit.\" On January 25, 2011, Senator Toomey introduced The Full Faith And Credit Act bill [S.163] that would require the Treasury to prioritize payments to service the national debt over other obligations. (The bill was cleared by its committee for consideration the next day and added to the Senate \"calendar of business\", but no further action had occurred by mid-August 2011.)\nEven if the Treasury were to prioritize payments on the debt above other spending and avoid formal default on its bonds, failure to raise the debt ceiling would force the government to reduce its spending by as much as ten percent of GDP overnight, leading to a corresponding fall in aggregate demand. Economists believe that such a significant shock, if sustained, would reverse the economic recovery and send the country into a recession.\n\n\n== Proposed resolutions ==\nCongress considered whether and by how much to extend the debt ceiling (or eliminate it), and what long-term policy changes (if any) should be made concurrently.The Republican positions on raising the debt ceiling included:\n\nA Dollar-for-dollar deal; that is, raise the debt ceiling to match corresponding spending cuts\nMore of the budget cuts in the first two years\nSpending caps\nA Balanced Budget Amendment \u2013 to pass Congress and be sent to states for ratification\nNo tax increases but tax reform could be considered(One representative, Ron Paul, proposed transferring $1.6 trillion of Federal Reserve assets to the government and destroying those bonds, thereby reducing the United States gross federal debt by the same amount This would violate the property rights of national banks who own the Federal Reserve Banks.)\nThe Democratic positions on raising the debt ceiling included:\n\nInitially, a \"clean\" increase or unconditional raise to the debt ceiling with no spending cuts attached\nSpending cuts combined with tax increases on some categories of taxpayers, to reduce deficits (For example, a 1:1 spending cut / tax increase ratio initially desired in the Congress versus 3:1 offered by President Obama.)\nA large debt-ceiling increase, to support borrowing into 2013 (after the next election)\nOpposed to any major cuts to Social Security, Medicare, or Medicaid(Some Democratic lawmakers suggested that the President could declare that the debt ceiling violates the US Constitution and issue an Executive Order to direct the Treasury to issue more debt.)\nThe US House of Representatives originally refused to raise the debt ceiling without deficit reduction, voting down a \"clean\" bill to increase the debt ceiling without conditions. The May 31 vote was 318 to 97, with all 236 Republicans and 82 Democrats voting to defeat the bill. The Republicans largely believed a deficit reduction deal should be based solely on spending cuts, including cuts to entitlements, without any tax increases, to reduce or solve the long-term issue of debt. Obama and the Democrats in the US Congress wanted an increase in the debt ceiling to solve the short-term borrowing problem, and in exchange supported a decrease in the budget deficit, to be funded by a combination of spending cuts and revenue increases. Some prominent liberal economists, such as Paul Krugman, Larry Summers, and Brad DeLong, and prominent investors such as Bill Gross, went even further, and argued that not only should the debt ceiling be raised, but federal spending (and, therefore, the deficit) should be increased in the short term (as long as the economy remains in the liquidity trap), which they believed would stimulate the economy, reduce unemployment, and ultimately reduce the deficit in the medium to long term.Some Tea Party Caucus and other Republicans, however, (including, but not limited to, Senators Jim DeMint, Rand Paul, and Mike Lee, and Representatives Michele Bachmann, Ron Paul, and Allen West) expressed skepticism about raising the debt ceiling (with some suggesting the consequences of default are exaggerated), arguing that the debt ceiling should not be raised, and \"instead the federal debt [should] be 'capped' at the current limit,\" \"although that would oblige the government to cut spending by almost half overnight.\"Jack Balkin, the Knight Professor of Constitutional Law and the First Amendment at Yale Law School, suggested two other ways to solve the debt ceiling crisis: he pointed out that the US Treasury has the power to issue platinum coins in any denomination, so it could solve the debt ceiling crisis by simply issuing two platinum coins in denominations of $1 trillion each, depositing them into its account in the Federal Reserve, and writing checks on the proceeds. Another way to solve the debt ceiling crisis, Balkin suggested, would be for the federal government to sell the Federal Reserve an option to purchase government property for $2 trillion. The Federal Reserve would then credit the proceeds to the government's checking account. Once Congress lifted the debt ceiling, the president could buy back the option for a dollar, or the option could simply expire in 90 days.In a report issued by the credit rating agency Moody's, analyst Steven Hess suggested that the government should consider getting rid of the limit altogether, because the difficulty inherent in reaching an agreement to raise the debt ceiling \"creates a high level of uncertainty\" and an increased risk of default. As reported by The Washington Post, \"without a limit dependent on congressional approval, the report said, the agency would worry less about the government's ability to meet its debt obligations.\" Other public figures, including Democratic ex-President Bill Clinton and Republican ex-CBO director Douglas Holtz-Eakin, have suggested eliminating the debt ceiling.\n\n\n=== Possible methods of bypassing the debt ceiling ===\n\n\n==== Fourteenth Amendment ====\nDuring the debate, some scholars, Democratic lawmakers, and Treasury Secretary Tim Geithner suggested that the President could declare that the debt ceiling violates the Constitution and issue an Executive Order to direct the Treasury to issue more debt. They point to Section 4 of the Fourteenth Amendment to the US Constitution, passed in the context of the Civil War Reconstruction, that states that the validity of the public debt shall not be questioned. Others rebutted this argument by pointing to Section 8 of Article 1 and Section 5 of the Fourteenth Amendment, which state that Congress has the power of the purse and the authority to enforce the Fourteenth Amendment.\nArticle I, Section 8. The Congress shall have power . . .To borrow Money on the credit of the United States;Amendment XIV, Section 4. The validity of the public debt of the United States, authorized by law, including debts incurred for payment of pensions and bounties for services in suppressing insurrection or rebellion, shall not be questioned. But neither the United States nor any State shall assume or pay any debt or obligation incurred in aid of insurrection or rebellion against the United States, or any claim for the loss or emancipation of any slave; but all such debts, obligations and claims shall be held illegal and void.Amendment XIV, Section 5. The Congress shall have power to enforce, by appropriate legislation, the provisions of this article.ArgumentsJack Balkin, looking into the Legislative History of the Fourteenth Amendment, argued that Section 4 was adopted to guard against politically determined default. Referencing the sponsor of the provision, Senator Benjamin Wade, Balkin argued that \"the central rationale for Section Four ... was to remove threats of default on federal debts from partisan struggle.\" Balkin quotes Wade: \"every man who has property in the public funds will feel safer when he sees that the national debt is withdrawn from the power of a Congress to repudiate it and placed under the guardianship of the Constitution than he would feel if it were left at loose ends and subject to the varying majorities which may arise in Congress.\" According to Balkin, this reveals \"an important structural principle. The threat of defaulting on government obligations is a powerful weapon, especially in a complex, interconnected world economy. Devoted partisans can use it to disrupt government, to roil ordinary politics, to undermine policies they do not like, even to seek political revenge. Section Four was placed in the Constitution to remove this weapon from ordinary politics.\"\nBruce Bartlett, a former adviser to President Ronald Reagan and columnist for The Fiscal Times, argued that Section 4 renders the debt ceiling unconstitutional, and that the President should disregard the debt limit.\nThe Nation editor Katrina vanden Heuvel argued that the President could use the public debt section of the Fourteenth Amendment to force the Treasury to continue paying its debts if an agreement to raise the debt ceiling was not reached.\nLaurence Tribe, professor of Constitutional Law at Harvard Law School, called the argument that the public debt clause can nullify the debt ceiling \"false hope\" and noted that nothing in the Constitution enabled the President to \"usurp legislative power\" with regards to the debt. Tribe said that since Congress has means other than borrowing to pay the federal debt (including raising taxes, coining money, and selling federal assets), the argument that the President could seize the power to borrow could be extended to give the President the ability to seize those powers as well.Garrett Epps counter-argued that the President would not be usurping Congressional power by invoking Section 4 to declare the debt ceiling unconstitutional, because the debt ceiling exceeds Congressional authority. He called it legislative \"double-counting,\" as paraphrased in The New Republic, \"because Congress already appropriated the funds in question, it is the executive branch's duty to enact those appropriations.\" In other words, given Congress has appropriated money via federal programs, the Executive is obligated to enact and, therefore, fund them, but the debt ceiling's limit on debt prevents the executive from carrying out the instructions given by Congress, on the constitutional authority to set appropriations; essentially, to obey the statutory debt ceiling would require usurping congress' constitutional powers, and hence the statute must be unconstitutional.\nFormer President Bill Clinton endorsed this counter-argument, saying he would eliminate the debt ceiling using the 14th Amendment. He called it \"crazy\" that Congress first appropriates funds and then gets a second vote on whether to pay.\nMatthew Zeitlin added to the counter-argument that, were Section 4 invoked, members of Congress would not have standing to sue the President for allegedly usurping congressional authority, even if they were willing to do so; and those likely to have standing would be people \"designed to elicit zero public sympathy: those who purchased credit default swaps which would pay off in the event of government default\". Matthew Steinglass argued that, because it would come down to the Supreme Court, the Court would not vote in favor of anyone who could and would sue: it would rule the debt ceiling unconstitutional. This is because, for the Court to rule to uphold the debt ceiling, it would, in effect, be voting for the United States to default, with the consequences that would entail; and, Steinglass argues, the Court would not do that.Michael Stern, Senior Counsel to the US House of Representatives from 1996 to 2004, stated that Garrett Epps \"had adopted an overly broad interpretation of the Public Debt Clause and that this interpretation, even if accepted, could not justify invalidating the debt limit\" because \"the President's duty to safeguard the national debt no more enables him to assume Congress's power of the purse than it would enable him to assume the judicial power when (in his opinion) the Supreme Court acts in an unconstitutional manner.\"\nRob Natelson, former Constitutional Law Professor at University of Montana, argued that \"this is not some issue in the disputed boundaries between legislative and executive power.\" He continued, \"That's why the Constitution itself (Article I, Section 8, Clause 2) gives only Congress, not the President, the power \"To borrow Money on the credit of the United States.\" In another argument, Natelson stated that Bruce Bartlett \"deftly omits a crucial part of the quote from the Fourteenth Amendment. It actually says, 'The validity of the public debt of the United States, AUTHORIZED BY LAW ... shall not be questioned.' In other words, Congress has to approve the debt for it not to be questioned. And note that this language refers to existing debt, not to creating new debt. He also neglects to mention that Section 5 of the Fourteenth Amendment specifically grants to Congress, not to the President, authority to enforce the amendment.\"\nTreasury Secretary Tim Geithner implied that the debt ceiling may violate the Constitution; however George Madison, General Counsel to the US Treasury, wrote that \"Secretary Geithner has never argued that the 14th Amendment to the US Constitution allows the President to disregard the statutory debt limit\" (but nor did Madison say that Geithner had argued against the proposition either), and that \"the Constitution explicitly places the borrowing authority with Congress.\" He stated that \"Secretary Geithner has always viewed the debt limit as a binding legal constraint that can only be raised by Congress.\"\n\n\n==== Minting coins in extremely high denominations ====\n\nUS law does not place a limit on the denomination of minted coins, and specifically mentions that the Mint can create platinum coins of arbitrary value under the discretion of the Secretary of the Treasury. Yale law professor Jack Balkin mentioned seigniorage as a solution, although there had been speculation about the option of a \"trillion-dollar coin\" online since at least January 2011. Hence it has been suggested that a coin with a face value of a trillion or more could be minted and deposited with the Federal Reserve and used to buy back debt, thus making funds available.\n\n\n==== Monetizing gold ====\nA similar crisis was faced during the Eisenhower Administration in 1953. The debt ceiling was not raised until the spring of 1954. To accommodate the gap, the Eisenhower administration increased its gold certificate deposits at the Federal Reserve, which it could do because the market price of gold had increased. According to experts, the Secretary of the Treasury is still authorized to monetize 8,000 tons of gold, valued under the old law at approximately $42 per ounce, but with a market value worth over $1,600 per ounce.\n\n\n== Agreement ==\n\nOn July 31, 2011, President Obama announced that the leaders of both parties in both chambers had reached an agreement that would reduce the deficit and avoid default. The same day, Speaker Boehner's office outlined the agreement for House Republicans. According to the statement:\n\nThe agreement cut spending more than it increased the debt limit. In the first installment (\"tranche\"), $917 billion would be cut over 10 years in exchange for increasing the debt limit by $900 billion.\nThe agreement established a Congressional Joint Select Committee that would produce debt reduction legislation by November 23, 2011, that would be immune from amendments or filibuster. The goal of the legislation is to cut at least $1.5 trillion over the coming 10 years and should be passed by December 23, 2011. The committee would have 12 members, 6 from each party.\nProjected revenue from the Joint Select Committee's legislation must not exceed the revenue baseline produced by current law, which assumes the Bush tax cuts will expire entirely at the end of 2012.\nThe agreement specified an incentive for Congress to act. If Congress fails to produce a deficit reduction bill with at least $1.2 trillion in cuts, then Congress can grant a $1.2 trillion increase in the debt ceiling. This would trigger across-the-board cuts (\"sequestration\") of spending, equally split between defense and non-defense programs. The cuts would apply to mandatory and discretionary spending in the years 2013 to 2021 and be in an amount equal to the difference between $1.2 trillion and the amount of deficit reduction enacted from the joint committee. The sequestration mechanism is the same as the Balanced Budget Act of 1997. There are exemptions\u2014across the board cuts would apply to Medicare, but not to Social Security, Medicaid, civil and military employee pay, or veterans.\nCongress must vote on a Balanced Budget Amendment between October 1, 2011, and the end of the year.\nThe debt ceiling may be increased an additional $1.5 trillion if either one of the following two conditions are met:\nA balanced budget amendment is sent to the states\nThe joint committee cuts spending by a greater amount than the requested debt ceiling increaseMost of the $900 billion in cuts occur in future years, and so will not remove significant capital from the economy in the current and following year. The across-the-board cuts could not take place until 2013. If they are triggered, a new Congress could vote to reduce, eliminate, or deepen all or part of them. Under the U.S. Constitution, the President could veto such a future bill passed by Congress; in such a scenario, Congress would have pass a bill to override this veto by a two-thirds majority of each house of Congress.The agreement, entitled the Budget Control Act of 2011, passed the House on August 1, 2011, by a vote of 269\u2013161; 174 Republicans and 95 Democrats voted for it, while 66 Republicans and 95 Democrats voted against it. The Senate passed the agreement on August 2, 2011, by a vote of 74\u201326; 7 Democrats and 19 Republicans voted against it. Obama signed the bill shortly after it was passed by the Senate.\n\n\n== Reaction ==\n\n\n=== US reaction ===\nThe national debt rose $238 billion (or about 60% of the new debt ceiling) on August 3, the largest one-day increase in the history of the United States. The US debt surpassed 100 percent of gross domestic product for the first time since World War II. According to the International Monetary Fund, the US joined a group of countries whose public debt exceeds their GDP. The group includes Japan (229 percent), Greece (152 percent), Jamaica (137 percent), Lebanon (134 percent), Italy (120 percent), Ireland (114 percent), and Iceland (103 percent).\nThe NASDAQ, ASX, and S&amp;P 100 lost up to four percent in value, the largest drop since July 2009, during the global financial crisis that was precipitated in part by the United States housing bubble and the corresponding losses by holders of mortgages and mortgage-backed securities. The commodities market also took losses, with average spot crude oil prices falling below $US86 a barrel. The price of gold fell, as deepening losses on Wall Street prompted investors to sell.On August 5, 2011, Standard &amp; Poor's credit rating agency downgraded the long-term credit rating of the United States government for the first time in its history, from AAA to AA+. In contrast with previous ratings, the agency assumed in the base case scenario that the tax cuts of 2001 and 2003 would not expire at the end of 2012, citing Congressional resistance to revenue raising measures. The downside scenario, the conditions that would likely lead to a further downgrade to AA, assumed that the second round of spending cuts would fail to occur and that yield on Treasury bonds would increase but the dollar would remain the key global reserve currency. The upside scenario, consistent with maintaining the new AA+ rating, included the expiration of the 2001 and 2003 tax cuts and only modest growth in government debt as a percentage of GDP over the coming decade. A week later, S&amp;P senior director Joydeep Mukherji said that one factor was that numerous American politicians expressed skepticism about the serious consequences of a default\u2014an attitude that he said was \"not common\" among countries with a AAA rating. At the end of 2012, the United States fiscal cliff was resolved in a compromise without expiring the 2001 and 2003 tax cuts, but S&amp;P did not downgrade to AA. The other two major credit rating agencies, Moody's and Fitch, continued to rate the federal government's bonds as AAA.In a joint press release on the same day from the Federal Reserve System, the Federal Deposit Insurance Corporation, the National Credit Union Administration, and the Office of the Comptroller of the Currency, federally regulated institutions were told that for risk-based capital purposes, the debt of the United States was still considered to be risk free.\n\n\n==== Congressional reaction ====\nSenate Minority Leader Mitch McConnell, on the GOP: \"I think some of our members may have thought the default issue was a hostage you might take a chance at shooting. Most of us didn't think that. What we did learn is this \u2013 it's a hostage that's worth ransoming. And it focuses the Congress on something that must be done.\"Boehner was reported to be particularly concerned that any defense cuts could not go into effect until after 2013.\n\n\n=== International reaction ===\nThe international community characterized the political brinkmanship in Washington as playing a game of chicken, and criticized the US government for \"dangerously irresponsible\" actions.International reaction to the US credit rating downgrade has been mixed. Australian Prime Minister Julia Gillard urged calm over the downgrade, since only one of the three major credit rating agencies decided to lower its rating. On August 6, 2011, China, the largest foreign holder of United States debt, said that Washington needed to \"cure its addiction to debts\" and \"live within its means\". The Chinese state media outlet Xinhua News Agency was critical of the US government, questioned whether the US dollar should continue to be the global reserve currency, and called for international supervision over the issue of US dollar.The downgrade started a sell-off in every major stock market index around the world, threatening a stock market crash in the international markets. The G7 finance ministers scheduled a meeting to discuss the \"global financial crisis that concerns all countries\".\n\n\n=== Political aftermath ===\nPolitically, the crisis caused support for the Republican Party to drop, whose support for the debt-ceiling deal was needed as it controlled the House. The party saw its approval ratings drop from 41 percent in July to 33 percent in August. Nevertheless, President Obama saw his approval ratings drop to a record low of 40 percent in regards to his handling of the crisis.\n\n\n== Timeline ==\n\nAlthough the US has raised its debt ceiling many times before 2011, these increases were not generally coupled with an ongoing global economic crisis.\nDecember 16, 2009: The debt ceiling was exceeded. To avoid default, the Treasury Department used \"extraordinary accounting tools\" to enable the Treasury to make an additional $150 billion available to meet the necessary federal obligations.\nFebruary 12, 2010: Increase in the debt ceiling signed into law by President Obama, after being passed by the Democratic 111th United States Congress. It increased the debt ceiling by $1.9 trillion from $12.394 trillion to $14.294 trillion.\nFebruary 18, 2010: Obama issued an Executive Order to establish the National Commission on Fiscal Responsibility and Reform, also known as the Bowles-Simpson Commission. The mission of the commission was to propose recommendations designed to balance the budget, excluding interest payments on the debt, by 2015. It was tasked to issue a report with a set of recommendations by December 1, 2010.\nNovember 2, 2010: The Republican Party gained 63 seats in the US House of Representatives in the United States midterm elections, recapturing the majority by 242\u2013193 in the 112th Congress. Major planks for the House Republicans during the election campaign were cutting federal spending and stopping any tax increases.\nDecember 1, 2010: The Bowles-Simpson Commission on Fiscal Responsibility and Reform issued its report, but the recommendations failed to win support of at least 14 of the 18 members necessary to adopt it formally. The recommendations were never adopted by Congress nor President Obama.\nJanuary 6, April 4, and May 2, 2011: Secretary of the Treasury Timothy Geithner sent letters requesting an increase in the debt ceiling.\nJanuary 25, 2011: Senator Pat Toomey introduces the Full Faith And Credit Act bill [S.163] that would require the Treasury to prioritize payments to service the national debt over other obligations. The bill was never debated.\nJanuary 28, 2011: Moody's Investors Service said it may place a \"negative\" outlook on the AAA rating of US debt sooner than anticipated, as the country's budget deficit widened.\nFebruary 14, 2011: Obama released his budget proposal for fiscal year 2012. Republicans criticized the budget for doing too little to rein in the burgeoning US deficit. The CBO analysis, released in April 2011, estimated that the budget would increase total deficits over 10 years by $2.7 trillion: from $6.7 trillion of the March 2011 baseline to $9.4 trillion with the proposed budget. The Senate rejected the budget proposal on May 25, 2011 (see below).\nApril 14, 2011: Both the House of Representatives and the Senate voted in favor of the 2011 US federal budget, 260\u2013167 and 81\u201319 respectively. This budget projected the 2011 deficit to be $1.645 trillion, and therefore ensured that the debt ceiling would be hit during this fiscal year.\nApril 15, 2011: On a party-line vote 235\u2013193, the House of Representatives passed the Republican 2012 budget proposal aimed to reduce total spending by $5.8 trillion and reduce total deficits by $4.4 trillion over 10 years compared to the current-policy baseline. It included reform to Medicare and Medicaid entitlement programs, which the Democrats criticized as an attempt to leave seniors and poor holding the bag on health care costs. The criticism resonated with the many in the public, who voiced opposition to the proposed changes. The Senate rejected the budget proposal on May 25, 2011 (see below).\nApril 18, 2011: Standard &amp; Poor's Ratings Services revised its outlook on the US to negative due to recent and expected further deterioration in the US fiscal profile, and of the ability and willingness of the US to soon reverse this trend. With the negative outlook, S&amp;P believed there is a likelihood of at least one-in-three of a downward rating adjustment within two years.\nMay 16, 2011: The debt ceiling is reached. Treasury Secretary Timothy Geithner issued a debt issuance suspension period, directing the Treasury to utilize \"extraordinary measures\" to fund federal obligations.\nMay 18, 2011: Bipartisan deficit-reduction talks among the \"Gang of Six\" high-profile Senators are suspended when Republican Tom Coburn drops out.\nMay 24, 2011: Vice President Joe Biden and four Democratic lawmakers begin meeting with the Republican House Majority Leader Eric Cantor and the Republican Senate Minority Whip Jon Kyl, in an effort to continue the talks. Cantor said that these talks would lay the groundwork for further discussions between President Obama, Republican Speaker of the House John Boehner, and other leaders of Congress.\nMay 25, 2011: The Senate rejected both the Republican House budget proposal, by a vote of 57\u201340, and the Obama budget proposal, by a vote of 97\u20130.\nMay 31, 2011: The House voted on a bill to raise the debt ceiling without any spending cuts tied to the increase. President Obama asked Congress to raise the debt ceiling in a 'clean' vote that included no other conditions. The bill, which would have raised the debt ceiling by $2.4 trillion, failed by a vote of 97\u2013318. Democrats accused Republicans of playing politics by holding a vote they knew would fail.\nJune 23, 2011: Biden's negotiations on the debt ceiling were cut off when both Eric Cantor and Jon Kyl walk out over disagreements on taxes.\nJuly 19, 2011: The Republican Majority in the House brought the Cut, Cap and Balance Act (H.R.2560), their proposed solution to the crisis, to a vote. They passed the bill by a vote of 234\u2013190, split closely along party lines: 229 Republicans and 5 Democrats 'for', 181 Democrats and 9 Republicans 'against'; it was sent to the Senate for consideration. The Bill authorized that the debt ceiling be raised by $2.4 trillion after a Balanced Budget Amendment was passed by Congress. Since Constitutional amendments require a two-thirds majority vote in both chambers of Congress to pass, a vote for a Balanced Budget Amendment would require more support than the Cut, Cap and Balance Act bill achieved in the House vote.\nJuly 22, 2011: The Senate voted along party lines to table the Cut, Cap and Balance Act; 51 Democrats voting to table it and 46 Republicans voting to bring it to a debate. Senate Majority Leader Harry Reid called the Act \"one of the worst pieces of legislation to ever be placed on the floor of the United States Senate\". Even had it passed Congress, Obama had promised to veto the bill.\nJuly 25, 2011: Republicans and Democrats outlined separate deficit-reduction proposals.\nJuly 25, 2011: Obama and Speaker of the House John Boehner addressed the nation separately over network television with regards to the debt ceiling.\nJuly 25, 2011: The bond market is shaken by a single $850 million futures trade betting on US default.\nJuly 29, 2011: The Budget Control Act of 2011 S. 627, a Republican bill that immediately raised the debt ceiling by $900 billion and reduced spending by $917 billion, passed in the House on a vote of 218\u2013210. No Democrats voted for it, and it also drew 'no' votes from 22 Republicans, who deemed it insufficiently tough on spending cuts. It allows the President to request a second increase in the debt ceiling of up to $1.6 trillion upon passage of the balanced-budget amendment and a separate $1.8 trillion deficit reduction package, to be written by a new \"joint committee of Congress\". Upon introduction into the Senate in the evening, the bill was immediately tabled on a 59\u201341 vote, including some Republican votes.\nJuly 30, 2011: The House of Representatives voted 173\u2013246 to defeat Senate Majority Leader Harry Reid's $2.4 trillion plan to reduce the deficit and raise the debt ceiling.\nJuly 31, 2011: President Barack Obama announced that leaders of both parties had reached an agreement to lift the debt ceiling and reduce the federal deficit. Separately, House Speaker John Boehner told Republicans that they had reached the framework for an agreement. Boehner revealed details of the agreement in a presentation to the House Republicans.\nAugust 1, 2011: The House passed a bipartisan bill by a vote of 269\u2013161. 174 Republicans and 95 Democrats voted 'yes'; 66 Republicans and 95 Democrats voted 'no'.\nAugust 2, 2011: The Senate passed the bill by a vote of 74\u201326. 28 Republicans, 45 Democrats, and 1 independent voted 'yes'; 19 Republicans, 6 Democrats, and 1 independent voted 'no'. President Obama signed the debt ceiling bill the same day, thus ending fears of a default. Obama also declared that the bill is an \"important first step to ensuring that as a nation we live within our means\".\nAugust 2, 2011: The date estimated by the Department of the Treasury that the borrowing authority of the US would be exhausted, if the debt ceiling crisis were not resolved.\nAugust 3, 2011: The Treasury increased the national debt by $238 billion.\nAugust 5, 2011: Standard &amp; Poor's lowered the credit rating of the United States from AAA to AA+, citing Congressional resistance to new revenue measures and uncontrolled growth of entitlement programs. The agency rated the long-term outlook as negative, citing uncertainty in debt growth dynamics.\nAugust 9, 2011. The US Federal Reserve announced it will keep interest rates at \"exceptionally low levels\" at least through mid-2013; it made no commitment for further quantitative easing. (Reuters) The Dow Jones Industrial Average and the New York Stock Exchange as well as other world stock markets, recovered after recent falls. (Wall Street Journal)\nAugust 15, 2011: The date estimated by the Fitch rating agency and the FRBNY primary dealer Jefferies &amp; Co that $29 billion of federal debt interest would have become due, thus triggering a technical sovereign default if the debt ceiling crisis had not been resolved. This, however, did not occur as the debt ceiling crisis was resolved by then.\n\n\n== See also ==\nBudget Control Act of 2011\nEuropean sovereign debt crisis\nHistory of United States debt-ceiling increases\n2007\u20132008 financial crisis\n2013 United States debt-ceiling crisis\n2023 United States debt-ceiling crisis\nUnited States Congress Joint Select Committee on Deficit Reduction\nUnited States federal government credit-rating downgrades\n1995\u20131996 United States federal government shutdowns\nSovereign default\n\n\n== References ==\n\n\n== External links ==\n\"U.S. Debt Ceiling: Costs and Consequences\" Archived September 8, 2013, at the Wayback Machine. Council on Foreign Relations. December 7, 2012.\n\"Obama vs. Boehner: Who Killed the Debt Deal?\". New York Times Magazine. March 28, 2012.\n\"Apple now has more cash than the U.S. government\". CNN. July 29, 2011.\n\"Understanding the Federal Debt Limit\". Concord Coalition. July 8, 2011. Archived from the original on July 27, 2011. Retrieved July 27, 2011.\n\"United States of America Long-Term Rating Lowered To 'AA+' On Political Risks And Rising Debt Burden; Outlook Negative\" (PDF). Standard &amp; Poor's. August 5, 2011.\n\"U.S. debt ceiling: How big is it and how often has it changed?\". the guardian. January 2013."
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"content": "On January 19, 2023, the United States hit its debt ceiling, leading to a debt-ceiling crisis, part of an ongoing political debate within Congress about federal government spending and the national debt that the U.S. government accrues. In response, Janet Yellen, the Secretary of the Treasury, began enacting temporary \"extraordinary measures\". On May 1, 2023, Yellen warned these measures could be exhausted as early as June 1, 2023; this date was later pushed to June 5.The debt ceiling had been increased multiple times since the 2013 debt ceiling standoff, all without budgetary preconditions attached; the most recent increase was in December 2021. In the 2023 impasse, Republicans proposed cutting spending back to 2022 levels as a precondition to raising the debt ceiling, while Democrats insisted on a \"clean bill\" without preconditions, as had been the case in raising the ceiling three times during the Donald Trump administration.In the event the government runs out of funds, the Treasury would have to either default on payments to bondholders or immediately curtail payment of funds owed to various companies and individuals that had been mandated but not fully funded by Congress. Both situations would be expected to result in a global economic meltdown. Additionally, if the federal government were unable to issue new debt, it would have to balance its budget by imposing budget cuts that, in total, would equal 5% of the size of the American economy.Constitutional scholar Laurence Tribe said that a default would be unconstitutional due to the 14th Amendment and the government would be required to repay its debts despite hitting the debt ceiling. President Joe Biden said that he was considering invoking the 14th because he felt he had authority to do so, but questioned whether it could be done in time to avoid default given the possibility that it might be appealed.On May 27, Biden and House speaker Kevin McCarthy struck a deal to increase the debt-ceiling but cap federal spending; the resulting bill, the Fiscal Responsibility Act of 2023, passed the House on May 31 and the Senate on June 1. Biden signed it into law on June 3, bringing the crisis to an end.\n\n\n== Background ==\n\n\n=== The deficit and the national debt ===\n\n\n==== Federal budget and deficit ====\n\nIn 2019, just over 60% of the federal budget went to mandatory spending for programs like Social Security, Medicare, and Medicaid, with another 30% going to discretionary spending (half of which went to defense). The remaining 9% went to pay for interest on the debt. Meanwhile, both mandatory spending programs and interest on the debt were expected to take up increasing shares of the federal budget, while tax revenues were expected to be stagnant.In the fiscal year 2022, the federal government brought in $4.90 trillion but spent $6.27 trillion, with a net budget deficit of $1.38 trillion (the fourth-highest of the 21st century). In addition, it has run deficits every year since 2001, when it last ran a surplus. Financing a deficit requires that the government borrow money.However, based on Article 1, Section 8, Clause 2 of the United States Constitution, only Congress has the authority to borrow money \"on the Credit of the United States\".\n\n\n==== Debt ceiling ====\n\nThe United States debt ceiling is a legislative limit that determines how much debt the Treasury Department may incur. It was introduced in 1917, when Congress voted to give Treasury the right to issue bonds for financing America participating in World War I, rather than issuing them for individual projects, as had been the case in the past. In 1939, Congress gave the Treasury the right to issue and manage debt\u2014though it limited how much it could issue. From 1939 to 2018, the Treasury increased the debt ceiling 98 times, decreasing it five times. Whilst the Treasury can borrow money to pay for federal expenditures, it is limited in power by Congress.In other words, the Treasury can borrow money to pay for federal expenditures\u2014but only as much as Congress lets it.\n\n\n==== National debt ====\n\nSince 2009, America's national debt has nearly tripled, with annual federal deficits averaging close to $1 trillion since 2001. During the 21st century, it has gone up for various reasons, including tax cuts under Presidents Bush and Trump, wars in Iraq and Afghanistan, entitlements like Medicare Part D, and spending in response to the Great Recession and the COVID-19 pandemic. Currently, the U.S. is the industrialized country with the fourth highest debt-to-GDP ratio, behind Japan, Italy and Greece. Additionally, the national debt is forecast to be double the United States' GDP by 2051.\n\n\n==== Reducing the deficit and debt ====\nAccording to both policy experts and politicians, dealing with the deficit and debt will ultimately involve both raising taxes and decreasing spending. Past plans for taxes hikes have included reducing the number of deductions, increasing rates on higher earners, and making new taxes, while proposals for reducing spending have included reducing Social Security benefits, lowering payments for Medicaid and Medicare, and cutting defense spending, among others.However, it tends to be difficult to do so in practice, owing to citizens' reluctance to alter large programs like Social Security or the raising of taxes. Historically, no political party has been willing to reduce the deficit or debt when they have held power, although the issue is often a foundation of candidates' election campaigns.\n\n\n=== The U.S. dollar and borrowing ===\nThe United States dollar (used heavily in international trade) is considered to be the world's reserve currency for a variety of reasons, including the sheer magnitude of the American economy, America's geopolitical strength, the dollar's relative stability, and the market for U.S. debt.As well, the Compromise of 1790 (when Treasury Secretary Alexander Hamilton got both Secretary of State Thomas Jefferson and Representative James Madison to agree to take on Revolutionary War debts assumed by the states and the Continental Congress in exchange for locating the capital on the Potomac River by Virginia) played a role with this: Because Revolutionary War bondholders were paid 100 cents on the dollar, America made good on its debt and established good credit. This, in turn, helped contribute to the dollar becoming the world's reserve currency.As a result, foreign creditors (including China, Japan, and the United Kingdom) are large markets for the currency. This makes it easier for the U.S. government to finance the national debt, via being charged lower interest rates for borrowing money.\n\n\n== Reactions ==\n\n\n=== Congress and the president ===\nThe House of Representatives and the White House disagree on how to resolve this crisis. House Speaker Kevin McCarthy (R-CA) has called for negotiations to reduce federal spending in exchange for increasing the debt ceiling, including making possible cuts to Medicare, Medicaid, and Social Security, or otherwise possibly overhauling entitlements. In contrast, the Biden administration has declared that raising the debt ceiling is non-negotiable, and that Congress is obligated to increase it. Senate Minority Leader Mitch McConnell (R-KY) has said that there will be no default, though he has also said that dealing with the debt ceiling will be up to President Biden and Speaker McCarthy.As well, members of the House Freedom Caucus (and a few other Republicans who were not part of it, such as Representative Matt Gaetz) had raised a significant portion of funding for their 2022 election campaigns from small donors, which made it easier for them to resist pressure from business groups to raise the debt ceiling. Indeed, the debt ceiling fight was viewed by some as being an example of widening divisions between corporate America and the Republican Party, which had begun during the Trump presidency. On May 5, 2023 the president's senior advisor, Mitch Landrieu, appeared on TV to field questions on the White House response to the debt-ceiling crisis and the banking crisis. A week later, Landrieu held a press conference at the White House to underscore the serious threat to the national economy of the 'manufactured crisis' of the debt-ceiling standoff.\n\n\n=== Treasury Department ===\n\n\n==== Secretary Yellen's comments ====\nTreasury Secretary Janet Yellen told the Associated Press that, while she expected that Congress would eventually raise the debt ceiling, demanding spending cuts in exchange for doing so would be irresponsible and that increasing it was about ensuring that the federal government could pay for spending that Congress had already approved, rather than about new spending. Yellen made similar points in her January 13, 2023, letter to Congress, also warning that if they did not suspend or raise it, they would harm the American economy, the American people, and the global financial system's stability.\n\n\n==== \"Extraordinary measures\" ====\nAs a result of reaching the debt ceiling, the Treasury Department began considering implementation of \"extraordinary measures\" to prevent a default for a few months, so as to give Congress time to increase the debt ceiling, explained in a memo it issued on January 19, 2023. However, it would only be able to use them for a few months. Extraordinary measures are accounting maneuvers that the Treasury uses to enable the federal government to continue to meet its various financial obligations while there is an impasse over the debt ceiling. Said measures were first used by it in 1985, and Congress granted the Treasury permission to continue using them the following year.Secretary Yellen also initiated a \"debt issuance suspension period\" through June 5, and has rejected the minting of a trillion-dollar coin (which would have created $1 trillion in seigniorage).\n\n\n=== Markets ===\nAnalysts were monitoring the ongoing debate over raising the debt ceiling, and were keeping investors informed of it and similarly warning about the potential consequences of a default. However, as of January 23, 2023, markets were not reacting to the debt ceiling debate, as the expectation was that the debt ceiling would be raised in time to prevent default. Analysts wrote that, with the exception of the 2011 debt ceiling crisis, markets had historically not reacted to debates over raising it. On the other hand, they wrote that if the debt ceiling wasn't increased as the deadline for doing so drew nearer, stock prices would start dropping and interest rates would begin to rise.On May 5, 2023, European credit rating agency Scope placed the United States' AA sovereign rating under review for downgrade.\n\n\n== Responses and analysis ==\n\n\n=== Comparisons to the 2011 debt ceiling crisis ===\n\nThe Associated Press has noted similarities between the 2023 debt ceiling crisis and the one in 2011, including how both involved the GOP-controlled House of Representatives demanding spending cuts in exchange for increasing the debt limit.In 2011, both the House and the Obama administration negotiated for months on it until talks collapsed. As a result, markets experienced turmoil, with the S&amp;P 500 dropping by over 16% in the final month before the deadline. In August 2011, two days before the government would have defaulted, there was a compromise between Democrats and Senate Republicans to create a committee to look into cutting spending, and to also increase the debt ceiling. As a result of the near-default, America's credit rating was downgraded to AA+ by Standard and Poor's, as American borrowing costs went up by $1.3 billion that year.\n\n\n=== Potential consequences of a default ===\nIncreasing political polarization since 2011 has made votes to raise the debt ceiling more contentious than before, with economists now considering what would happen if the federal government defaulted on its loans. One analysis from September 2021 (during a previous debt limit standoff) said that, if the federal government defaulted, America's credit rating would experience a drastic downgrade, interest rates on Treasury bonds would go up sharply, interest rates both in the U.S. and worldwide would spike, and payments on benefits (such as social security) and salaries for the military would be stopped. Other potential consequences of a default would include reduced consumer confidence, a recession, immediately stopping about 10% of the American economy, increasing the cost of a 30-year mortgage, losing three million jobs in the U.S., and increasing the national debt due to higher interest rates.Moody's Analytics warned that Congress may not be able to avoid breaching the debt limit. This warning was based on both the difficulty the House had in electing Kevin McCarthy as Speaker, and how some lawmakers (mostly Republican) were wondering if the Treasury would be able to prioritize paying bondholders if it was breached.\n\n\n=== Fundraising off of the debt ceiling fight ===\nEven with the ongoing fight over raising the debt ceiling, party leaders in Congress were busy raising money, with Republican Congressional leaders raising about $10.4 million and Democratic ones raising $5.7 million during the first three months of 2023.A number of moderate and progressive Democrats in the House and Senate had explicitly brought up the current debt ceiling fight in fundraising appeals to their supporters, and had framed it in terms of warning about potential consequences of a default. Messages about this came from Senate Majority Leader Chuck Schumer, moderates like senators Jon Tester and Sherrod Brown, and progressives like Representative Alexandria Ocasio-Cortez and Senator Elizabeth Warren.Meanwhile, Republican Senator Tim Scott explicitly brought up the debt ceiling fight in his fundraising emails, though he wrote about it in terms of limiting government spending. At the same time, far Right Republicans in Congress had been using the debt ceiling over the past few years to galvanize their supporters and to do fundraising based on it.\n\n\n=== Possible scenarios for how the impasse would end ===\nIn March 2023, economists with Moody's Analytics analyzed five different scenarios for dealing with the debt limit. They included the following in their report on this:\nIncreasing it right before x-date without any conditions (possibly by suspending it until October 1, and then increasing it again to last until sometime in early 2025), thereby avoiding damage to the economy. This would also be what they had done on previous occasions when there was debate over increasing the debt ceiling, and which report indicated would be the most likely possibility for resolving it this time.\nUnilateral action by the executive branch to avert default, which could include:President Biden invoking the 14th Amendment (Section 4) in case no agreement had been made by x-date to increase the debt ceiling. Though it would avert default, it could cause a constitutional crisis and the Supreme Court could have to intervene.\nThe Treasury minting a trillion-dollar coin with its authority under 31 U.S.C. Section 5112, depositing it at the Federal Reserve, and drawing it down to pay the government's bills.\nThe Treasury issuing premium bonds rather than par bonds as Treasury debt comes due, lowering the face amount of debt outstanding and subject to the debt limit.The Treasury prioritizing payments for a few days, which would cause interest rates to spike, would cause chaos in the markets, and would increase the odds of a mild recession starting in late 2023. As well, it is unknown if the Treasury Department would be legally allowed to do this, or if it would be able to, plus effects on the United States' credit rating are unknown.\nAdopting ideas the House Republicans were suggesting in March 2023, including cutting both Medicaid and nondefense-related discretionary spending. Results of this would include a recession and reduced economic growth for the next decade (the borrowing would be significantly reduced, so interest rates would be lower), with people with lower incomes being more likely to suffer financially due to losing both government benefits and jobs.\nA lengthy default that would last for weeks. Results of this would include Treasury debt being downgraded by credit rating agencies, reduced treasury spending, a severe recession, higher interest rates, and a long-term diminution of the U.S. dollar's status as the world's reserve currency, among other effects.\n\n\n== Potential debt ceiling workarounds ==\n\n\n=== Fourteenth Amendment ===\n\nWhile the Fourteenth Amendment, ratified in 1866, is more widely known for its provisions granting citizenship to freed slaves and establishing equal rights, it also contains a long-forgotten provision, Section 4, that states, in part, \"The validity of the public debt of the United States, authorized by law, including debts incurred for payment of pensions and bounties for services in suppressing insurrection or rebellion, shall not be questioned.\" With former Confederate states being admitted back into the Union at the time of the 14th amendment's ratification, many pro-Union members of Congress feared that if the South were to take back a significant amount of Congress, or were to retake the Presidency, they would refuse to pay the debt incurred by the Union during the Civil War, or pay debts incurred by the Confederacy to support its war effort against the United States. Section 4 confirmed the legitimacy of all U.S. debt to stop this from ever happening.\nWhile Section 4's original purpose has long become moot, many constitutional legal scholars believe that Section 4 of the 14th amendment makes the debt ceiling unconstitutional. President Biden could, in theory, end the crisis by avoiding Congress altogether, issuing an executive order invoking Section 4 and ordering the Treasury to continue making payments, even if that pushed the public debt above $31.4 trillion.\nHowever, an invocation of the 14th amendment by President Biden would come with serious pitfalls. Legal scholars are divided as to whether or not it would be legally permissible for Biden to take such an action. His executive order might not be accepted by the courts, and even if it were eventually upheld by the United States Supreme Court, the uncertainty leading up to a decision might cause turmoil in the markets and a spike in interest rates.\n\n\n=== Trillion-dollar coin ===\n\nIn 1997, Congress passed a law that vested power to the Treasury to mint commemorative platinum coins of any denomination. The law, 31 U.S.C. Section 5112, was originally intended to help the Treasury make money off of coin collectors, an idea penned by Delaware's at-large representative, Republican Mike Castle. The text of the statute did not specify any limitations on how high the denomination of the coin could be.An idea, which first emerged just prior to the 2011 debt ceiling crisis, is that the Treasury Secretary could instruct the US Mint to issue a trillion-dollar coin, and deposit it with the Federal Reserve.According to economist Mark Zandi, using the coin in such a way would be inflationary. An opinion article in National Review likened it to the government \"printing money\" to pay off debt. However, according to economist Paul Krugman, the move would not be inflationary, saying on Twitter, \"The Fed would surely sterilize any impact on the monetary base by selling off some of its huge portfolio of US debt.\"Current Treasury Secretary Janet Yellen dismissed the plan as a \"gimmick\", saying that the Federal Reserve isn't required to accept the coin for deposit, and likely would not. Krugman expressed a different opinion, saying on Twitter, \"As for claims that Powell would refuse to accept the coin, or the Supremes would block premium bonds \u2014 well, nobody knows. But my guess is that nobody wants to be the guy who destroys the world economy. Even people happy to see it burn don't want their fingerprints on it.\"\n\n\n== Attempts to raise the debt ceiling ==\nHaving recently regained control of the House, Republicans demanded deep spending cuts as a precondition to raising the debt ceiling, while Democrats insisted on a \"clean bill\" without preconditions, as had been the case in raising the ceiling in 2017, 2018, and 2019, during the Trump administration.\n\n\n=== Meetings between Biden and McCarthy ===\n\n\n==== February ====\nOn Wednesday, February 1, 2023 President Biden and Speaker McCarthy met for an hour in the Oval Office to discuss how to raise the debt ceiling. The two did not reach agreement \u2013 the president called for a clean debt ceiling increase, while the speaker demanded cuts to spending in exchange for raising it \u2013 though both agreed they would continue talking about it.\n\n\n==== May ====\nBiden and McCarthy met several times in May to try and find a way to solve the crisis, ultimately coming to an agreement on May 27.\n\n\n=== March 9 presidential budget ===\nOn March 9, 2023, President Biden released a potential budget for 2023. At 184 pages, this budget included $3 trillion to reduce the deficit, with savings largely coming from increased taxes on the wealthy and corporations.\n\n\n=== Limit, Save, Grow Act ===\nOn April 19, Speaker McCarthy unveiled the Limit, Save, Grow Act, a 320-page House bill which would have raised the debt ceiling by $1.5 trillion (enough to last until at least March 31, 2024), while at the same time providing for significant spending cuts. More specifically, the proposals contained in the draft law included eliminating the partial federal student loan forgiveness program started by the Biden administration, introducing work requirements for Medicaid, eliminating IRS enforcement funding for audits, and getting rid of many clean energy subsidies.In its April 25 analysis of the bill, the Congressional Budget Office estimated that it would reduce federal budget deficits from 2023 to 2033 by a total of around $4.8 trillion, with two-thirds of that coming from reduced discretionary outlays and the rest coming from lower mandatory spending, increased Revenue, and lower interest payments on the national debt.Responses to the bill were mixed. House Budget Committee Chairman Jodey Arrington, who filed the bill, criticized the Biden administration's spending while saying that the plan would address that. Meanwhile, the House Budget Committee's Democratic members referred to it as \"The Default on America Act\", or DOA for short. President Biden said on April 25 that, should the bill pass Congress, he will veto it.It was originally reported that a considerable amount of Republican Representatives would not have supported the bill. However, on April 26, following several days of negotiations and last-minute changes to the bill, the latter managed to pass in the House of Representatives by a vote of 217 to 215, with Republicans Andy Biggs of Arizona, Ken Buck of Colorado, Tim Burchett of Tennessee and Matt Gaetz of Florida joining all Democrats in voting against it.The bill was highly unlikely to pass in the Senate. However, it was viewed by House Republicans as a stepping stone for further negotiations with President Biden on the debt ceiling and spending cuts.\n\n\n=== Discharge petition ===\nOn May 17, Democratic Representative Brendan Boyle introduced a discharge petition to force a vote on House Resolution 350, a special rule providing for immediate consideration of the so-called Breaking the Gridlock Act and of one amendment to the same, which is to be offered by the most senior ranking minority member of the Committee on Ways and Means. Democrats intended to use the amendment to replace the original text of the draft law in its entirety, turning it into a bill raising the debt ceilingBy May 27, all 213 Democratic representatives had signed the petition. Nonetheless, the petition failed to obtain the 218 signatures needed in order for it to be successful because no Republican signed it.\n\n\n== Agreement ==\n\nOn May 29, Patrick McHenry introduced the Fiscal Responsibility Act of 2023, a bipartisan piece of legislation implementing the agreement between Biden and McCarthy. The bill, which was endorsed by both Republican and Democratic leadership, includes the following provisions:\nThe debt limit is suspended until January 1, 2025.\nDiscretionary spending is capped during fiscal years 2024 and 2025.\nAll unused funds appropriated during the COVID-19 pandemic are rescinded.\nAbout a quarter of the $80 billion of additional funding for the Internal Revenue Service provided for in the Inflation Reduction Act of 2022 are rescinded.\nThe administration is required to operate under a PAYGO system: any executive regulation whose implementation costs more money than it brings in can only be made if an equal or greater amount of money is rescinded from other federal programs; this system is waivable by the Office of Management and Budget.\nThe student loans payment moratorium enacted in 2020 ends on September 1, 2023; the partial student loan forgiveness plan introduced by the Biden administration remains unaffected.\nWork requirements for adult SNAP recipients with no dependents are broadened so as to apply to those aged under 51 in fiscal year 2023, to those aged 53 in fiscal year 2024, and to those aged under 55 in fiscal years 2025 to 2030 (currently, only those under 50 are required to work in order to be eligible). Veterans and homeless people are exempt from this provision.\nObtaining a federal permit for energy projects is made easier, especially for what concerns the Mountain Valley Pipeline.On May 30, the Rules Committee agreed to send the bill to the Floor of the House by a vote of 7 to 6, with Republicans Ralph Norman and Chip Roy joining all Democratic members of the Committee in voting against. The bill passed the House on May 31 and the Senate on June 1. Biden signed it into law on June 3.\n\n\n=== Vote summaries ===\n\n\n==== House of Representatives ====\n\n\n==== Senate ====\n\n\n== See also ==\nHistory of the United States debt ceiling\n1995\u20131996 United States federal government shutdowns, which included a dispute about the debt ceiling\n2011 United States debt-ceiling crisis\n2013 United States debt ceiling crisis\n\n\n== Notes ==\n\n\n== References ==\n\n\n== External links ==\nReport: How America Amassed $33 Trillion in Debt",
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"extract": "On January 19, 2023, the United States hit its debt ceiling, leading to a debt-ceiling crisis, part of an ongoing political debate within Congress about federal government spending and the national debt that the U.S. government accrues. In response, Janet Yellen, the Secretary of the Treasury, began enacting temporary \"extraordinary measures\". On May 1, 2023, Yellen warned these measures could be exhausted as early as June 1, 2023; this date was later pushed to June 5.The debt ceiling had been increased multiple times since the 2013 debt ceiling standoff, all without budgetary preconditions attached; the most recent increase was in December 2021. In the 2023 impasse, Republicans proposed cutting spending back to 2022 levels as a precondition to raising the debt ceiling, while Democrats insisted on a \"clean bill\" without preconditions, as had been the case in raising the ceiling three times during the Donald Trump administration.In the event the government runs out of funds, the Treasury would have to either default on payments to bondholders or immediately curtail payment of funds owed to various companies and individuals that had been mandated but not fully funded by Congress. Both situations would be expected to result in a global economic meltdown. Additionally, if the federal government were unable to issue new debt, it would have to balance its budget by imposing budget cuts that, in total, would equal 5% of the size of the American economy.Constitutional scholar Laurence Tribe said that a default would be unconstitutional due to the 14th Amendment and the government would be required to repay its debts despite hitting the debt ceiling. President Joe Biden said that he was considering invoking the 14th because he felt he had authority to do so, but questioned whether it could be done in time to avoid default given the possibility that it might be appealed.On May 27, Biden and House speaker Kevin McCarthy struck a deal to increase the debt-ceiling but cap federal spending; the resulting bill, the Fiscal Responsibility Act of 2023, passed the House on May 31 and the Senate on June 1. Biden signed it into law on June 3, bringing the crisis to an end.\n\n\n== Background ==\n\n\n=== The deficit and the national debt ===\n\n\n==== Federal budget and deficit ====\n\nIn 2019, just over 60% of the federal budget went to mandatory spending for programs like Social Security, Medicare, and Medicaid, with another 30% going to discretionary spending (half of which went to defense). The remaining 9% went to pay for interest on the debt. Meanwhile, both mandatory spending programs and interest on the debt were expected to take up increasing shares of the federal budget, while tax revenues were expected to be stagnant.In the fiscal year 2022, the federal government brought in $4.90 trillion but spent $6.27 trillion, with a net budget deficit of $1.38 trillion (the fourth-highest of the 21st century). In addition, it has run deficits every year since 2001, when it last ran a surplus. Financing a deficit requires that the government borrow money.However, based on Article 1, Section 8, Clause 2 of the United States Constitution, only Congress has the authority to borrow money \"on the Credit of the United States\".\n\n\n==== Debt ceiling ====\n\nThe United States debt ceiling is a legislative limit that determines how much debt the Treasury Department may incur. It was introduced in 1917, when Congress voted to give Treasury the right to issue bonds for financing America participating in World War I, rather than issuing them for individual projects, as had been the case in the past. In 1939, Congress gave the Treasury the right to issue and manage debt\u2014though it limited how much it could issue. From 1939 to 2018, the Treasury increased the debt ceiling 98 times, decreasing it five times. Whilst the Treasury can borrow money to pay for federal expenditures, it is limited in power by Congress.In other words, the Treasury can borrow money to pay for federal expenditures\u2014but only as much as Congress lets it.\n\n\n==== National debt ====\n\nSince 2009, America's national debt has nearly tripled, with annual federal deficits averaging close to $1 trillion since 2001. During the 21st century, it has gone up for various reasons, including tax cuts under Presidents Bush and Trump, wars in Iraq and Afghanistan, entitlements like Medicare Part D, and spending in response to the Great Recession and the COVID-19 pandemic. Currently, the U.S. is the industrialized country with the fourth highest debt-to-GDP ratio, behind Japan, Italy and Greece. Additionally, the national debt is forecast to be double the United States' GDP by 2051.\n\n\n==== Reducing the deficit and debt ====\nAccording to both policy experts and politicians, dealing with the deficit and debt will ultimately involve both raising taxes and decreasing spending. Past plans for taxes hikes have included reducing the number of deductions, increasing rates on higher earners, and making new taxes, while proposals for reducing spending have included reducing Social Security benefits, lowering payments for Medicaid and Medicare, and cutting defense spending, among others.However, it tends to be difficult to do so in practice, owing to citizens' reluctance to alter large programs like Social Security or the raising of taxes. Historically, no political party has been willing to reduce the deficit or debt when they have held power, although the issue is often a foundation of candidates' election campaigns.\n\n\n=== The U.S. dollar and borrowing ===\nThe United States dollar (used heavily in international trade) is considered to be the world's reserve currency for a variety of reasons, including the sheer magnitude of the American economy, America's geopolitical strength, the dollar's relative stability, and the market for U.S. debt.As well, the Compromise of 1790 (when Treasury Secretary Alexander Hamilton got both Secretary of State Thomas Jefferson and Representative James Madison to agree to take on Revolutionary War debts assumed by the states and the Continental Congress in exchange for locating the capital on the Potomac River by Virginia) played a role with this: Because Revolutionary War bondholders were paid 100 cents on the dollar, America made good on its debt and established good credit. This, in turn, helped contribute to the dollar becoming the world's reserve currency.As a result, foreign creditors (including China, Japan, and the United Kingdom) are large markets for the currency. This makes it easier for the U.S. government to finance the national debt, via being charged lower interest rates for borrowing money.\n\n\n== Reactions ==\n\n\n=== Congress and the president ===\nThe House of Representatives and the White House disagree on how to resolve this crisis. House Speaker Kevin McCarthy (R-CA) has called for negotiations to reduce federal spending in exchange for increasing the debt ceiling, including making possible cuts to Medicare, Medicaid, and Social Security, or otherwise possibly overhauling entitlements. In contrast, the Biden administration has declared that raising the debt ceiling is non-negotiable, and that Congress is obligated to increase it. Senate Minority Leader Mitch McConnell (R-KY) has said that there will be no default, though he has also said that dealing with the debt ceiling will be up to President Biden and Speaker McCarthy.As well, members of the House Freedom Caucus (and a few other Republicans who were not part of it, such as Representative Matt Gaetz) had raised a significant portion of funding for their 2022 election campaigns from small donors, which made it easier for them to resist pressure from business groups to raise the debt ceiling. Indeed, the debt ceiling fight was viewed by some as being an example of widening divisions between corporate America and the Republican Party, which had begun during the Trump presidency. On May 5, 2023 the president's senior advisor, Mitch Landrieu, appeared on TV to field questions on the White House response to the debt-ceiling crisis and the banking crisis. A week later, Landrieu held a press conference at the White House to underscore the serious threat to the national economy of the 'manufactured crisis' of the debt-ceiling standoff.\n\n\n=== Treasury Department ===\n\n\n==== Secretary Yellen's comments ====\nTreasury Secretary Janet Yellen told the Associated Press that, while she expected that Congress would eventually raise the debt ceiling, demanding spending cuts in exchange for doing so would be irresponsible and that increasing it was about ensuring that the federal government could pay for spending that Congress had already approved, rather than about new spending. Yellen made similar points in her January 13, 2023, letter to Congress, also warning that if they did not suspend or raise it, they would harm the American economy, the American people, and the global financial system's stability.\n\n\n==== \"Extraordinary measures\" ====\nAs a result of reaching the debt ceiling, the Treasury Department began considering implementation of \"extraordinary measures\" to prevent a default for a few months, so as to give Congress time to increase the debt ceiling, explained in a memo it issued on January 19, 2023. However, it would only be able to use them for a few months. Extraordinary measures are accounting maneuvers that the Treasury uses to enable the federal government to continue to meet its various financial obligations while there is an impasse over the debt ceiling. Said measures were first used by it in 1985, and Congress granted the Treasury permission to continue using them the following year.Secretary Yellen also initiated a \"debt issuance suspension period\" through June 5, and has rejected the minting of a trillion-dollar coin (which would have created $1 trillion in seigniorage).\n\n\n=== Markets ===\nAnalysts were monitoring the ongoing debate over raising the debt ceiling, and were keeping investors informed of it and similarly warning about the potential consequences of a default. However, as of January 23, 2023, markets were not reacting to the debt ceiling debate, as the expectation was that the debt ceiling would be raised in time to prevent default. Analysts wrote that, with the exception of the 2011 debt ceiling crisis, markets had historically not reacted to debates over raising it. On the other hand, they wrote that if the debt ceiling wasn't increased as the deadline for doing so drew nearer, stock prices would start dropping and interest rates would begin to rise.On May 5, 2023, European credit rating agency Scope placed the United States' AA sovereign rating under review for downgrade.\n\n\n== Responses and analysis ==\n\n\n=== Comparisons to the 2011 debt ceiling crisis ===\n\nThe Associated Press has noted similarities between the 2023 debt ceiling crisis and the one in 2011, including how both involved the GOP-controlled House of Representatives demanding spending cuts in exchange for increasing the debt limit.In 2011, both the House and the Obama administration negotiated for months on it until talks collapsed. As a result, markets experienced turmoil, with the S&amp;P 500 dropping by over 16% in the final month before the deadline. In August 2011, two days before the government would have defaulted, there was a compromise between Democrats and Senate Republicans to create a committee to look into cutting spending, and to also increase the debt ceiling. As a result of the near-default, America's credit rating was downgraded to AA+ by Standard and Poor's, as American borrowing costs went up by $1.3 billion that year.\n\n\n=== Potential consequences of a default ===\nIncreasing political polarization since 2011 has made votes to raise the debt ceiling more contentious than before, with economists now considering what would happen if the federal government defaulted on its loans. One analysis from September 2021 (during a previous debt limit standoff) said that, if the federal government defaulted, America's credit rating would experience a drastic downgrade, interest rates on Treasury bonds would go up sharply, interest rates both in the U.S. and worldwide would spike, and payments on benefits (such as social security) and salaries for the military would be stopped. Other potential consequences of a default would include reduced consumer confidence, a recession, immediately stopping about 10% of the American economy, increasing the cost of a 30-year mortgage, losing three million jobs in the U.S., and increasing the national debt due to higher interest rates.Moody's Analytics warned that Congress may not be able to avoid breaching the debt limit. This warning was based on both the difficulty the House had in electing Kevin McCarthy as Speaker, and how some lawmakers (mostly Republican) were wondering if the Treasury would be able to prioritize paying bondholders if it was breached.\n\n\n=== Fundraising off of the debt ceiling fight ===\nEven with the ongoing fight over raising the debt ceiling, party leaders in Congress were busy raising money, with Republican Congressional leaders raising about $10.4 million and Democratic ones raising $5.7 million during the first three months of 2023.A number of moderate and progressive Democrats in the House and Senate had explicitly brought up the current debt ceiling fight in fundraising appeals to their supporters, and had framed it in terms of warning about potential consequences of a default. Messages about this came from Senate Majority Leader Chuck Schumer, moderates like senators Jon Tester and Sherrod Brown, and progressives like Representative Alexandria Ocasio-Cortez and Senator Elizabeth Warren.Meanwhile, Republican Senator Tim Scott explicitly brought up the debt ceiling fight in his fundraising emails, though he wrote about it in terms of limiting government spending. At the same time, far Right Republicans in Congress had been using the debt ceiling over the past few years to galvanize their supporters and to do fundraising based on it.\n\n\n=== Possible scenarios for how the impasse would end ===\nIn March 2023, economists with Moody's Analytics analyzed five different scenarios for dealing with the debt limit. They included the following in their report on this:\nIncreasing it right before x-date without any conditions (possibly by suspending it until October 1, and then increasing it again to last until sometime in early 2025), thereby avoiding damage to the economy. This would also be what they had done on previous occasions when there was debate over increasing the debt ceiling, and which report indicated would be the most likely possibility for resolving it this time.\nUnilateral action by the executive branch to avert default, which could include:President Biden invoking the 14th Amendment (Section 4) in case no agreement had been made by x-date to increase the debt ceiling. Though it would avert default, it could cause a constitutional crisis and the Supreme Court could have to intervene.\nThe Treasury minting a trillion-dollar coin with its authority under 31 U.S.C. Section 5112, depositing it at the Federal Reserve, and drawing it down to pay the government's bills.\nThe Treasury issuing premium bonds rather than par bonds as Treasury debt comes due, lowering the face amount of debt outstanding and subject to the debt limit.The Treasury prioritizing payments for a few days, which would cause interest rates to spike, would cause chaos in the markets, and would increase the odds of a mild recession starting in late 2023. As well, it is unknown if the Treasury Department would be legally allowed to do this, or if it would be able to, plus effects on the United States' credit rating are unknown.\nAdopting ideas the House Republicans were suggesting in March 2023, including cutting both Medicaid and nondefense-related discretionary spending. Results of this would include a recession and reduced economic growth for the next decade (the borrowing would be significantly reduced, so interest rates would be lower), with people with lower incomes being more likely to suffer financially due to losing both government benefits and jobs.\nA lengthy default that would last for weeks. Results of this would include Treasury debt being downgraded by credit rating agencies, reduced treasury spending, a severe recession, higher interest rates, and a long-term diminution of the U.S. dollar's status as the world's reserve currency, among other effects.\n\n\n== Potential debt ceiling workarounds ==\n\n\n=== Fourteenth Amendment ===\n\nWhile the Fourteenth Amendment, ratified in 1866, is more widely known for its provisions granting citizenship to freed slaves and establishing equal rights, it also contains a long-forgotten provision, Section 4, that states, in part, \"The validity of the public debt of the United States, authorized by law, including debts incurred for payment of pensions and bounties for services in suppressing insurrection or rebellion, shall not be questioned.\" With former Confederate states being admitted back into the Union at the time of the 14th amendment's ratification, many pro-Union members of Congress feared that if the South were to take back a significant amount of Congress, or were to retake the Presidency, they would refuse to pay the debt incurred by the Union during the Civil War, or pay debts incurred by the Confederacy to support its war effort against the United States. Section 4 confirmed the legitimacy of all U.S. debt to stop this from ever happening.\nWhile Section 4's original purpose has long become moot, many constitutional legal scholars believe that Section 4 of the 14th amendment makes the debt ceiling unconstitutional. President Biden could, in theory, end the crisis by avoiding Congress altogether, issuing an executive order invoking Section 4 and ordering the Treasury to continue making payments, even if that pushed the public debt above $31.4 trillion.\nHowever, an invocation of the 14th amendment by President Biden would come with serious pitfalls. Legal scholars are divided as to whether or not it would be legally permissible for Biden to take such an action. His executive order might not be accepted by the courts, and even if it were eventually upheld by the United States Supreme Court, the uncertainty leading up to a decision might cause turmoil in the markets and a spike in interest rates.\n\n\n=== Trillion-dollar coin ===\n\nIn 1997, Congress passed a law that vested power to the Treasury to mint commemorative platinum coins of any denomination. The law, 31 U.S.C. Section 5112, was originally intended to help the Treasury make money off of coin collectors, an idea penned by Delaware's at-large representative, Republican Mike Castle. The text of the statute did not specify any limitations on how high the denomination of the coin could be.An idea, which first emerged just prior to the 2011 debt ceiling crisis, is that the Treasury Secretary could instruct the US Mint to issue a trillion-dollar coin, and deposit it with the Federal Reserve.According to economist Mark Zandi, using the coin in such a way would be inflationary. An opinion article in National Review likened it to the government \"printing money\" to pay off debt. However, according to economist Paul Krugman, the move would not be inflationary, saying on Twitter, \"The Fed would surely sterilize any impact on the monetary base by selling off some of its huge portfolio of US debt.\"Current Treasury Secretary Janet Yellen dismissed the plan as a \"gimmick\", saying that the Federal Reserve isn't required to accept the coin for deposit, and likely would not. Krugman expressed a different opinion, saying on Twitter, \"As for claims that Powell would refuse to accept the coin, or the Supremes would block premium bonds \u2014 well, nobody knows. But my guess is that nobody wants to be the guy who destroys the world economy. Even people happy to see it burn don't want their fingerprints on it.\"\n\n\n== Attempts to raise the debt ceiling ==\nHaving recently regained control of the House, Republicans demanded deep spending cuts as a precondition to raising the debt ceiling, while Democrats insisted on a \"clean bill\" without preconditions, as had been the case in raising the ceiling in 2017, 2018, and 2019, during the Trump administration.\n\n\n=== Meetings between Biden and McCarthy ===\n\n\n==== February ====\nOn Wednesday, February 1, 2023 President Biden and Speaker McCarthy met for an hour in the Oval Office to discuss how to raise the debt ceiling. The two did not reach agreement \u2013 the president called for a clean debt ceiling increase, while the speaker demanded cuts to spending in exchange for raising it \u2013 though both agreed they would continue talking about it.\n\n\n==== May ====\nBiden and McCarthy met several times in May to try and find a way to solve the crisis, ultimately coming to an agreement on May 27.\n\n\n=== March 9 presidential budget ===\nOn March 9, 2023, President Biden released a potential budget for 2023. At 184 pages, this budget included $3 trillion to reduce the deficit, with savings largely coming from increased taxes on the wealthy and corporations.\n\n\n=== Limit, Save, Grow Act ===\nOn April 19, Speaker McCarthy unveiled the Limit, Save, Grow Act, a 320-page House bill which would have raised the debt ceiling by $1.5 trillion (enough to last until at least March 31, 2024), while at the same time providing for significant spending cuts. More specifically, the proposals contained in the draft law included eliminating the partial federal student loan forgiveness program started by the Biden administration, introducing work requirements for Medicaid, eliminating IRS enforcement funding for audits, and getting rid of many clean energy subsidies.In its April 25 analysis of the bill, the Congressional Budget Office estimated that it would reduce federal budget deficits from 2023 to 2033 by a total of around $4.8 trillion, with two-thirds of that coming from reduced discretionary outlays and the rest coming from lower mandatory spending, increased Revenue, and lower interest payments on the national debt.Responses to the bill were mixed. House Budget Committee Chairman Jodey Arrington, who filed the bill, criticized the Biden administration's spending while saying that the plan would address that. Meanwhile, the House Budget Committee's Democratic members referred to it as \"The Default on America Act\", or DOA for short. President Biden said on April 25 that, should the bill pass Congress, he will veto it.It was originally reported that a considerable amount of Republican Representatives would not have supported the bill. However, on April 26, following several days of negotiations and last-minute changes to the bill, the latter managed to pass in the House of Representatives by a vote of 217 to 215, with Republicans Andy Biggs of Arizona, Ken Buck of Colorado, Tim Burchett of Tennessee and Matt Gaetz of Florida joining all Democrats in voting against it.The bill was highly unlikely to pass in the Senate. However, it was viewed by House Republicans as a stepping stone for further negotiations with President Biden on the debt ceiling and spending cuts.\n\n\n=== Discharge petition ===\nOn May 17, Democratic Representative Brendan Boyle introduced a discharge petition to force a vote on House Resolution 350, a special rule providing for immediate consideration of the so-called Breaking the Gridlock Act and of one amendment to the same, which is to be offered by the most senior ranking minority member of the Committee on Ways and Means. Democrats intended to use the amendment to replace the original text of the draft law in its entirety, turning it into a bill raising the debt ceilingBy May 27, all 213 Democratic representatives had signed the petition. Nonetheless, the petition failed to obtain the 218 signatures needed in order for it to be successful because no Republican signed it.\n\n\n== Agreement ==\n\nOn May 29, Patrick McHenry introduced the Fiscal Responsibility Act of 2023, a bipartisan piece of legislation implementing the agreement between Biden and McCarthy. The bill, which was endorsed by both Republican and Democratic leadership, includes the following provisions:\nThe debt limit is suspended until January 1, 2025.\nDiscretionary spending is capped during fiscal years 2024 and 2025.\nAll unused funds appropriated during the COVID-19 pandemic are rescinded.\nAbout a quarter of the $80 billion of additional funding for the Internal Revenue Service provided for in the Inflation Reduction Act of 2022 are rescinded.\nThe administration is required to operate under a PAYGO system: any executive regulation whose implementation costs more money than it brings in can only be made if an equal or greater amount of money is rescinded from other federal programs; this system is waivable by the Office of Management and Budget.\nThe student loans payment moratorium enacted in 2020 ends on September 1, 2023; the partial student loan forgiveness plan introduced by the Biden administration remains unaffected.\nWork requirements for adult SNAP recipients with no dependents are broadened so as to apply to those aged under 51 in fiscal year 2023, to those aged 53 in fiscal year 2024, and to those aged under 55 in fiscal years 2025 to 2030 (currently, only those under 50 are required to work in order to be eligible). Veterans and homeless people are exempt from this provision.\nObtaining a federal permit for energy projects is made easier, especially for what concerns the Mountain Valley Pipeline.On May 30, the Rules Committee agreed to send the bill to the Floor of the House by a vote of 7 to 6, with Republicans Ralph Norman and Chip Roy joining all Democratic members of the Committee in voting against. The bill passed the House on May 31 and the Senate on June 1. Biden signed it into law on June 3.\n\n\n=== Vote summaries ===\n\n\n==== House of Representatives ====\n\n\n==== Senate ====\n\n\n== See also ==\nHistory of the United States debt ceiling\n1995\u20131996 United States federal government shutdowns, which included a dispute about the debt ceiling\n2011 United States debt-ceiling crisis\n2013 United States debt ceiling crisis\n\n\n== Notes ==\n\n\n== References ==\n\n\n== External links ==\nReport: How America Amassed $33 Trillion in Debt"
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"content": "In January 2013, the United States reached the, at the time, debt ceiling of $16.394 trillion that had been enacted following a crisis in 2011. President Obama and members of the Democratic Party proposed raising the debt ceiling, with some advocating for its complete dismissal. Members of the Republican Party staunchly opposed raising the debt ceiling unless spending cuts would parallel the bill, including defunding the Affordable Care Act. Previous raises of the debt ceiling have been largely bipartisan without conditions.\nThe debt ceiling issue was one of the causes for the 2013 government shutdown, and a lack of a budget bill over the issue forced the government to sequester its budget.\nThe crisis, as well as the government shutdown, ended on October 17, 2013, with the passing of the Continuing Appropriations Act, 2014.\n\n\n== Background ==\n\nAfter the passing in early January 2013 of the American Taxpayer Relief Act of 2012 to avert the projected fiscal cliff, political attention shifted to the debt ceiling. The debt ceiling had technically been reached on December 31, 2012, when the Treasury Department commenced \"extraordinary measures\" to enable the continued financing of the government.The debt ceiling is part of a law (Title 31 of the United States Code, section 3101) created by Congress. According to the Government Accountability Office, \"The debt limit does not control or limit the ability of the federal government to run deficits or incur obligations. Rather, it is a limit on the ability to pay obligations already incurred.\" It does not prohibit Congress from creating further obligations upon the United States. The ceiling was last set at $16.4 trillion in 2011.On January 15, 2013, Fitch Ratings warned that delays in raising the debt ceiling could result in a formal review of its credit rating of the U.S., potentially leading to it being downgraded from AAA. Fitch cautioned that a downgrade could also result from the absence of a plan to bring down the deficit in the medium term. Additionally, the company stated that \"In Fitch's opinion, the debt ceiling is an ineffective and potentially dangerous mechanism for enforcing fiscal discipline.\"\n\n\n== Debate ==\nIn a press conference held on January 14, 2013, President Obama stated that not raising the debt ceiling would cause delays in payments including benefits and government employees' salaries and lead to default on government debt. President Obama urged Congress to raise the debt ceiling without conditions to avoid a default by the United States on government debt. Raising the debt ceiling was also supported by Ben Bernanke, chairman of the Federal Reserve.\nRepublican Speaker of the House, John Boehner and the Senate Republican minority leader, Mitch McConnell as well as other Republicans argued that the debt ceiling should not be raised unless spending is cut by an amount equal to or greater than the debt ceiling increase. Republicans also argued that the Treasury can avoid debt default by prioritizing interest payments on government debt over other obligations. Heritage Action for America, the Family Research Council and the Club for Growth argued that a rise in the debt ceiling should be accompanied by a plan to balance the budget within ten years, through reduced spending in the discretionary budget as well as for entitlements.Several Democratic House members, including Peter Welch, proposed removing the debt ceiling altogether. This proposal found support from some economists such as Jacob Funk Kirkegaard, a senior fellow at the Peterson Institute for International Economics. A survey of 38 economists found that 84% agreed that a separate debt ceiling that is periodically increased could lead to uncertainty and poor fiscal outcomes.\n\n\n== Debt ceiling suspension ==\nIn mid-January, Paul Ryan, Chairman of the House Budget Committee, floated the idea of a short-term debt ceiling increase. He argued that giving Treasury enough borrowing power to postpone default until mid-March would allow Republicans to gain an advantage over Obama and Democrats in debt ceiling negotiations. This advantage would be due to the fact that postponing default until mid-March would allow for a triple deadline to be in March: the sequester on March 1, the default in the middle of the month, and the expiration of the current continuing resolution and the resulting federal government shutdown on March 27. This was supposed to provide extra pressure on the Senate and the President to work out a deal with the Republican-led House.Shortly after that, the House learned that the Senate had not passed an independent budget plan since April 2009. House Republicans quickly came up with an idea that would suspend the debt ceiling enough to allow time for both chambers of Congress to pass a budget.On February 4, 2013, President Obama signed into law the \"No Budget, No Pay Act of 2013\", which suspended the U.S. debt ceiling through May 18, 2013. The bill was passed in the Senate one week previously by a vote of 64\u201334, with all \"no\" votes from Republican senators, who were critical of the lack of spending cuts that accompanied an increase in the limit. In the House, the bill passed the week before by a vote of 285\u2013144, with both parties voting in favor. In the House, Republican representatives attached a provision to mandate the temporary withholding of pay to members of Congress if they did not produce a budget plan by April 15. Pay would be reinstated once a budget was passed or on January 2, 2015 (the last day of the 113th Congress), whichever came first. Under the law, the debt ceiling would be set on May 19, 2013, to a level \"necessary to fund commitment incurred by the Federal Government that required payment.\"\n\n\n=== Developments during suspension ===\n\nOn March 1, the sequester, cutting $1.2 trillion over the next decade, went into effect after the parties failed to reach a deal. On March 21, the House passed a FY 2014 budget that would balance the United States budget in 2023. This was a shorter period than envisaged in their 2013 budget, which balanced in 2035, and the 2012 budget, which balanced in 2063. It passed the House on a mostly party-line 221\u2013207 vote. However, later that day, the Senate voted 59\u201340 to reject the House Republican budget. On March 23, the Senate passed its own 2014 budget on a 50\u201349 vote. The House refused to hold a vote on the Senate budget. On April 10, the President released his own 2014 budget, which was not voted on in either house of Congress. Throughout March and April, there were several developments that reduced the sequester's impact. The bill that extended the government's continuing resolution to September 30 lessened the sequester's effect on defense, and later bills removed furloughs for air traffic control and food service industries.\n\n\n=== Debt ceiling reached again ===\nOn May 19, the debt ceiling was reinstated at just under $16.7 trillion to reflect borrowing during the suspension period. As there was no provision made for further commitments after the ceiling's reinstatement, Treasury began applying extraordinary measures once again.Despite earlier estimates of late July, Treasury announced that default would not happen \"until sometime after Labor Day\". Other organizations, including the Congressional Budget Office (CBO), projected exhaustion of the extraordinary measures in October or possibly November.On August 26, 2013, Treasury informed Congress that if the debt ceiling was not raised in time, the United States would be forced to default on its debt sometime in mid-October.On September 25, Treasury announced that extraordinary measures would be exhausted no later than October 17, leaving Treasury with about $30 billion in cash, plus incoming revenue, but no ability to borrow money. The CBO estimated that the exact date on which Treasury would have had to begin prioritizing/delaying bills and/or actually defaulting on some obligations would fall between October 22 and November 1.\n\n\n== October 2013 debt ceiling debate ==\nObama and Republicans disagreed on the terms of raising the nation's debt limit, and even as to whether the debt limit should even be a subject of negotiation.\nHouse Republicans described a number of policies they wanted to enact before they would agree to increasing the debt ceiling beyond October 2013:\nLong term debt ceiling increase (allowing Treasury to borrow for the rest of Obama's term): privatize Medicare and/or Social Security.\nMedium term debt ceiling increase (allowing Treasury to borrow until sometime in 2015): cut food stamps, use the chained consumer price index (CPI), tax reform, agree to enact block-grant Medicaid or a large raise in the retirement age.\nShort term debt ceiling increase (postponing default until sometime in the first half of 2014): means testing of Social Security, a small raise in the retirement age or ending agricultural subsidies.Obama, in turn, asserted that the 2013 sequestration cuts already represented a budget compromise, and that he did not intend to negotiate further on the issue of debt repayment. However, the president said that he would be willing to negotiate on almost any issue after a clean bill to reopen the government and increase the debt ceiling had been passed.In September 2013 the House of Representatives drafted a bill that would postpone default for approximately twelve months from its passage. The bill also included a one-year delay in implementation of the Patient Protection and Affordable Care Act, a requirement for both houses of Congress to vote on tax reform plans by the end of 2013, and a fast-track process to begin construction of the Keystone XL Pipeline. However, the bill was not voted on by the House or Senate due to some members of the House Republican caucus believing that the bill did not make deep enough spending cuts to be worthy of Republican support.\nThe US Government went into a partial shutdown on October 1, 2013, with about 800,000 Federal employees being put on temporary leave. Treasury Secretary Jack Lew reiterated that the debt ceiling would need to be raised by October 17.In early October 2013, the House drafted a bill that would raise the debt ceiling without conditions through November 22, but keep the partial government shutdown in place. However, it died due to insufficient support among both House Republicans and House Democrats.\n\n\n== Resolution ==\nOn October 16, the Senate passed the Continuing Appropriations Act, 2014, a continuing resolution, to fund the government until January 15, 2014, and suspending the debt ceiling until February 7, 2014, thus ending the 2013 United States federal government shutdown and debt-ceiling crisis.\nIt set up a House\u2013Senate budget conference to negotiate a long-term spending agreement, and strengthened income verification for subsidies under the Patient Protection and Affordable Care Act. The Senate vote was 81\u201318 in favor, with 1 member absent due to illness. The House passed the bill unamended later that day, by a vote of 285\u2013144, with 3 members absent due to illness. The President signed the bill early the next morning on October 17. Under the resolution, the debt ceiling debate and partial government shutdown were postponed, with federal workers returning to work on October 17.On January 14, 2014, the House and the Senate Appropriations Committees agreed on a spending plan that would fund the federal government for two years. A bill extending the previous continuing resolution through January 18 was also passed. On January 16, 2014, Congress passed a $1.1 trillion appropriations bill that will keep the federal government funded until October 2014. President Obama signed the appropriations bill into law on January 18.On February 7, 2014, the debt limit suspension expired and treasury began applying extraordinary measures once again, warning that such measures would not last beyond February 27 due to large tax refunds that would need to be paid during February. On February 11, after finding insufficient support for various conditions for increasing the debt ceiling, the House passed a bill suspending the debt ceiling without conditions through March 15, 2015. The Senate passed the bill unamended on February 12, 2014, and it was signed into law as Public Law 113-83 by the President on February 15.\n\n\n== Reaction ==\n\n\n=== Effect on United States debt rating ===\nJust as during the 2011 debt ceiling crisis, the 2013 crisis caused rating agencies to re-evaluate the rating of US government debt. On October 15, Fitch Ratings placed the United States under a \"Rating watch negative\" in response to the crisis. On October 17, Dagong Global Credit Rating downgraded the United States from A to A\u2212, and maintained a negative outlook on the country's credit.\n\n\n=== Effect on the U.S. Stock Market ===\nAccording to a Morningstar analysis of debt-ceiling and government shutdown situations, the U.S. stock market remained relatively unchanged during the 2013 crisis period.\n\n\n=== Political aftermath ===\nIn the immediate aftermath of the crisis opinion polls showed approval to drop for the Republican Party. Polls showed that Americans blamed the Republicans more for the shutdown than President Barack Obama by a margin of 22 points (53 percent to 31 percent). Another poll showed a 74% disapproval rating of the way Republicans handled the crisis while 61% disapproved of the way Democrats handled the budget talks. According to a Gallup Poll, \"60 percent of respondents said that a third major party is needed to represent the American people\", an all-time high.\n\n\n== See also ==\nBudget Control Act of 2011\nEuropean sovereign debt crisis\nHistory of United States debt ceiling\n2007\u20132008 financial crisis\nUnited States Congress Joint Select Committee on Deficit Reduction\nUnited States federal government credit-rating downgrades\n2011 United States debt-ceiling crisis\n2023 United States debt-ceiling crisis\n2013 United States federal government shutdown\n1995\u20131996 United States federal government shutdowns\n\n\n== References ==",
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"extract": "In January 2013, the United States reached the, at the time, debt ceiling of $16.394 trillion that had been enacted following a crisis in 2011. President Obama and members of the Democratic Party proposed raising the debt ceiling, with some advocating for its complete dismissal. Members of the Republican Party staunchly opposed raising the debt ceiling unless spending cuts would parallel the bill, including defunding the Affordable Care Act. Previous raises of the debt ceiling have been largely bipartisan without conditions.\nThe debt ceiling issue was one of the causes for the 2013 government shutdown, and a lack of a budget bill over the issue forced the government to sequester its budget.\nThe crisis, as well as the government shutdown, ended on October 17, 2013, with the passing of the Continuing Appropriations Act, 2014.\n\n\n== Background ==\n\nAfter the passing in early January 2013 of the American Taxpayer Relief Act of 2012 to avert the projected fiscal cliff, political attention shifted to the debt ceiling. The debt ceiling had technically been reached on December 31, 2012, when the Treasury Department commenced \"extraordinary measures\" to enable the continued financing of the government.The debt ceiling is part of a law (Title 31 of the United States Code, section 3101) created by Congress. According to the Government Accountability Office, \"The debt limit does not control or limit the ability of the federal government to run deficits or incur obligations. Rather, it is a limit on the ability to pay obligations already incurred.\" It does not prohibit Congress from creating further obligations upon the United States. The ceiling was last set at $16.4 trillion in 2011.On January 15, 2013, Fitch Ratings warned that delays in raising the debt ceiling could result in a formal review of its credit rating of the U.S., potentially leading to it being downgraded from AAA. Fitch cautioned that a downgrade could also result from the absence of a plan to bring down the deficit in the medium term. Additionally, the company stated that \"In Fitch's opinion, the debt ceiling is an ineffective and potentially dangerous mechanism for enforcing fiscal discipline.\"\n\n\n== Debate ==\nIn a press conference held on January 14, 2013, President Obama stated that not raising the debt ceiling would cause delays in payments including benefits and government employees' salaries and lead to default on government debt. President Obama urged Congress to raise the debt ceiling without conditions to avoid a default by the United States on government debt. Raising the debt ceiling was also supported by Ben Bernanke, chairman of the Federal Reserve.\nRepublican Speaker of the House, John Boehner and the Senate Republican minority leader, Mitch McConnell as well as other Republicans argued that the debt ceiling should not be raised unless spending is cut by an amount equal to or greater than the debt ceiling increase. Republicans also argued that the Treasury can avoid debt default by prioritizing interest payments on government debt over other obligations. Heritage Action for America, the Family Research Council and the Club for Growth argued that a rise in the debt ceiling should be accompanied by a plan to balance the budget within ten years, through reduced spending in the discretionary budget as well as for entitlements.Several Democratic House members, including Peter Welch, proposed removing the debt ceiling altogether. This proposal found support from some economists such as Jacob Funk Kirkegaard, a senior fellow at the Peterson Institute for International Economics. A survey of 38 economists found that 84% agreed that a separate debt ceiling that is periodically increased could lead to uncertainty and poor fiscal outcomes.\n\n\n== Debt ceiling suspension ==\nIn mid-January, Paul Ryan, Chairman of the House Budget Committee, floated the idea of a short-term debt ceiling increase. He argued that giving Treasury enough borrowing power to postpone default until mid-March would allow Republicans to gain an advantage over Obama and Democrats in debt ceiling negotiations. This advantage would be due to the fact that postponing default until mid-March would allow for a triple deadline to be in March: the sequester on March 1, the default in the middle of the month, and the expiration of the current continuing resolution and the resulting federal government shutdown on March 27. This was supposed to provide extra pressure on the Senate and the President to work out a deal with the Republican-led House.Shortly after that, the House learned that the Senate had not passed an independent budget plan since April 2009. House Republicans quickly came up with an idea that would suspend the debt ceiling enough to allow time for both chambers of Congress to pass a budget.On February 4, 2013, President Obama signed into law the \"No Budget, No Pay Act of 2013\", which suspended the U.S. debt ceiling through May 18, 2013. The bill was passed in the Senate one week previously by a vote of 64\u201334, with all \"no\" votes from Republican senators, who were critical of the lack of spending cuts that accompanied an increase in the limit. In the House, the bill passed the week before by a vote of 285\u2013144, with both parties voting in favor. In the House, Republican representatives attached a provision to mandate the temporary withholding of pay to members of Congress if they did not produce a budget plan by April 15. Pay would be reinstated once a budget was passed or on January 2, 2015 (the last day of the 113th Congress), whichever came first. Under the law, the debt ceiling would be set on May 19, 2013, to a level \"necessary to fund commitment incurred by the Federal Government that required payment.\"\n\n\n=== Developments during suspension ===\n\nOn March 1, the sequester, cutting $1.2 trillion over the next decade, went into effect after the parties failed to reach a deal. On March 21, the House passed a FY 2014 budget that would balance the United States budget in 2023. This was a shorter period than envisaged in their 2013 budget, which balanced in 2035, and the 2012 budget, which balanced in 2063. It passed the House on a mostly party-line 221\u2013207 vote. However, later that day, the Senate voted 59\u201340 to reject the House Republican budget. On March 23, the Senate passed its own 2014 budget on a 50\u201349 vote. The House refused to hold a vote on the Senate budget. On April 10, the President released his own 2014 budget, which was not voted on in either house of Congress. Throughout March and April, there were several developments that reduced the sequester's impact. The bill that extended the government's continuing resolution to September 30 lessened the sequester's effect on defense, and later bills removed furloughs for air traffic control and food service industries.\n\n\n=== Debt ceiling reached again ===\nOn May 19, the debt ceiling was reinstated at just under $16.7 trillion to reflect borrowing during the suspension period. As there was no provision made for further commitments after the ceiling's reinstatement, Treasury began applying extraordinary measures once again.Despite earlier estimates of late July, Treasury announced that default would not happen \"until sometime after Labor Day\". Other organizations, including the Congressional Budget Office (CBO), projected exhaustion of the extraordinary measures in October or possibly November.On August 26, 2013, Treasury informed Congress that if the debt ceiling was not raised in time, the United States would be forced to default on its debt sometime in mid-October.On September 25, Treasury announced that extraordinary measures would be exhausted no later than October 17, leaving Treasury with about $30 billion in cash, plus incoming revenue, but no ability to borrow money. The CBO estimated that the exact date on which Treasury would have had to begin prioritizing/delaying bills and/or actually defaulting on some obligations would fall between October 22 and November 1.\n\n\n== October 2013 debt ceiling debate ==\nObama and Republicans disagreed on the terms of raising the nation's debt limit, and even as to whether the debt limit should even be a subject of negotiation.\nHouse Republicans described a number of policies they wanted to enact before they would agree to increasing the debt ceiling beyond October 2013:\nLong term debt ceiling increase (allowing Treasury to borrow for the rest of Obama's term): privatize Medicare and/or Social Security.\nMedium term debt ceiling increase (allowing Treasury to borrow until sometime in 2015): cut food stamps, use the chained consumer price index (CPI), tax reform, agree to enact block-grant Medicaid or a large raise in the retirement age.\nShort term debt ceiling increase (postponing default until sometime in the first half of 2014): means testing of Social Security, a small raise in the retirement age or ending agricultural subsidies.Obama, in turn, asserted that the 2013 sequestration cuts already represented a budget compromise, and that he did not intend to negotiate further on the issue of debt repayment. However, the president said that he would be willing to negotiate on almost any issue after a clean bill to reopen the government and increase the debt ceiling had been passed.In September 2013 the House of Representatives drafted a bill that would postpone default for approximately twelve months from its passage. The bill also included a one-year delay in implementation of the Patient Protection and Affordable Care Act, a requirement for both houses of Congress to vote on tax reform plans by the end of 2013, and a fast-track process to begin construction of the Keystone XL Pipeline. However, the bill was not voted on by the House or Senate due to some members of the House Republican caucus believing that the bill did not make deep enough spending cuts to be worthy of Republican support.\nThe US Government went into a partial shutdown on October 1, 2013, with about 800,000 Federal employees being put on temporary leave. Treasury Secretary Jack Lew reiterated that the debt ceiling would need to be raised by October 17.In early October 2013, the House drafted a bill that would raise the debt ceiling without conditions through November 22, but keep the partial government shutdown in place. However, it died due to insufficient support among both House Republicans and House Democrats.\n\n\n== Resolution ==\nOn October 16, the Senate passed the Continuing Appropriations Act, 2014, a continuing resolution, to fund the government until January 15, 2014, and suspending the debt ceiling until February 7, 2014, thus ending the 2013 United States federal government shutdown and debt-ceiling crisis.\nIt set up a House\u2013Senate budget conference to negotiate a long-term spending agreement, and strengthened income verification for subsidies under the Patient Protection and Affordable Care Act. The Senate vote was 81\u201318 in favor, with 1 member absent due to illness. The House passed the bill unamended later that day, by a vote of 285\u2013144, with 3 members absent due to illness. The President signed the bill early the next morning on October 17. Under the resolution, the debt ceiling debate and partial government shutdown were postponed, with federal workers returning to work on October 17.On January 14, 2014, the House and the Senate Appropriations Committees agreed on a spending plan that would fund the federal government for two years. A bill extending the previous continuing resolution through January 18 was also passed. On January 16, 2014, Congress passed a $1.1 trillion appropriations bill that will keep the federal government funded until October 2014. President Obama signed the appropriations bill into law on January 18.On February 7, 2014, the debt limit suspension expired and treasury began applying extraordinary measures once again, warning that such measures would not last beyond February 27 due to large tax refunds that would need to be paid during February. On February 11, after finding insufficient support for various conditions for increasing the debt ceiling, the House passed a bill suspending the debt ceiling without conditions through March 15, 2015. The Senate passed the bill unamended on February 12, 2014, and it was signed into law as Public Law 113-83 by the President on February 15.\n\n\n== Reaction ==\n\n\n=== Effect on United States debt rating ===\nJust as during the 2011 debt ceiling crisis, the 2013 crisis caused rating agencies to re-evaluate the rating of US government debt. On October 15, Fitch Ratings placed the United States under a \"Rating watch negative\" in response to the crisis. On October 17, Dagong Global Credit Rating downgraded the United States from A to A\u2212, and maintained a negative outlook on the country's credit.\n\n\n=== Effect on the U.S. Stock Market ===\nAccording to a Morningstar analysis of debt-ceiling and government shutdown situations, the U.S. stock market remained relatively unchanged during the 2013 crisis period.\n\n\n=== Political aftermath ===\nIn the immediate aftermath of the crisis opinion polls showed approval to drop for the Republican Party. Polls showed that Americans blamed the Republicans more for the shutdown than President Barack Obama by a margin of 22 points (53 percent to 31 percent). Another poll showed a 74% disapproval rating of the way Republicans handled the crisis while 61% disapproved of the way Democrats handled the budget talks. According to a Gallup Poll, \"60 percent of respondents said that a third major party is needed to represent the American people\", an all-time high.\n\n\n== See also ==\nBudget Control Act of 2011\nEuropean sovereign debt crisis\nHistory of United States debt ceiling\n2007\u20132008 financial crisis\nUnited States Congress Joint Select Committee on Deficit Reduction\nUnited States federal government credit-rating downgrades\n2011 United States debt-ceiling crisis\n2023 United States debt-ceiling crisis\n2013 United States federal government shutdown\n1995\u20131996 United States federal government shutdowns\n\n\n== References =="
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"title": "United States debt ceiling",
"content": "In the United States, the debt ceiling or debt limit is a legislative limit on the amount of national debt that can be incurred by the U.S. Treasury, thus limiting how much money the federal government may pay by borrowing more money, on the debt it already borrowed. The debt ceiling is an aggregate figure that applies to gross debt, which includes debt in the hands of the public and intra-government accounts. About 0.5 percent of the debt is not covered by the ceiling (as of 10/2013). Because expenditures are authorized by separate legislation, the debt ceiling does not directly limit government deficits. In effect, it can only restrain the Treasury from paying for expenditures and other financial obligations after the limit has been reached, but which have already been approved (in the budget) and appropriated.\nThere is a debate among legal scholars regarding the constitutionality of the debt ceiling. Some scholars argue that the debt ceiling does not provide the legal authority for the United States to default on its debt. Some also argue that the debt ceiling itself is unconstitutional since it does not provide a clear mechanism for the government to meet its constitutional obligation to repay its debts once it meets the borrowing limit.When the debt ceiling is reached without an increase in the limit having been enacted, Treasury will need to resort to \"extraordinary measures\" to temporarily finance government expenditures and obligations until a resolution can be reached. The Treasury has never reached the point of exhausting extraordinary measures, resulting in a constitutionally questionable default, although, on some occasions, it appeared that Congress might allow a default to take place. If this situation were to occur, it is unclear whether the Treasury would be able to prioritize debt payments to avoid a default on its bond obligations. A protracted default could trigger a variety of economic problems including a financial crisis, and a decline in output that would put the country into an economic recession.Management of the United States public debt is an important part of the macroeconomics of the United States economy and finance system, and the debt ceiling is designed to be a constraint on the executive's ability to manage the U.S. economy. There is debate, however, on how the U.S. economy should be managed, and whether a debt ceiling is an appropriate or constitutional mechanism for restraining government spending.The most recent time that the debt ceiling was raised was on June 3, 2023, when U.S. president Joe Biden signed the Fiscal Responsibility Act of 2023 into law ending the 2023 United States debt-ceiling crisis that began on January 19, 2023. The debt limit extends into 2025. Previously, in December 2021, the debt ceiling was raised when it was increased by $2.5 trillion, to $31.381 trillion, which lasted until January 2023.\n\n\n== Background ==\nUnder Article I Section 8 of the United States Constitution, only Congress can authorize the borrowing of money on the credit of the United States. From the founding of the U.S. until 1917, Congress directly authorized each debt issued. To provide more flexibility to finance the United States' involvement in World War I, Congress modified the method by which it authorized debt in the Second Liberty Bond Act of 1917. Under this Act, Congress established an aggregate limit, or \"ceiling,\" on the total amount of new bonds that could be issued.\nThe present debt ceiling is an aggregate limit applied to nearly all federal debt, which was substantially established by the Public Debt Acts of 1939 and 1941 which have subsequently been amended to change the ceiling amount.\nFrom time to time, political disputes arise when the Treasury advises Congress that the debt ceiling is about to be reached and indicates that a default is imminent. When the debt ceiling is reached, and pending an increase in the limit, Treasury may resort to \"extraordinary measures\" to buy more time before the ceiling can be raised by Congress. The U.S. has never reached the point of default where the Treasury was incapable of paying U.S. debt obligations, though it has been close on several occasions. The only exception was during the War of 1812 when parts of Washington D.C. including the Treasury were burned.In 2011, the U.S. reached a crisis point of near default on public debt. The delay in raising the debt ceiling resulted in the first downgrade in the United States credit rating, a sharp drop in the stock market, and an increase in borrowing costs. Congress raised the debt limit with the Budget Control Act of 2011, which added to the fiscal cliff when the new ceiling was reached on December 31, 2012.\n\n\n== Relationship to federal budget ==\nThe process of setting the debt ceiling is separate and distinct from the United States budget process, and raising the debt ceiling neither directly increases nor decreases the budget deficit, and vice versa. The Government Accountability Office explains, \"the debt limit does not control or limit the ability of the federal government to run deficits or incur obligations. Rather, it is a limit on the ability to pay obligations already incurred.\"The President formulates a federal budget every year, which Congress must pass, sometimes with amendments, in a concurrent resolution, which does not require the President's signature and is not binding. The budget details projected tax collections and expenditures and, therefore, specifies the estimated amount of borrowing the government would have to do in that fiscal year.\n\n\n=== Debt not covered by ceiling ===\nIn December 2012, the Treasury calculated that $239 million in United States Notes were in circulation, which in accordance with the debt ceiling legislation, are excluded from the statutory debt limit. The $239 million excludes $25 million in U.S. Notes issued prior to July 1, 1929, determined pursuant to Act of June 30, 1961, 31 U.S.C. 5119, to have been destroyed or irretrievably lost.Debts of the Federal Financing Bank are not debts of the government per se and therefore are also not subject to the ceiling, but have a separate limit of $15 billion.\n\n\n== Legislative history ==\n\nBefore 1917, the U.S. had no debt ceiling. Congress either authorized specific loans or allowed the Treasury to issue certain debt instruments and individual debt issues for specific purposes. Sometimes Congress gave the Treasury discretion over what type of debt instrument would be issued. 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.In 1953, the U.S. Treasury risked reaching the debt ceiling of $275 billion. Though President Eisenhower requested that Congress increase it on July 30, 1953, the Senate refused to act on it. As a result, the president asked federal agencies to reduce how much they spent, plus the Treasury Department used its cash balances with banks to stay under the debt ceiling. And, starting in November 1953, Treasury monetized close to $1 billion of gold left over in its vaults, which helped keep it from exceeding the $275 billion limit. During spring and summer 1954, the Senate and the executive branch negotiated on a debt ceiling increase, and a $6 billion one was passed on August 28, 1954.Before the Budget and Impoundment Control Act of 1974, the debt ceiling played an important role in enabling Congress to hold hearings and debates on the budget. James Surowiecki argued that the debt ceiling lost its usefulness after these reforms to the budget process.In 1979, noting the potential problems of hitting a default, Dick Gephardt imposed the \"Gephardt Rule,\" a parliamentary rule that deemed the debt ceiling was 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-controlled Congress in 1995.A vote to increase the debt ceiling has usually been (since the 1950s) a legal budgetary formality between the President and Congress. As of 1993 the debt ceiling had not historically been a political issue that would make the elected government fail to pass a yearly budget.\n\n\n=== Debt ceiling increases under Presidents Ronald Reagan and George H. W. Bush ===\nUnder the two terms of President Ronald Reagan, the House was controlled by Democrats, and the Senate was, at various points, under the control of both parties. Early in his term, Reagan faced some bipartisan resistance from Congress for a 1981 raising of the debt limit. But Democrats, using the Gephardt Rule, joined with Republicans to increase the debt ceiling eighteen separate times.Under President George H.W. Bush, Democrats controlled both the House and Senate. Again using the Gephardt Rule, Congress increased the debt ceiling nine times without controversy.\n\n\n=== Debt ceiling increases under President Bill Clinton ===\n\nThe debt-ceiling debate of 1995 led to a showdown on the federal budget and resulted in the U.S. federal government shutdowns of 1995 and 1996.\n\n\n=== Debt ceiling increases under President George W. Bush ===\nWhile George W. Bush was President, both Republicans and Democrats controlled the House and the Senate at various points during his term. Congress increased the debt ceiling eight times in 2002, 2003, 2004, 2006, 2007, and twice in 2008.When Republicans were in the majority, they consistently voted to increase the debt ceiling. While some Democrats did vote against the debt ceiling when the process was controlled by a Republican majority, Democrats did not filibuster debt limit increases in 2003, 2004 and 2006, allowing Senate Republicans to raise the debt limit with a simple majority.When Democrats controlled the House and the Senate in the last two years of George W. Bush's term, Democratic majorities in the House and the Senate reinstated the automatic Gephardt Rule and increased the debt ceiling three times without attaching preconditions.\n\n\n=== Debt ceiling increases under President Barack Obama ===\n\nIn 2011, Republicans took control of Congress and again suspended the Gephardt Rule as they had under Clinton. The Republican majority in Congress demanded deficit reduction as part of raising the debt ceiling. The resulting contention was resolved on August 2, 2011, by the Budget Control Act of 2011. Under the \"McConnell Rule,\" the president was allowed to unilaterally raise the debt ceiling. This action could be overturned by an act of Congress, but this would require a 2\u20443 majority vote in both houses assuming that the president vetoed the act.On August 5, 2011, Standard &amp; Poors issued the first ever downgrade in the federal government's credit rating, citing their April warnings, the difficulty of bridging the parties and that the resulting agreement fell well short of the hoped-for comprehensive 'grand bargain'. The credit downgrade and debt ceiling debacle contributed to the Dow Jones Industrial Average (DJIA) falling nearly 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.Following the increase in the debt ceiling to $16.394 trillion in 2011, the U.S. 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. Extraordinary measures were expected to be exhausted by February 15.Another debt ceiling crisis arose in early 2013 when the ceiling was reached again, and the Treasury adopted extraordinary measures to avoid a default. The Treasury said it was not set up to prioritize payments and had given the opinion that it is unclear whether 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 was not raised. Economists estimated that such an action would cause GDP to contract by 7 percent, which is larger than the contraction during 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 the freeze in their revenue.The 2013 crisis was temporarily resolved on February 4, 2013, when President Barack Obama signed the No Budget, No Pay Act of 2013 which suspended the debt ceiling 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. During the suspension period, the Treasury was authorized to borrow to the extent that it \"is required to meet existing commitments\". On May 19, the debt ceiling was raised by $306 billion to cover the borrowings done during the suspension period, as well as commitments that accrued in the preceding period that extraordinary measures were in place, which commenced on December 31, 2012.Treasury Secretary Jack Lew notified Congress that these measures would be exhausted by October 17, 2013 and that a default would occur on October 17 when interest payments came due. From October 17, 2013 until February 7, 2014, the debt ceiling was again suspended. On February 12, 2014, the Temporary Debt Limit Extension Act was passed, suspending the debt ceiling until March 15, 2015. At that time, the Treasury Department took extraordinary measures.The debt ceiling would again have been reached on November 3, 2015. But on October 30, 2015, the debt ceiling was again suspended to March 2017.\n\n\n=== Debt ceiling increases under President Donald Trump ===\nWhen Donald Trump was President, the debt ceiling was subject to less partisan controversy. The administration and the Republicans who controlled the House and the Senate prioritized tax cuts over a balanced budget.\nThe ceiling was suspended three times: from September 30, 2017, to December 8, 2017; from December 8, 2017 to March 1, 2019; and, after concerns were raised from Treasury in July 2019 of an unexpected shortfall due to reduced tax receipts under Trump's tax legislation, from August 2, 2019 to July 31, 2021.Congress did not impose any preconditions or significant spending cuts. Democrats in the Senate could have threatened to stop the debt ceiling increase by use of the filibuster but declined to do so.\n\n\n=== Debt ceiling increases under President Joe Biden ===\n\nDuring Biden's first two years as president, the House and Senate were both controlled by the Democratic Party. In October 2021, the debt ceiling was increased by $480 billion, as a temporary measure requiring fresh legislation by December 3, 2021. That month, Congress voted to increase it by $2.5 trillion, which President Biden signed into effect on December 16, 2021. At that point, it was set at about $31.4 trillion.On January 19, 2023, the United States hit its debt ceiling of $31.4 trillion. By this time, Republicans had taken control of the House during the 2022 midterm elections. Although Republicans were a minority in the Senate, they threatened for the first time in American history to use the filibuster to stop the debt ceiling increase. The crisis was resolved by negotiation of the Fiscal Responsibility Act of 2023.\n\n\n== Extraordinary measures ==\nThe Treasury Department is permitted to borrow funds needed to fund government operations, as had been authorized by congressional appropriations, up to the debt ceiling, with some small exceptions. In a letter to Congress on April 4, 2011, Treasury Secretary Timothy Geithner explained that when the debt ceiling is reached, the Treasury can declare a \"debt issuance suspension period\" during which it can take \"extraordinary measures\" to continue meeting federal obligations provided that it does not involve the issue of new debt. These measures are taken to avoid, as far as resources permit, a partial government shutdown or a default on the debt. These methods have been used on several previous occasions in which federal debt neared its statutory limit.Extraordinary measures can include suspending investments in the G Fund of the Thrift Savings Plan of individual retirement funds of federal employees. In 2011, extraordinary measures included suspending investments in the Civil Service Retirement and Disability Fund (CSRDF), the Postal Service Retiree Health Benefits Fund (Postal Benefits Fund), and the Exchange Stabilization Fund (ESF). In addition, certain CSRDF investments were also redeemed early. In 1985, the Treasury had also exchanged Treasury securities for non-Treasury securities held by the Federal Financing Bank.However, these amounts are not sufficient to cover government operations for extended periods. Treasury first implemented these measures on December 16, 2009, to avoid a government shutdown. These measures were implemented again on May 16, 2011, when Treasury Secretary Geithner declared a \"debt issuance suspension period\". According to his letter to Congress, this period could \"last until August 2, 2011, when the Department of the Treasury projects that the borrowing authority of the United States will be exhausted\".The measures were again implemented on December 31, 2012, the start of the debt ceiling crisis of 2013 with the default trigger date ticking to February 2013. The crisis was deferred with the suspension of the limit on February 4, and the cancellation of the extraordinary measures. The measures were again invoked at the end of the ceiling's suspension on May 19, 2013, with the date of exhaustion of the resources and the default trigger date being estimated by the Treasury as October 17. The ceiling was again suspended by legislation on that date until February 4, 2014.\n\n\n== Default on financial obligations ==\nAccording to the text of the debt ceiling law, if the debt ceiling is not raised and extraordinary measures are exhausted, the U.S. government is legally unable to borrow money to pay its financial obligations. At that point, the law indicates that the government must cease making payments unless the treasury has cash on hand to cover them. In addition, the law indicates that the government would not have the resources to pay the interest on (and some time redeem) government securities when due, which would be characterized as a default. A default may affect the United States' sovereign risk rating and the interest rate that it will be required to pay on future debt. As of 2012, the U.S. defaulted on its financial obligations once in 1979, due to a computer backlog, but the periodic crises relating to the debt ceiling have led several rating agencies to United States federal government credit-rating downgrades. As of 2012, the GAO estimated that the delay in raising the debt ceiling during the debt ceiling crisis of 2011 raised borrowing costs for the government by $1.3 billion in the fiscal year 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.As of 2012, some writers expressed the view that if extraordinary measures are exhausted, the executive branch has the authority to determine which obligations are paid and which are not, though the Treasury has argued that all obligations are on equal footing under the law. The writers have argued that the executive branch can choose to prioritize interest payments on bonds, which would avoid an immediate, direct default on sovereign debt. During the debt ceiling crisis of 2011, Treasury Secretary Timothy Geitner argued that prioritization of interest payments would not help since government expenditures would have needed to be cut by an unrealistic 40% if the debt ceiling is not raised. Also, a default on non-debt obligations would still undermine American creditworthiness according to at least one rating agency. In 2011, the Treasury suggested that it could not prioritize certain types of expenditures because all expenditures are on equal footing under the law. In this view, when extraordinary measures are exhausted, no payments could be made except when money (such as tax receipts) is in the treasury, at all and the U.S. would be in default on all of its obligations. The CBO notes, that prioritization would not avoid the technical definition found in Black's Law Dictionary where default is defined as \u201cthe failure to make a payment when due.\u201dMany scholars argue that debt ceiling law is unconstitutional and there is no legal basis by which the U.S. government may default on any of its debt. They point to Section Four of the 14th Amendment of the United States Constitution, which states that \"the validity of the public debt of the United States...shall not be questioned.\" They argue that it was unconstitutional for the U.S. Congress to pass the debt ceiling law in the first place, since the law does not provide a clear way for the U.S. to pay its debts and implicitly requires a default. Harvard University legal scholar Laurence Tribe argues that \"using the ceiling to make us default on our debts clearly would be unconstitutional.\" This argument has also been endorsed by various politicians, including President Bill Clinton, former labor secretary Robert Reich, Representative Jerry Nadler, and Representative James Clyburn. In 2023, a group of lawmakers from the Senate and House of Representatives sent a letter to President Biden encouraging him to consider invoking the 14th Amendment to pay government debts. However, there are scholars who argue that even if the law itself is unconstitutional, that determination must be made by the courts and the President does not have the authority to unilaterally ignore the debt ceiling law. In practice, the administrations of Presidents Barack Obama and Joe Biden have rejected relying on legal arguments against the constitutionality of the debt ceiling. Obama said in 2011 that his lawyers \"were not persuaded that that is a winning argument.\" In 2023, Biden's Treasury Secretary Janet Yellen called this strategy \"legally questionable.\" Biden himself said \"I think we have the authority\" to invoke the 14th Amendment to pay government debts, suggesting that he would explore this question in the future, but he questioned the practicality of relying on this approach to defuse a debt ceiling standoff. In May 2023, the National Association of Government Employees filed a lawsuit in federal court alleging that the debt ceiling law is unconstitutional.\n\n\n== Debate on debt ceiling ==\nReports to Congress from the OMB and other sources in the 1990s have repeatedly stated that the debt limit is an ineffective means to restrain the growth of debt.In 2011, James Surowiecki argued that the debt ceiling originally served a useful purpose. When introduced, presidents had stronger authority to borrow and spend as they pleased. However, after 1974 the Congress began passing comprehensive budget resolutions which specified exactly how much money the government could spend.The apparent redundancy of the debt ceiling has led to suggestions that it should be abolished altogether. Several Democratic House members, including Peter Welch, proposed abolishing the debt ceiling. The proposal found support from some economists such as Jacob Funk Kirkegaard, a senior fellow at the Peterson Institute for International Economics.\nIn January 2013, a survey of 38 highly regarded economists found that 84 percent agreed that, since Congress already approves spending and taxation, \"a separate debt ceiling that has to be increased periodically creates unneeded uncertainty and can potentially lead to worse fiscal outcomes.\" Only one member of the panel, Luigi Zingales, disagreed with the statement. Rating agency Moody's has stated that \"the debt limit creates a high level of uncertainty\" and that the government should change \"its framework for managing government debt to lessen or eliminate that uncertainty\".In 2021, the U.S. debt ceiling has been described as \"anachronistic\", with the two major parties criticized for utilizing the debt ceiling to play a dangerous game of chicken for purely partisan political purposes.\n\n\n=== Modern Monetary Theory ===\nProponents of Modern Monetary Theory (MMT), a heterodox, post-Keynesian economic theory which arose in the late 20th century, have critiqued the concept of the debt ceiling and its theoretical and practical uses. A core tenet of MMT is that currency arose from and is wholly controlled as fiat money by governments, the latter claim is dependent on the government as the sovereign issuer of the given currency. As of 2019, MMT theorists believed that governments have the power to create and spend money within a limit of reason without creating hyperinflation, as well as the ability to forgive its debt or repay itself; in contrast, as of 2020, orthodox economic theorists tended to focus on national deficit as a debt that needs to be repaid eventually. As a result, MMT theorists argue the debt ceiling is largely a symbolic limit on government spending; in 2020 Stephanie Kelton, a prominent supporter of MMT, wrote that \"there are no constraints on the federal budget.\"After the turn of the 20th century, and particularly during and since the Great Recession (2007-2009) political landscape, MMT has been the subject of political debate between post-Keynsian, mainstream, and free-market economic theorists and politicians alike. As of 2019, MMT debates on the debt ceiling have pervaded Congress, with progressive representatives, prominently Alexandria Ocasio-Cortez, boosting the theory to the mainstream, while conservative representatives have been critiquing MMT's potential impacts on government spending and inflation.As of January 2023 Treasury Secretary Janet Yellen supported legislation to abolish the debt limit, which President Biden has ruled out.\n\n\n== References ==\n\n\n== Sources ==\n\"Amerikanere kan l\u00e6re af dansk g\u00e6ldsloft\" (in Danish). DR Nyheder. August 3, 2011. Retrieved May 6, 2013.\n\"Analysis of 2011-2012 Actions Taken and Effect of Delayed Increase on Borrowing Costs\" (PDF). GAO. July 2012. Retrieved January 13, 2013.\nAustin, D. Andrew (August 9, 2017). The Debt Limit Since 2011 (PDF). Washington, DC: Congressional Research Service. Retrieved November 22, 2017.\nMurray, Justin (November 6, 2017). Votes on Measures to Adjust the Statutory Debt Limit, 1978 to Present (PDF). Washington, DC: Congressional Research Service. Retrieved November 22, 2017.\n\"Federal Debt and the Statutory Limit, November 2012\" (PDF). Congressional Budget Office. November 2012.\n\"Delays Create Debt Management Challenges and Increase Uncertainty in the Treasury Market\" (PDF). GAO-11-203. GAO. February 2011. Retrieved January 13, 2013.\nGreen, Joshua (May 9, 2011). \"How Dick Gephardt Fixed the Debt-Ceiling Problem\". The Atlantic.\nKowalcky, Linda W.; LeLoup, Lance T. (1993). \"Congress and the Politics of Statutory Debt Limitation\". Public Administration Review. 53 (1): 14. CiteSeerX 10.1.1.397.5755. doi:10.2307/977272. JSTOR 977272.\nLawder, David (June 29, 2011). \"Prioritizing debt payments won't work: Geithner\". Reuters.\nLevit, Mandy R.; Brass, Clinton T.; Nicola, Timothy J.; Nuschler, Dawn (January 4, 2013). \"Reaching the Debt Limit: Background and Potential Effects on Government Operations\" (PDF). Archived from the original (PDF) on January 23, 2013.\nMasters, Jonathan. \"U.S. Debt Ceiling: Costs and Consequences\". Renewing America. Council on Foreign Relations.\nSahadi, Jeanne (January 7, 2013). \"Debt Ceiling: 'Chaotic' choices on 100 million payments\". CNNMoney. Retrieved January 13, 2013.\nSahadi, Jeanne (May 17, 2013). \"Debt ceiling: Treasury starts juggling act\". CNNMoney. Archived from the original on June 7, 2013.\nSurowiecki, James (August 1, 2011). \"Smash the Ceiling\". The New Yorker.\nSweet, Ken (August 8, 2011). \"Dow plunges after S&amp;P downgrade\". CNNMoney.\nYglesias, Matthew (January 16, 2013). \"What if Congress Doesn't Raise the Debt Ceiling?\". Slate.\n\n\n== Further reading ==\nEisner, Robert (1993). \"Federal Debt\". In David R. Henderson (ed.). Concise Encyclopedia of Economics (1st ed.). Library of Economics and Liberty. OCLC 317650570, 50016270, 163149563\nGeorge J. Hall and Thomas J. Sargent. 2018. \"Brief history of US debt limits before 1939.\" PNAS March 20, 2018. 115 (12) 2942-2945",
"pageid": 31461654
},
{
"title": "History of the United States debt ceiling",
"content": "The history of the United States debt ceiling deals with movements in the United States debt ceiling since it was created in 1917. Management of the United States public debt is an important part of the macroeconomics of the United States economy and finance system, and the debt ceiling is a limitation on the federal government's ability to manage the economy and finance system. The debt ceiling is also a limitation on the federal government's ability to finance government operations, and the failure of Congress to authorize an increase in the debt ceiling has resulted in crises, especially in recent years. \n\n\n== Overview ==\nA statutorily imposed debt ceiling has been in effect since 1917 when the US Congress passed the Second Liberty Bond Act. Before 1917 there was no debt ceiling in force, but there were parliamentary procedural limitations on the amount of debt that could be issued by the government.\nExcept for about a year during 1835\u20131836, the United States has continuously had a fluctuating public debt since the US Constitution legally went into effect on March 4, 1789. Debts incurred during the American Revolutionary War and under the Articles of Confederation led to the first yearly report on the amount of the debt ($75,463,476.52 on January 1, 1791). The national debt, as expressed in absolute dollars, has increased under every presidential administration since Herbert Hoover.\n\n\n== Early history ==\nPrior to 1917, the United States did not have a debt ceiling, with Congress either authorizing specific loans or allowing the Treasury to issue certain debt instruments and individual debt issues for specific purposes. Sometimes Congress gave the Treasury discretion over what type of debt instrument would be issued.Between 1788 and 1917, Congress would authorize each bond issue by the United States Treasury by passing a legislative act that approved the issue and the amount.\nIn 1917, during World War I, Congress created the debt ceiling with the Second Liberty Bond Act of 1917, which allowed the Treasury to issue bonds and take on other debt without specific Congressional approval, as long as the total debt fell under the statutory debt ceiling. The 1917 legislation set limits on the aggregate amount of debt that could be accumulated through individual categories of debt (such as bonds and bills).\n\n\n=== Public Debt Acts ===\nIn 1939, Congress instituted the first limit on total accumulated debt over all kinds of instruments. The debt ceiling, in which an aggregate limit is applied to nearly all federal debt, was substantially established by Public Debt Acts passed in 1939 and 1941 and subsequently amended. The United States Public Debt Act of 1939 eliminated separate limits on different types of debt. The Public Debt Act of 1941 raised the aggregate debt limit on all obligations to $65 billion, and consolidated nearly all federal borrowing under the U.S. Treasury and eliminated the tax-exemption of interest and profit on government debt.Subsequent Public Debt Acts amended the aggregate debt limit: the 1942, 1943, 1944, and 1945 acts raised the limit to $125 billion, $210 billion, $260 billion, and $300 billion respectively. In 1946, the Public Debt Act was amended to reduce the debt limit to $275 billion. The limit stayed unchanged until 1954, the Korean War being financed through taxation. The U.S. Treasury nearly hit the debt ceiling in fall 1953, plus the Senate refused to raise it until summer 1954, but the federal government managed to avoid reaching it through using various measures, such as monetizing leftover gold.A feature of the Public Debt Acts, unlike the 1919 Victory Liberty Bond Act which financed American costs in the First World War, was that the new ceiling was set about 10% above the actual federal debt at the time.\n\n\n== 1970s ==\nPrior 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. James Surowiecki argued that the debt ceiling lost its usefulness after these reforms to the budget process.In 1979, noting the potential problems of hitting a default, Dick Gephardt (Rep, D-MO) 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 Congress in 1995.\n\n\n== Number of requests for increase ==\nDepending on who is doing the research, it is said that the US has raised its debt ceiling (in some form or other) at least 90 times in the 20th century.The debt ceiling was raised 74 times from March 1962 to May 2011, including 18 times under Ronald Reagan, eight times under Bill Clinton, and seven times under George W. Bush.\nCongress has raised the debt ceiling 14 times from 2001 to 2016. The debt ceiling was raised a total of 7 times (total increase of $5365bil) during Pres. Bush's eight-year term and it was raised 11 times (as of 03/2015 a total increase of $6498bil) during Pres. Obama's eight years in office.\n\n\n== 1995 debt ceiling crisis ==\n\nThe 1995 request for a debt ceiling increase led to debate in Congress on reduction of the size of the federal government, which led to the non-passage of the federal budget, and the United States federal government shutdown of 1995\u201396. The ceiling was eventually increased and the government shutdown resolved.\n\n\n== 2011 debt ceiling crisis ==\n\nIn 2011, Republicans in Congress used the debt ceiling as leverage for deficit reduction because of the lack of Congressional normal order for fiscal year budget votes on the chamber floors and subsequent conference reconciliations between the House and the Senate for final budgets. 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. The GAO estimated that the delay in raising the debt ceiling raised borrowing costs for the government by $1.3 billion (~$1.57 billion in 2021) 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.\n\n\n== 2013 debt ceiling crisis ==\n\nFollowing the increase in the debt ceiling to $16.394 trillion in 2011, 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. With the ATRA tax cuts, the government indicated that the debt ceiling needed to raise by $700 billion (~$814 billion in 2021) for it to continue financing operations for the rest of the 2013 fiscal year and that extraordinary measures were expected to be exhausted by February 15. 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, 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.The No Budget, No Pay Act of 2013 suspended the debt ceiling from February 4, 2013 until May 19, 2013. On May 19, the debt ceiling was formally raised to approximately $16.699 trillion to accommodate the borrowing done during the suspension period. However, after the end of the suspension, the ceiling was raised only to the actual debt at that time, and Treasury needed to activate extraordinary measures to avoid a default. With the impacts of the American Taxpayer Relief Act of 2012 tax increases on those who make $400,000 per year, the 2013 sequester, and a $60 billion payment from Fannie Mae and Freddie Mac that reached the Treasury on June 28, 2013, the extraordinary measures were predicted to last until October 17 by the Treasury, but financial firms suggested funds might have lasted a little longer. Jefferies Group said extraordinary measures might have lasted until the end of October while Credit Suisse estimated mid-November.The US Treasury began taking extraordinary measures to enable payments, and stated that it would delay payments if funds could not be raised through extraordinary measures, and the debt ceiling was not raised. During the crisis, approval ratings for the Republican Party declined.\n\n\n== 2021 debt ceiling crisis ==\nFollowing the July 2021 expiration of the debt ceiling suspension, the U.S. Treasury began taking \"extraordinary measures\" which were set to expire around October 18. Senate Republicans blocked attempts to raise the ceiling using the filibuster, insisting that Democrats should act on their own and use reconciliation to raise the limit. The Senate voted to raise it on October 7, 2021, but only to grant the U.S. Treasury authority to borrow money until that December. That month, Congress voted to increase it by $2.5 (~$2.5 trillion in 2021) trillion, which President Biden signed into effect on December 16, 2021. At that point, it was set at about $31.4 trillion.\n\n\n== 2023 debt ceiling crisis ==\n\nOn January 19, 2023, the United States again reached the debt ceiling.\nPresident Biden at first refused to negotiate, instead insisting on a clean debt ceiling raise. Many news outlets and pundits have talked about this leading to a significant risk that the US defaults on its obligations, though default is not the only possible outcome of the debt ceiling not being raised, the alternative being shutting down portions of government operations. The Treasury has, however, explicitly stated that this would be technically impossible. Many news outlets have also claimed that the federal government has not defaulted on financial obligations before, including President Biden calling such a situation \"unprecedented\", however a more accurate statement is that the US has defaulted on obgliations several times in history, but never because of the debt ceiling. These included late interest payments in 1814 due to the financial strain of the War of 1812 (the last time the US experienced a \u201cmajor default on its financial obligations\"), and briefly in 1979, due to technical glitches.\n\n\n== Historical debt ceiling levels ==\nNote that this table does not go back to 1917 when the debt ceiling started.\n\nReference for values between 1993 and 2015:Note that:\n\nThe figures are unadjusted for the time value of money, such as interest and inflation and the size of the economy that generated a debt.\nThe debt ceiling is an aggregate of gross debt, which includes debt in hands of public and in intragovernment accounts.\nThe debt ceiling does not necessarily reflect the level of actual debt.\nFrom March 15 to October 30, 2015 there was a de facto debt limit of $18.153 trillion, due to use of extraordinary measures.\n\n\n== Notes ==\n\n\n== References ==\n\n\n== Sources ==\n\"Amerikanere kan l\u00e6re af dansk g\u00e6ldsloft\". DR Nyheder. 3 August 2011. Retrieved 6 May 2013.\n\"Analysis of 2011-2012 Actions Taken and Effect of Delayed Increase on Borrowing Costs\" (PDF). GAO. July 2012. Retrieved 13 January 2013.\nAustin, D. Andrew (29 April 2008). \"The Debt Limit: History and Recent Increases\" (PDF). Congressional Research Service.\nAustin, D. Andrew; Levit, Mindy R. (27 December 2012). \"The Debt Limit: History and Recent Increases\" (PDF). Congressional Research Service.\nAustin, D. Andrew (5 June 2017). \"The Debt Limit Since 2011\" Congressional Research Service.\n\"Debt ceiling\". IGM Forum. Chicago Booth. 15 January 2013. Retrieved 19 January 2013.\n\"Federal Debt and the Statutory Limit, November 2012\" (PDF). Congressional Budget Office. November 2012.\n\"Debt Limit Analysis\" (PDF). Bipartisan Policy Center. 27 November 2012. Retrieved 13 January 2013.\n\"Delays Create Debt Management Challenges and Increase Uncertainty in the Treasury Market\" (PDF). GAO-11-203. GAO. February 2011. Retrieved 13 January 2013.\nGreen, Joshua (9 May 2011). \"How Dick Gephardt Fixed the Debt-Ceiling Problem\". The Atlantic.\nKowalcky, Linda W.; LeLoup, Lance T. (1993). \"Congress and the Politics of Statutory Debt Limitation\". Public Administration Review. 53 (1): 14. CiteSeerX 10.1.1.397.5755. doi:10.2307/977272. JSTOR 977272.\nLawder, David (29 June 2011). \"Prioritizing debt payments won't work: Geithner\". Reuters.\nLevit, Mandy R.; Brass, Clinton T.; Nicola, Timothy J.; Nuschler, Dawn. \"Reaching the Debt Limit: Background and Potential Effects on Government Operations\" (PDF).\nMasters, Jonathan. \"U.S. Debt Ceiling: Costs and Consequences\". Renewing America. Council on Foreign Relations. Archived from the original on 2013-09-08. Retrieved 2013-10-09.\nSahadi, Jeanne (7 January 2013). \"Debt Ceiling: 'Chaotic' choices on 100 million payments\". CNNMoney. Retrieved 13 January 2013.\nSurowiecki, James (1 August 2011). \"Smash the Ceiling\". The New Yorker.\nSweet, Ken (8 August 2011). \"Dow plunges after S&amp;P downgrade\". CNNMoney.\nYglesias, Matthew (16 January 2013). \"What if Congress Doesn't Raise the Debt Ceiling?\". Slate.\n\n\n== External links ==\nHistory and Recent Increases (2008)\nHistory and Recent Increases (2010)\nUS Treasury Debt to the Penny (Daily)\nEstimated Debt to the Penny (Real Time)",
"pageid": 32656127
},
{
"title": "2011 United States debt-ceiling crisis",
"content": "In 2011, ongoing political debate in the United States Congress about the appropriate level of government spending and its effect on the national debt and deficit reached a crisis centered on raising the debt ceiling, leading to the passage of the Budget Control Act of 2011.\nThe Republican Party, which gained control of the House of Representatives in January of 2011, demanded that President Obama negotiate over deficit reduction in exchange for an increase in the debt ceiling, the statutory maximum of money the Treasury is allowed to borrow. The debt ceiling had routinely been raised in the past without partisan debate or additional terms or conditions. This reflects the fact that the debt ceiling does not prescribe the amount of spending, but only ensures that the government can pay for the spending to which it has already committed itself. Some use the analogy of an individual \"paying their bills.\"\nIf the United States breached its debt ceiling and were unable to resort to other \"extraordinary measures\", the Treasury would have to either default on payments to bondholders or immediately curtail payment of funds owed to various companies and individuals that had been mandated but not fully funded by Congress. Both situations would likely have led to a significant international financial crisis.\nOn July 31, two days prior to when the Treasury estimated the borrowing authority of the United States would be exhausted, Republicans agreed to raise the debt ceiling in exchange for a complex deal of significant future spending cuts. The crisis did not permanently resolve the potential of future use of the debt ceiling in budgetary disputes, as shown by the subsequent crisis in 2013.\nThe crisis sparked the most volatile week for financial markets since the 2008 crisis, with the stock market trending significantly downward. Prices of government bonds (\"Treasuries\") rose as investors, anxious over the dismal prospects of the US economic future and the ongoing European sovereign-debt crisis, fled into the still-perceived relative safety of US government bonds. Later that week, the credit-rating agency Standard &amp; Poor's downgraded the credit rating of the United States government for the first time in the country's history, though the other two major credit-rating agencies, Moody's and Fitch, retained America's credit rating at AAA. The Government Accountability Office (GAO) estimated that the delay in raising the debt ceiling increased government borrowing costs by $1.3 billion in 2011 and also pointed to unestimated higher costs in later years. The Bipartisan Policy Center extended the GAO's estimates and found that delays in raising the debt ceiling would raise borrowing costs by $18.9 billion.\n\n\n== Context ==\nUnder US law, an administration can spend only if it has sufficient funds to pay for it. These funds can come either from tax receipts or from borrowing by the United States Department of the Treasury. Congress has set a debt ceiling, beyond which the Treasury cannot borrow (this is similar to a credit limit on a credit card). The debt limit does not restrict Congress's ability to enact spending and revenue legislation that affects the level of debt or otherwise constrains fiscal policy; it restricts Treasury's authority to borrow to finance the decisions already enacted by Congress and the President. Congress also usually votes on increasing the debt limit after fiscal policy decisions affecting federal borrowing have begun to take effect. In the absence of sufficient revenue, a failure to raise the debt ceiling would result in the administration being unable to fund all the spending which it is required to do by prior acts of Congress. At that point, the government must cancel or delay some spending, a situation sometimes referred to as a partial government shut down.\nIn addition, the Obama administration stated that, without this increase, the US would enter sovereign default (failure to pay the interest and/or principal of US treasury securities on time) thereby creating an international crisis in the financial markets. Alternatively, default could be averted if the government were to promptly reduce its other spending by about half.An increase in the debt ceiling requires the approval of both houses of Congress. Republicans and some Democrats insisted that an increase in the debt ceiling be coupled with a plan to reduce the growth in debt. There were differences as to how to reduce the expected increase in the debt. Initially, nearly all Republican legislators (who held a majority in the House of Representatives) opposed any increase in taxes and proposed large spending cuts. A large majority of Democratic legislators (who held a majority in the Senate) favored tax increases along with smaller spending cuts. Supporters of the Tea Party movement pushed their fellow Republicans to reject any agreement that failed to incorporate large and immediate spending cuts or a constitutional amendment requiring a balanced budget.\n\n\n== Background ==\n\n\n=== Debt ceiling ===\n\nIn the United States, the federal government can pay for expenditures only if Congress has approved the expenditure in an appropriation bill. If the proposed expenditure exceeds the revenues that have been collected, there is a deficit or shortfall, which can only be financed by the government, through the Department of the Treasury, borrowing the shortfall amount by the issue of debt instruments. Under federal law, the amount that the government can borrow is limited by the debt ceiling, which can only be increased with a separate vote by Congress.\nPrior to 1917, Congress directly authorized the amount of each borrowing. In 1917, in order to provide more flexibility to finance the US involvement in World War I, Congress instituted the concept of a \"debt ceiling\". Since then, the Treasury may borrow any amount needed as long as it keeps the total at or below the authorized ceiling. Some small special classes of debt are not included in this total. To change the debt ceiling, Congress must enact specific legislation, and the President must sign it into law.\nThe process of setting the debt ceiling is separate and distinct from the regular process of financing government operations, and raising the debt ceiling does not have any direct impact on the budget deficit. The US government passes a federal budget every year. This budget details projected tax collections and outlays and, therefore, the amount of borrowing the government would have to do in that fiscal year. A vote to increase the debt ceiling is, therefore, usually seen as a formality, needed to continue spending that has already been approved previously by the Congress and the President. The Government Accountability Office explains: \"The debt limit does not control or limit the ability of the federal government to run deficits or incur obligations. Rather, it is a limit on the ability to pay obligations already incurred.\" The apparent redundancy of the debt ceiling has led to suggestions that it should be abolished altogether. From 1979 to 1995, the House of Representatives followed the \"Gephardt Rule\" which deemed the debt ceiling raised if necessary to cover appropriations.\nThe US has had public debt since its inception. Debts incurred during the American Revolutionary War and under the Articles of Confederation led to the first yearly report on the amount of the debt ($75,463,476.52 on January 1, 1791). Every president since Harry Truman has added to the national debt. The debt ceiling has been raised 74 times since March 1962, including 18 times under Ronald Reagan, eight times under Bill Clinton, seven times under George W. Bush and three times (as of August 2011) under Barack Obama.\nAs of May 2011, approximately 40 percent of US government spending relied on borrowed money. That is, without borrowing, the federal government would have had to cut spending immediately by 40 percent, affecting many daily operations of the government, besides the impact on the domestic and international economies. It is unclear if the Treasury has the technological capability to disburse funds to some individuals it owes money. The Government Accountability Office reported in February 2011 that managing debt when delays in raising the debt limit occur diverts Treasury's resources from other cash and debt management responsibilities and that Treasury's borrowing costs modestly increased during debt limit debates in 2002, 2003, 2010 and 2011. If the interest payments on the national debt are not made, the US would be in default, potentially causing catastrophic economic consequences for the US and the wider world as well. (Effects outside the US would be likely because the United States is a major trading partner with many countries. Other major world powers that hold US government debt could demand immediate repayment.)\nAccording to the Treasury, \"failing to increase the debt limit would . . . cause the government to default on its legal obligations \u2013 an unprecedented event in American history\". These legal obligations include paying Social Security and Medicare benefits, military salaries, interest on the debt, and many other items. Making the promised payments of the principal and interest of US treasury securities on time ensures that the nation does not default on its sovereign debt.Critics have argued that the debt ceiling crisis is \"self-inflicted,\" as treasury bond interest rates were at historical lows, and the US had no market restrictions on its ability to obtain additional credit. The debt ceiling has been raised 68 times since 1960. Sometimes the increase was treated as routine; many times it was used to score political points for the minority party by criticizing the out-of-control spending of the majority. The only other country with a debt limit is Denmark, which has set its debt ceiling so high that it is unlikely to be reached. If raising the limit ceases to be routine, this may create uncertainty for global markets each time a debt ceiling increase is debated. The 2011 debt-ceiling crisis has shown how a party in control of only one chamber of Congress (in this case, Republicans in control of the House of Representatives but not the Senate or the Presidency) can have significant influence if it chooses to block the routine raising of the debt limit.\n\n\n=== Concern about budget deficits and long-term debt ===\n\nUnderlying the contentious debate over raising the debt ceiling has been an anxiety, growing since 2008, about the large United States federal budget deficits and the increasing federal debt. According to the Congressional Budget Office (CBO): \"At the end of 2008, that debt equaled 40 percent of the nation's annual economic output (a little above the 40-year average of 37 percent). Since then, the figure has shot upward: By the end of fiscal year 2011, the Congressional Budget Office (CBO) projects federal debt will reach roughly 70 percent of gross domestic product (GDP) \u2014 the highest percentage since shortly after World War II.\" The sharp rise in debt after 2008 stems largely from lower tax revenues and higher federal spending related to the severe recession and persistently high unemployment in 2008\u201311. Though a balanced budget is ideal, allowing down payment on debt and more flexibility within government budgeting, limiting deficits to within 1% to 2% of GDP is sufficient to stabilize the debt. Deficits in 2009 and 2010 were 10.0 percent and 8.9 percent respectively, and the largest as a share of gross domestic product since 1945.In 2009, the Tea Party movement emerged with a focus on reducing government spending and regulation. The Tea Party movement helped usher in a wave of new Republican office-holders in the 2010 mid-term elections whose major planks during the campaign included cutting federal spending and stopping any tax increases. These new Republicans and the new Republican House majority greatly affected the 2011 debt ceiling political debate.In early 2010, President Obama established the Bowles-Simpson Commission to propose recommendations to balance the budget by 2015. The commission issued a report in December 2010, but the recommendations failed to receive enough votes to allow the report to be passed on to Congress.\nThroughout 2011, Standard &amp; Poor's and Moody's credit rating services issued warnings that US credit rating could be downgraded because of the continued large deficits and increasing debt. According to the CBO's 2011 long-term budget outlook, without major policy changes the large budget deficits and growing debt would continue, which \"would reduce national saving, leading to higher interest rates, more borrowing from abroad, and less domestic investment \u2013 which in turn would lower income growth in the United States\". The European sovereign debt crisis was occurring throughout 2010\u20132011, and there were concerns that the US was on the same trajectory.\n\n\n=== Negative real interest rates ===\nSince 2010, the U.S. Treasury has been obtaining negative real interest rates on government debt. Such low rates, outpaced by the inflation rate, occur when the market believes that there are no alternatives with sufficiently low risk, or when popular institutional investments such as insurance companies, pensions, or bond, money market, and balanced mutual funds are required or choose to invest sufficiently large sums in Treasury securities to hedge against risk. Lawrence Summers and other economists state that at such low rates, government debt borrowing saves taxpayer money, and improves creditworthiness. In the late 1940s and then again in the early 1970s, the US and UK both reduced their debt burden by about 30% to 40% of GDP per decade by taking advantage of negative real interest rates, but there is no guarantee that government debt rates will continue to stay so low. In January 2012, the U.S. Treasury Borrowing Advisory Committee of the Securities Industry and Financial Markets Association unanimously recommended that government debt be allowed to auction even lower, at negative absolute interest rates.This method of negative real interest rates has been claimed to be a form of financial repression by governments as it is \"a transfer from creditors (savers) to borrowers (in the historical episode under study here\u2014the government)\" and \"given that deficit reduction usually involves highly unpopular expenditure reductions and (or) tax increases of one form or another, the relatively 'stealthier' financial repression tax may be a more politically palatable alternative to authorities faced with the need to reduce outstanding debts\".\n\n\n== Resort to extraordinary measures ==\nPrior to the 2011 debt ceiling crisis, the debt ceiling was last raised on February 12, 2010 to $14.294 trillion.On April 15, 2011, Congress passed the last part of the 2011 United States federal budget in the beginning 2012, authorizing federal government spending for the remainder of the 2011 fiscal year, which ended on September 30, 2011. For the 2011 fiscal year, expenditure was estimated at $3.82 trillion, with expected revenues of $2.17 trillion, leaving a deficit of $1.48 trillion. This includes, public and federal debt, as well as the GDP. Leaving a budget deficit of 38.7%, the world's highest.\nHowever, soon after the 2011 budget was passed, the debt ceiling set in February 2010 was reached. In a letter to Congress of April 4, 2011, Treasury Secretary Timothy Geithner explained that when the debt ceiling is reached, the US Treasury can declare a debt issuance suspension period and utilize \"extraordinary measures\" to acquire funds to meet federal obligations but which do not require the issue of new debt, such as the sale of assets from the Civil Service Retirement and Disability Fund and the G Fund of the Thrift Savings Plan. These measures were implemented on May 16, 2011, when Geithner declared a \"debt issuance suspension period\". According to his letter to Congress, this period could \"last until August 2, 2011, when the Department of the Treasury projects that the borrowing authority of the United States will be exhausted\". These methods have been used on several previous occasions in which federal debt neared its statutory limit.\n\n\n=== The August 2, 2011 deadline ===\nThe U.S. Treasury stated on multiple occasions that the US government would exhaust its borrowing authority around August 2, 2011. That date appeared to serve as an effective deadline for Congress to vote to increase the debt ceiling.While the U.S. Treasury's borrowing authority may have been exhausted on August 2, 2011, it retained cash balances that would have enabled it to meet federal obligations for a short time. According to Barclays Capital, Treasury would run out of cash around August 10, when $8.5 billion in Social Security payments were due. According to Wall Street analysts, Treasury would not be able borrow from the capital markets after August 2, but still would have enough incoming cash to meet its obligations until August 15. Analysts also predicted that Treasury would be able to roll over the $90 billion in US debt that matured on August 4, and gain additional time to avert the crisis.Projections required for debt and cash management can be volatile. Outside experts that track Treasury finances had said that announced Treasury estimates were within the range of uncertainty for their analyses. Delaying an increase in the debt limit past August 2 could have risked a delay in Social Security and other benefit checks, and could have led to disruptions in scheduled Treasury auctions.\n\n\n== Implications of not raising the debt ceiling ==\nExperts were divided on how bad the effects of not raising the debt ceiling for a short period would be on the economy. While some leading economists, including Republican adviser Douglas Holtz-Eakin, suggested even a brief failure to meet US obligations could have devastating long-term consequences, others argued that the market would write it off as a Congressional dispute and return to normal once the immediate crisis was resolved.\nSome argued that the worst outcome would be if the US failed to pay interest and/or principal on the national debt to bondholders, thereby defaulting on its sovereign debt. Former Treasury Secretary Lawrence Summers warned in July 2011 that the consequences of such a default would be higher borrowing costs for the US government (as much as one percent or $150 billion/year in additional interest costs) and the equivalent of bank runs on the money markets and other financial markets, potentially as severe as those of September 2008.In January 2011 Treasury Secretary Timothy Geithner warned that \"failure to raise the limit would precipitate a default by the United States. Default would effectively impose a significant and long-lasting tax on all Americans and all American businesses and could lead to the loss of millions of American jobs. Even a very short-term or limited default would have catastrophic economic consequences that would last for decades.\"Senators Pat Toomey and Jim DeMint expressed deep concern that administration officials were stating or implying that failure to raise the nation's debt limit would constitute a default on US debt and precipitate a financial crisis: \"We believe it is irresponsible and harmful for you to sow the seeds of doubt in the market regarding the full faith and credit of the United States and ask that you set the record straight \u2013 that you will use all available Treasury funds necessary to prevent default while Congress addresses the looming debt crisis.\"Geithner responded that prioritizing debt would require \"cutting roughly 40 percent of all government payments\", which could only be achieved by \"selectively defaulting on obligations previously approved by Congress\". He argued that this would harm the reputation of the United States so severely that there is \"no guarantee that investors would continue to re-invest in new Treasury securities\", forcing the government to repay the principal on existing debt as it matured, which it would be unable to do under any conceivable circumstance. He concluded: \"There is no alternative to enactment of a timely increase in the debt limit.\" On January 25, 2011, Senator Toomey introduced The Full Faith And Credit Act bill [S.163] that would require the Treasury to prioritize payments to service the national debt over other obligations. (The bill was cleared by its committee for consideration the next day and added to the Senate \"calendar of business\", but no further action had occurred by mid-August 2011.)\nEven if the Treasury were to prioritize payments on the debt above other spending and avoid formal default on its bonds, failure to raise the debt ceiling would force the government to reduce its spending by as much as ten percent of GDP overnight, leading to a corresponding fall in aggregate demand. Economists believe that such a significant shock, if sustained, would reverse the economic recovery and send the country into a recession.\n\n\n== Proposed resolutions ==\nCongress considered whether and by how much to extend the debt ceiling (or eliminate it), and what long-term policy changes (if any) should be made concurrently.The Republican positions on raising the debt ceiling included:\n\nA Dollar-for-dollar deal; that is, raise the debt ceiling to match corresponding spending cuts\nMore of the budget cuts in the first two years\nSpending caps\nA Balanced Budget Amendment \u2013 to pass Congress and be sent to states for ratification\nNo tax increases but tax reform could be considered(One representative, Ron Paul, proposed transferring $1.6 trillion of Federal Reserve assets to the government and destroying those bonds, thereby reducing the United States gross federal debt by the same amount This would violate the property rights of national banks who own the Federal Reserve Banks.)\nThe Democratic positions on raising the debt ceiling included:\n\nInitially, a \"clean\" increase or unconditional raise to the debt ceiling with no spending cuts attached\nSpending cuts combined with tax increases on some categories of taxpayers, to reduce deficits (For example, a 1:1 spending cut / tax increase ratio initially desired in the Congress versus 3:1 offered by President Obama.)\nA large debt-ceiling increase, to support borrowing into 2013 (after the next election)\nOpposed to any major cuts to Social Security, Medicare, or Medicaid(Some Democratic lawmakers suggested that the President could declare that the debt ceiling violates the US Constitution and issue an Executive Order to direct the Treasury to issue more debt.)\nThe US House of Representatives originally refused to raise the debt ceiling without deficit reduction, voting down a \"clean\" bill to increase the debt ceiling without conditions. The May 31 vote was 318 to 97, with all 236 Republicans and 82 Democrats voting to defeat the bill. The Republicans largely believed a deficit reduction deal should be based solely on spending cuts, including cuts to entitlements, without any tax increases, to reduce or solve the long-term issue of debt. Obama and the Democrats in the US Congress wanted an increase in the debt ceiling to solve the short-term borrowing problem, and in exchange supported a decrease in the budget deficit, to be funded by a combination of spending cuts and revenue increases. Some prominent liberal economists, such as Paul Krugman, Larry Summers, and Brad DeLong, and prominent investors such as Bill Gross, went even further, and argued that not only should the debt ceiling be raised, but federal spending (and, therefore, the deficit) should be increased in the short term (as long as the economy remains in the liquidity trap), which they believed would stimulate the economy, reduce unemployment, and ultimately reduce the deficit in the medium to long term.Some Tea Party Caucus and other Republicans, however, (including, but not limited to, Senators Jim DeMint, Rand Paul, and Mike Lee, and Representatives Michele Bachmann, Ron Paul, and Allen West) expressed skepticism about raising the debt ceiling (with some suggesting the consequences of default are exaggerated), arguing that the debt ceiling should not be raised, and \"instead the federal debt [should] be 'capped' at the current limit,\" \"although that would oblige the government to cut spending by almost half overnight.\"Jack Balkin, the Knight Professor of Constitutional Law and the First Amendment at Yale Law School, suggested two other ways to solve the debt ceiling crisis: he pointed out that the US Treasury has the power to issue platinum coins in any denomination, so it could solve the debt ceiling crisis by simply issuing two platinum coins in denominations of $1 trillion each, depositing them into its account in the Federal Reserve, and writing checks on the proceeds. Another way to solve the debt ceiling crisis, Balkin suggested, would be for the federal government to sell the Federal Reserve an option to purchase government property for $2 trillion. The Federal Reserve would then credit the proceeds to the government's checking account. Once Congress lifted the debt ceiling, the president could buy back the option for a dollar, or the option could simply expire in 90 days.In a report issued by the credit rating agency Moody's, analyst Steven Hess suggested that the government should consider getting rid of the limit altogether, because the difficulty inherent in reaching an agreement to raise the debt ceiling \"creates a high level of uncertainty\" and an increased risk of default. As reported by The Washington Post, \"without a limit dependent on congressional approval, the report said, the agency would worry less about the government's ability to meet its debt obligations.\" Other public figures, including Democratic ex-President Bill Clinton and Republican ex-CBO director Douglas Holtz-Eakin, have suggested eliminating the debt ceiling.\n\n\n=== Possible methods of bypassing the debt ceiling ===\n\n\n==== Fourteenth Amendment ====\nDuring the debate, some scholars, Democratic lawmakers, and Treasury Secretary Tim Geithner suggested that the President could declare that the debt ceiling violates the Constitution and issue an Executive Order to direct the Treasury to issue more debt. They point to Section 4 of the Fourteenth Amendment to the US Constitution, passed in the context of the Civil War Reconstruction, that states that the validity of the public debt shall not be questioned. Others rebutted this argument by pointing to Section 8 of Article 1 and Section 5 of the Fourteenth Amendment, which state that Congress has the power of the purse and the authority to enforce the Fourteenth Amendment.\nArticle I, Section 8. The Congress shall have power . . .To borrow Money on the credit of the United States;Amendment XIV, Section 4. The validity of the public debt of the United States, authorized by law, including debts incurred for payment of pensions and bounties for services in suppressing insurrection or rebellion, shall not be questioned. But neither the United States nor any State shall assume or pay any debt or obligation incurred in aid of insurrection or rebellion against the United States, or any claim for the loss or emancipation of any slave; but all such debts, obligations and claims shall be held illegal and void.Amendment XIV, Section 5. The Congress shall have power to enforce, by appropriate legislation, the provisions of this article.ArgumentsJack Balkin, looking into the Legislative History of the Fourteenth Amendment, argued that Section 4 was adopted to guard against politically determined default. Referencing the sponsor of the provision, Senator Benjamin Wade, Balkin argued that \"the central rationale for Section Four ... was to remove threats of default on federal debts from partisan struggle.\" Balkin quotes Wade: \"every man who has property in the public funds will feel safer when he sees that the national debt is withdrawn from the power of a Congress to repudiate it and placed under the guardianship of the Constitution than he would feel if it were left at loose ends and subject to the varying majorities which may arise in Congress.\" According to Balkin, this reveals \"an important structural principle. The threat of defaulting on government obligations is a powerful weapon, especially in a complex, interconnected world economy. Devoted partisans can use it to disrupt government, to roil ordinary politics, to undermine policies they do not like, even to seek political revenge. Section Four was placed in the Constitution to remove this weapon from ordinary politics.\"\nBruce Bartlett, a former adviser to President Ronald Reagan and columnist for The Fiscal Times, argued that Section 4 renders the debt ceiling unconstitutional, and that the President should disregard the debt limit.\nThe Nation editor Katrina vanden Heuvel argued that the President could use the public debt section of the Fourteenth Amendment to force the Treasury to continue paying its debts if an agreement to raise the debt ceiling was not reached.\nLaurence Tribe, professor of Constitutional Law at Harvard Law School, called the argument that the public debt clause can nullify the debt ceiling \"false hope\" and noted that nothing in the Constitution enabled the President to \"usurp legislative power\" with regards to the debt. Tribe said that since Congress has means other than borrowing to pay the federal debt (including raising taxes, coining money, and selling federal assets), the argument that the President could seize the power to borrow could be extended to give the President the ability to seize those powers as well.Garrett Epps counter-argued that the President would not be usurping Congressional power by invoking Section 4 to declare the debt ceiling unconstitutional, because the debt ceiling exceeds Congressional authority. He called it legislative \"double-counting,\" as paraphrased in The New Republic, \"because Congress already appropriated the funds in question, it is the executive branch's duty to enact those appropriations.\" In other words, given Congress has appropriated money via federal programs, the Executive is obligated to enact and, therefore, fund them, but the debt ceiling's limit on debt prevents the executive from carrying out the instructions given by Congress, on the constitutional authority to set appropriations; essentially, to obey the statutory debt ceiling would require usurping congress' constitutional powers, and hence the statute must be unconstitutional.\nFormer President Bill Clinton endorsed this counter-argument, saying he would eliminate the debt ceiling using the 14th Amendment. He called it \"crazy\" that Congress first appropriates funds and then gets a second vote on whether to pay.\nMatthew Zeitlin added to the counter-argument that, were Section 4 invoked, members of Congress would not have standing to sue the President for allegedly usurping congressional authority, even if they were willing to do so; and those likely to have standing would be people \"designed to elicit zero public sympathy: those who purchased credit default swaps which would pay off in the event of government default\". Matthew Steinglass argued that, because it would come down to the Supreme Court, the Court would not vote in favor of anyone who could and would sue: it would rule the debt ceiling unconstitutional. This is because, for the Court to rule to uphold the debt ceiling, it would, in effect, be voting for the United States to default, with the consequences that would entail; and, Steinglass argues, the Court would not do that.Michael Stern, Senior Counsel to the US House of Representatives from 1996 to 2004, stated that Garrett Epps \"had adopted an overly broad interpretation of the Public Debt Clause and that this interpretation, even if accepted, could not justify invalidating the debt limit\" because \"the President's duty to safeguard the national debt no more enables him to assume Congress's power of the purse than it would enable him to assume the judicial power when (in his opinion) the Supreme Court acts in an unconstitutional manner.\"\nRob Natelson, former Constitutional Law Professor at University of Montana, argued that \"this is not some issue in the disputed boundaries between legislative and executive power.\" He continued, \"That's why the Constitution itself (Article I, Section 8, Clause 2) gives only Congress, not the President, the power \"To borrow Money on the credit of the United States.\" In another argument, Natelson stated that Bruce Bartlett \"deftly omits a crucial part of the quote from the Fourteenth Amendment. It actually says, 'The validity of the public debt of the United States, AUTHORIZED BY LAW ... shall not be questioned.' In other words, Congress has to approve the debt for it not to be questioned. And note that this language refers to existing debt, not to creating new debt. He also neglects to mention that Section 5 of the Fourteenth Amendment specifically grants to Congress, not to the President, authority to enforce the amendment.\"\nTreasury Secretary Tim Geithner implied that the debt ceiling may violate the Constitution; however George Madison, General Counsel to the US Treasury, wrote that \"Secretary Geithner has never argued that the 14th Amendment to the US Constitution allows the President to disregard the statutory debt limit\" (but nor did Madison say that Geithner had argued against the proposition either), and that \"the Constitution explicitly places the borrowing authority with Congress.\" He stated that \"Secretary Geithner has always viewed the debt limit as a binding legal constraint that can only be raised by Congress.\"\n\n\n==== Minting coins in extremely high denominations ====\n\nUS law does not place a limit on the denomination of minted coins, and specifically mentions that the Mint can create platinum coins of arbitrary value under the discretion of the Secretary of the Treasury. Yale law professor Jack Balkin mentioned seigniorage as a solution, although there had been speculation about the option of a \"trillion-dollar coin\" online since at least January 2011. Hence it has been suggested that a coin with a face value of a trillion or more could be minted and deposited with the Federal Reserve and used to buy back debt, thus making funds available.\n\n\n==== Monetizing gold ====\nA similar crisis was faced during the Eisenhower Administration in 1953. The debt ceiling was not raised until the spring of 1954. To accommodate the gap, the Eisenhower administration increased its gold certificate deposits at the Federal Reserve, which it could do because the market price of gold had increased. According to experts, the Secretary of the Treasury is still authorized to monetize 8,000 tons of gold, valued under the old law at approximately $42 per ounce, but with a market value worth over $1,600 per ounce.\n\n\n== Agreement ==\n\nOn July 31, 2011, President Obama announced that the leaders of both parties in both chambers had reached an agreement that would reduce the deficit and avoid default. The same day, Speaker Boehner's office outlined the agreement for House Republicans. According to the statement:\n\nThe agreement cut spending more than it increased the debt limit. In the first installment (\"tranche\"), $917 billion would be cut over 10 years in exchange for increasing the debt limit by $900 billion.\nThe agreement established a Congressional Joint Select Committee that would produce debt reduction legislation by November 23, 2011, that would be immune from amendments or filibuster. The goal of the legislation is to cut at least $1.5 trillion over the coming 10 years and should be passed by December 23, 2011. The committee would have 12 members, 6 from each party.\nProjected revenue from the Joint Select Committee's legislation must not exceed the revenue baseline produced by current law, which assumes the Bush tax cuts will expire entirely at the end of 2012.\nThe agreement specified an incentive for Congress to act. If Congress fails to produce a deficit reduction bill with at least $1.2 trillion in cuts, then Congress can grant a $1.2 trillion increase in the debt ceiling. This would trigger across-the-board cuts (\"sequestration\") of spending, equally split between defense and non-defense programs. The cuts would apply to mandatory and discretionary spending in the years 2013 to 2021 and be in an amount equal to the difference between $1.2 trillion and the amount of deficit reduction enacted from the joint committee. The sequestration mechanism is the same as the Balanced Budget Act of 1997. There are exemptions\u2014across the board cuts would apply to Medicare, but not to Social Security, Medicaid, civil and military employee pay, or veterans.\nCongress must vote on a Balanced Budget Amendment between October 1, 2011, and the end of the year.\nThe debt ceiling may be increased an additional $1.5 trillion if either one of the following two conditions are met:\nA balanced budget amendment is sent to the states\nThe joint committee cuts spending by a greater amount than the requested debt ceiling increaseMost of the $900 billion in cuts occur in future years, and so will not remove significant capital from the economy in the current and following year. The across-the-board cuts could not take place until 2013. If they are triggered, a new Congress could vote to reduce, eliminate, or deepen all or part of them. Under the U.S. Constitution, the President could veto such a future bill passed by Congress; in such a scenario, Congress would have pass a bill to override this veto by a two-thirds majority of each house of Congress.The agreement, entitled the Budget Control Act of 2011, passed the House on August 1, 2011, by a vote of 269\u2013161; 174 Republicans and 95 Democrats voted for it, while 66 Republicans and 95 Democrats voted against it. The Senate passed the agreement on August 2, 2011, by a vote of 74\u201326; 7 Democrats and 19 Republicans voted against it. Obama signed the bill shortly after it was passed by the Senate.\n\n\n== Reaction ==\n\n\n=== US reaction ===\nThe national debt rose $238 billion (or about 60% of the new debt ceiling) on August 3, the largest one-day increase in the history of the United States. The US debt surpassed 100 percent of gross domestic product for the first time since World War II. According to the International Monetary Fund, the US joined a group of countries whose public debt exceeds their GDP. The group includes Japan (229 percent), Greece (152 percent), Jamaica (137 percent), Lebanon (134 percent), Italy (120 percent), Ireland (114 percent), and Iceland (103 percent).\nThe NASDAQ, ASX, and S&amp;P 100 lost up to four percent in value, the largest drop since July 2009, during the global financial crisis that was precipitated in part by the United States housing bubble and the corresponding losses by holders of mortgages and mortgage-backed securities. The commodities market also took losses, with average spot crude oil prices falling below $US86 a barrel. The price of gold fell, as deepening losses on Wall Street prompted investors to sell.On August 5, 2011, Standard &amp; Poor's credit rating agency downgraded the long-term credit rating of the United States government for the first time in its history, from AAA to AA+. In contrast with previous ratings, the agency assumed in the base case scenario that the tax cuts of 2001 and 2003 would not expire at the end of 2012, citing Congressional resistance to revenue raising measures. The downside scenario, the conditions that would likely lead to a further downgrade to AA, assumed that the second round of spending cuts would fail to occur and that yield on Treasury bonds would increase but the dollar would remain the key global reserve currency. The upside scenario, consistent with maintaining the new AA+ rating, included the expiration of the 2001 and 2003 tax cuts and only modest growth in government debt as a percentage of GDP over the coming decade. A week later, S&amp;P senior director Joydeep Mukherji said that one factor was that numerous American politicians expressed skepticism about the serious consequences of a default\u2014an attitude that he said was \"not common\" among countries with a AAA rating. At the end of 2012, the United States fiscal cliff was resolved in a compromise without expiring the 2001 and 2003 tax cuts, but S&amp;P did not downgrade to AA. The other two major credit rating agencies, Moody's and Fitch, continued to rate the federal government's bonds as AAA.In a joint press release on the same day from the Federal Reserve System, the Federal Deposit Insurance Corporation, the National Credit Union Administration, and the Office of the Comptroller of the Currency, federally regulated institutions were told that for risk-based capital purposes, the debt of the United States was still considered to be risk free.\n\n\n==== Congressional reaction ====\nSenate Minority Leader Mitch McConnell, on the GOP: \"I think some of our members may have thought the default issue was a hostage you might take a chance at shooting. Most of us didn't think that. What we did learn is this \u2013 it's a hostage that's worth ransoming. And it focuses the Congress on something that must be done.\"Boehner was reported to be particularly concerned that any defense cuts could not go into effect until after 2013.\n\n\n=== International reaction ===\nThe international community characterized the political brinkmanship in Washington as playing a game of chicken, and criticized the US government for \"dangerously irresponsible\" actions.International reaction to the US credit rating downgrade has been mixed. Australian Prime Minister Julia Gillard urged calm over the downgrade, since only one of the three major credit rating agencies decided to lower its rating. On August 6, 2011, China, the largest foreign holder of United States debt, said that Washington needed to \"cure its addiction to debts\" and \"live within its means\". The Chinese state media outlet Xinhua News Agency was critical of the US government, questioned whether the US dollar should continue to be the global reserve currency, and called for international supervision over the issue of US dollar.The downgrade started a sell-off in every major stock market index around the world, threatening a stock market crash in the international markets. The G7 finance ministers scheduled a meeting to discuss the \"global financial crisis that concerns all countries\".\n\n\n=== Political aftermath ===\nPolitically, the crisis caused support for the Republican Party to drop, whose support for the debt-ceiling deal was needed as it controlled the House. The party saw its approval ratings drop from 41 percent in July to 33 percent in August. Nevertheless, President Obama saw his approval ratings drop to a record low of 40 percent in regards to his handling of the crisis.\n\n\n== Timeline ==\n\nAlthough the US has raised its debt ceiling many times before 2011, these increases were not generally coupled with an ongoing global economic crisis.\nDecember 16, 2009: The debt ceiling was exceeded. To avoid default, the Treasury Department used \"extraordinary accounting tools\" to enable the Treasury to make an additional $150 billion available to meet the necessary federal obligations.\nFebruary 12, 2010: Increase in the debt ceiling signed into law by President Obama, after being passed by the Democratic 111th United States Congress. It increased the debt ceiling by $1.9 trillion from $12.394 trillion to $14.294 trillion.\nFebruary 18, 2010: Obama issued an Executive Order to establish the National Commission on Fiscal Responsibility and Reform, also known as the Bowles-Simpson Commission. The mission of the commission was to propose recommendations designed to balance the budget, excluding interest payments on the debt, by 2015. It was tasked to issue a report with a set of recommendations by December 1, 2010.\nNovember 2, 2010: The Republican Party gained 63 seats in the US House of Representatives in the United States midterm elections, recapturing the majority by 242\u2013193 in the 112th Congress. Major planks for the House Republicans during the election campaign were cutting federal spending and stopping any tax increases.\nDecember 1, 2010: The Bowles-Simpson Commission on Fiscal Responsibility and Reform issued its report, but the recommendations failed to win support of at least 14 of the 18 members necessary to adopt it formally. The recommendations were never adopted by Congress nor President Obama.\nJanuary 6, April 4, and May 2, 2011: Secretary of the Treasury Timothy Geithner sent letters requesting an increase in the debt ceiling.\nJanuary 25, 2011: Senator Pat Toomey introduces the Full Faith And Credit Act bill [S.163] that would require the Treasury to prioritize payments to service the national debt over other obligations. The bill was never debated.\nJanuary 28, 2011: Moody's Investors Service said it may place a \"negative\" outlook on the AAA rating of US debt sooner than anticipated, as the country's budget deficit widened.\nFebruary 14, 2011: Obama released his budget proposal for fiscal year 2012. Republicans criticized the budget for doing too little to rein in the burgeoning US deficit. The CBO analysis, released in April 2011, estimated that the budget would increase total deficits over 10 years by $2.7 trillion: from $6.7 trillion of the March 2011 baseline to $9.4 trillion with the proposed budget. The Senate rejected the budget proposal on May 25, 2011 (see below).\nApril 14, 2011: Both the House of Representatives and the Senate voted in favor of the 2011 US federal budget, 260\u2013167 and 81\u201319 respectively. This budget projected the 2011 deficit to be $1.645 trillion, and therefore ensured that the debt ceiling would be hit during this fiscal year.\nApril 15, 2011: On a party-line vote 235\u2013193, the House of Representatives passed the Republican 2012 budget proposal aimed to reduce total spending by $5.8 trillion and reduce total deficits by $4.4 trillion over 10 years compared to the current-policy baseline. It included reform to Medicare and Medicaid entitlement programs, which the Democrats criticized as an attempt to leave seniors and poor holding the bag on health care costs. The criticism resonated with the many in the public, who voiced opposition to the proposed changes. The Senate rejected the budget proposal on May 25, 2011 (see below).\nApril 18, 2011: Standard &amp; Poor's Ratings Services revised its outlook on the US to negative due to recent and expected further deterioration in the US fiscal profile, and of the ability and willingness of the US to soon reverse this trend. With the negative outlook, S&amp;P believed there is a likelihood of at least one-in-three of a downward rating adjustment within two years.\nMay 16, 2011: The debt ceiling is reached. Treasury Secretary Timothy Geithner issued a debt issuance suspension period, directing the Treasury to utilize \"extraordinary measures\" to fund federal obligations.\nMay 18, 2011: Bipartisan deficit-reduction talks among the \"Gang of Six\" high-profile Senators are suspended when Republican Tom Coburn drops out.\nMay 24, 2011: Vice President Joe Biden and four Democratic lawmakers begin meeting with the Republican House Majority Leader Eric Cantor and the Republican Senate Minority Whip Jon Kyl, in an effort to continue the talks. Cantor said that these talks would lay the groundwork for further discussions between President Obama, Republican Speaker of the House John Boehner, and other leaders of Congress.\nMay 25, 2011: The Senate rejected both the Republican House budget proposal, by a vote of 57\u201340, and the Obama budget proposal, by a vote of 97\u20130.\nMay 31, 2011: The House voted on a bill to raise the debt ceiling without any spending cuts tied to the increase. President Obama asked Congress to raise the debt ceiling in a 'clean' vote that included no other conditions. The bill, which would have raised the debt ceiling by $2.4 trillion, failed by a vote of 97\u2013318. Democrats accused Republicans of playing politics by holding a vote they knew would fail.\nJune 23, 2011: Biden's negotiations on the debt ceiling were cut off when both Eric Cantor and Jon Kyl walk out over disagreements on taxes.\nJuly 19, 2011: The Republican Majority in the House brought the Cut, Cap and Balance Act (H.R.2560), their proposed solution to the crisis, to a vote. They passed the bill by a vote of 234\u2013190, split closely along party lines: 229 Republicans and 5 Democrats 'for', 181 Democrats and 9 Republicans 'against'; it was sent to the Senate for consideration. The Bill authorized that the debt ceiling be raised by $2.4 trillion after a Balanced Budget Amendment was passed by Congress. Since Constitutional amendments require a two-thirds majority vote in both chambers of Congress to pass, a vote for a Balanced Budget Amendment would require more support than the Cut, Cap and Balance Act bill achieved in the House vote.\nJuly 22, 2011: The Senate voted along party lines to table the Cut, Cap and Balance Act; 51 Democrats voting to table it and 46 Republicans voting to bring it to a debate. Senate Majority Leader Harry Reid called the Act \"one of the worst pieces of legislation to ever be placed on the floor of the United States Senate\". Even had it passed Congress, Obama had promised to veto the bill.\nJuly 25, 2011: Republicans and Democrats outlined separate deficit-reduction proposals.\nJuly 25, 2011: Obama and Speaker of the House John Boehner addressed the nation separately over network television with regards to the debt ceiling.\nJuly 25, 2011: The bond market is shaken by a single $850 million futures trade betting on US default.\nJuly 29, 2011: The Budget Control Act of 2011 S. 627, a Republican bill that immediately raised the debt ceiling by $900 billion and reduced spending by $917 billion, passed in the House on a vote of 218\u2013210. No Democrats voted for it, and it also drew 'no' votes from 22 Republicans, who deemed it insufficiently tough on spending cuts. It allows the President to request a second increase in the debt ceiling of up to $1.6 trillion upon passage of the balanced-budget amendment and a separate $1.8 trillion deficit reduction package, to be written by a new \"joint committee of Congress\". Upon introduction into the Senate in the evening, the bill was immediately tabled on a 59\u201341 vote, including some Republican votes.\nJuly 30, 2011: The House of Representatives voted 173\u2013246 to defeat Senate Majority Leader Harry Reid's $2.4 trillion plan to reduce the deficit and raise the debt ceiling.\nJuly 31, 2011: President Barack Obama announced that leaders of both parties had reached an agreement to lift the debt ceiling and reduce the federal deficit. Separately, House Speaker John Boehner told Republicans that they had reached the framework for an agreement. Boehner revealed details of the agreement in a presentation to the House Republicans.\nAugust 1, 2011: The House passed a bipartisan bill by a vote of 269\u2013161. 174 Republicans and 95 Democrats voted 'yes'; 66 Republicans and 95 Democrats voted 'no'.\nAugust 2, 2011: The Senate passed the bill by a vote of 74\u201326. 28 Republicans, 45 Democrats, and 1 independent voted 'yes'; 19 Republicans, 6 Democrats, and 1 independent voted 'no'. President Obama signed the debt ceiling bill the same day, thus ending fears of a default. Obama also declared that the bill is an \"important first step to ensuring that as a nation we live within our means\".\nAugust 2, 2011: The date estimated by the Department of the Treasury that the borrowing authority of the US would be exhausted, if the debt ceiling crisis were not resolved.\nAugust 3, 2011: The Treasury increased the national debt by $238 billion.\nAugust 5, 2011: Standard &amp; Poor's lowered the credit rating of the United States from AAA to AA+, citing Congressional resistance to new revenue measures and uncontrolled growth of entitlement programs. The agency rated the long-term outlook as negative, citing uncertainty in debt growth dynamics.\nAugust 9, 2011. The US Federal Reserve announced it will keep interest rates at \"exceptionally low levels\" at least through mid-2013; it made no commitment for further quantitative easing. (Reuters) The Dow Jones Industrial Average and the New York Stock Exchange as well as other world stock markets, recovered after recent falls. (Wall Street Journal)\nAugust 15, 2011: The date estimated by the Fitch rating agency and the FRBNY primary dealer Jefferies &amp; Co that $29 billion of federal debt interest would have become due, thus triggering a technical sovereign default if the debt ceiling crisis had not been resolved. This, however, did not occur as the debt ceiling crisis was resolved by then.\n\n\n== See also ==\nBudget Control Act of 2011\nEuropean sovereign debt crisis\nHistory of United States debt-ceiling increases\n2007\u20132008 financial crisis\n2013 United States debt-ceiling crisis\n2023 United States debt-ceiling crisis\nUnited States Congress Joint Select Committee on Deficit Reduction\nUnited States federal government credit-rating downgrades\n1995\u20131996 United States federal government shutdowns\nSovereign default\n\n\n== References ==\n\n\n== External links ==\n\"U.S. Debt Ceiling: Costs and Consequences\" Archived September 8, 2013, at the Wayback Machine. Council on Foreign Relations. December 7, 2012.\n\"Obama vs. Boehner: Who Killed the Debt Deal?\". New York Times Magazine. March 28, 2012.\n\"Apple now has more cash than the U.S. government\". CNN. July 29, 2011.\n\"Understanding the Federal Debt Limit\". Concord Coalition. July 8, 2011. Archived from the original on July 27, 2011. Retrieved July 27, 2011.\n\"United States of America Long-Term Rating Lowered To 'AA+' On Political Risks And Rising Debt Burden; Outlook Negative\" (PDF). Standard &amp; Poor's. August 5, 2011.\n\"U.S. debt ceiling: How big is it and how often has it changed?\". the guardian. January 2013.",
"pageid": 32442495
},
{
"title": "2023 United States debt-ceiling crisis",
"content": "On January 19, 2023, the United States hit its debt ceiling, leading to a debt-ceiling crisis, part of an ongoing political debate within Congress about federal government spending and the national debt that the U.S. government accrues. In response, Janet Yellen, the Secretary of the Treasury, began enacting temporary \"extraordinary measures\". On May 1, 2023, Yellen warned these measures could be exhausted as early as June 1, 2023; this date was later pushed to June 5.The debt ceiling had been increased multiple times since the 2013 debt ceiling standoff, all without budgetary preconditions attached; the most recent increase was in December 2021. In the 2023 impasse, Republicans proposed cutting spending back to 2022 levels as a precondition to raising the debt ceiling, while Democrats insisted on a \"clean bill\" without preconditions, as had been the case in raising the ceiling three times during the Donald Trump administration.In the event the government runs out of funds, the Treasury would have to either default on payments to bondholders or immediately curtail payment of funds owed to various companies and individuals that had been mandated but not fully funded by Congress. Both situations would be expected to result in a global economic meltdown. Additionally, if the federal government were unable to issue new debt, it would have to balance its budget by imposing budget cuts that, in total, would equal 5% of the size of the American economy.Constitutional scholar Laurence Tribe said that a default would be unconstitutional due to the 14th Amendment and the government would be required to repay its debts despite hitting the debt ceiling. President Joe Biden said that he was considering invoking the 14th because he felt he had authority to do so, but questioned whether it could be done in time to avoid default given the possibility that it might be appealed.On May 27, Biden and House speaker Kevin McCarthy struck a deal to increase the debt-ceiling but cap federal spending; the resulting bill, the Fiscal Responsibility Act of 2023, passed the House on May 31 and the Senate on June 1. Biden signed it into law on June 3, bringing the crisis to an end.\n\n\n== Background ==\n\n\n=== The deficit and the national debt ===\n\n\n==== Federal budget and deficit ====\n\nIn 2019, just over 60% of the federal budget went to mandatory spending for programs like Social Security, Medicare, and Medicaid, with another 30% going to discretionary spending (half of which went to defense). The remaining 9% went to pay for interest on the debt. Meanwhile, both mandatory spending programs and interest on the debt were expected to take up increasing shares of the federal budget, while tax revenues were expected to be stagnant.In the fiscal year 2022, the federal government brought in $4.90 trillion but spent $6.27 trillion, with a net budget deficit of $1.38 trillion (the fourth-highest of the 21st century). In addition, it has run deficits every year since 2001, when it last ran a surplus. Financing a deficit requires that the government borrow money.However, based on Article 1, Section 8, Clause 2 of the United States Constitution, only Congress has the authority to borrow money \"on the Credit of the United States\".\n\n\n==== Debt ceiling ====\n\nThe United States debt ceiling is a legislative limit that determines how much debt the Treasury Department may incur. It was introduced in 1917, when Congress voted to give Treasury the right to issue bonds for financing America participating in World War I, rather than issuing them for individual projects, as had been the case in the past. In 1939, Congress gave the Treasury the right to issue and manage debt\u2014though it limited how much it could issue. From 1939 to 2018, the Treasury increased the debt ceiling 98 times, decreasing it five times. Whilst the Treasury can borrow money to pay for federal expenditures, it is limited in power by Congress.In other words, the Treasury can borrow money to pay for federal expenditures\u2014but only as much as Congress lets it.\n\n\n==== National debt ====\n\nSince 2009, America's national debt has nearly tripled, with annual federal deficits averaging close to $1 trillion since 2001. During the 21st century, it has gone up for various reasons, including tax cuts under Presidents Bush and Trump, wars in Iraq and Afghanistan, entitlements like Medicare Part D, and spending in response to the Great Recession and the COVID-19 pandemic. Currently, the U.S. is the industrialized country with the fourth highest debt-to-GDP ratio, behind Japan, Italy and Greece. Additionally, the national debt is forecast to be double the United States' GDP by 2051.\n\n\n==== Reducing the deficit and debt ====\nAccording to both policy experts and politicians, dealing with the deficit and debt will ultimately involve both raising taxes and decreasing spending. Past plans for taxes hikes have included reducing the number of deductions, increasing rates on higher earners, and making new taxes, while proposals for reducing spending have included reducing Social Security benefits, lowering payments for Medicaid and Medicare, and cutting defense spending, among others.However, it tends to be difficult to do so in practice, owing to citizens' reluctance to alter large programs like Social Security or the raising of taxes. Historically, no political party has been willing to reduce the deficit or debt when they have held power, although the issue is often a foundation of candidates' election campaigns.\n\n\n=== The U.S. dollar and borrowing ===\nThe United States dollar (used heavily in international trade) is considered to be the world's reserve currency for a variety of reasons, including the sheer magnitude of the American economy, America's geopolitical strength, the dollar's relative stability, and the market for U.S. debt.As well, the Compromise of 1790 (when Treasury Secretary Alexander Hamilton got both Secretary of State Thomas Jefferson and Representative James Madison to agree to take on Revolutionary War debts assumed by the states and the Continental Congress in exchange for locating the capital on the Potomac River by Virginia) played a role with this: Because Revolutionary War bondholders were paid 100 cents on the dollar, America made good on its debt and established good credit. This, in turn, helped contribute to the dollar becoming the world's reserve currency.As a result, foreign creditors (including China, Japan, and the United Kingdom) are large markets for the currency. This makes it easier for the U.S. government to finance the national debt, via being charged lower interest rates for borrowing money.\n\n\n== Reactions ==\n\n\n=== Congress and the president ===\nThe House of Representatives and the White House disagree on how to resolve this crisis. House Speaker Kevin McCarthy (R-CA) has called for negotiations to reduce federal spending in exchange for increasing the debt ceiling, including making possible cuts to Medicare, Medicaid, and Social Security, or otherwise possibly overhauling entitlements. In contrast, the Biden administration has declared that raising the debt ceiling is non-negotiable, and that Congress is obligated to increase it. Senate Minority Leader Mitch McConnell (R-KY) has said that there will be no default, though he has also said that dealing with the debt ceiling will be up to President Biden and Speaker McCarthy.As well, members of the House Freedom Caucus (and a few other Republicans who were not part of it, such as Representative Matt Gaetz) had raised a significant portion of funding for their 2022 election campaigns from small donors, which made it easier for them to resist pressure from business groups to raise the debt ceiling. Indeed, the debt ceiling fight was viewed by some as being an example of widening divisions between corporate America and the Republican Party, which had begun during the Trump presidency. On May 5, 2023 the president's senior advisor, Mitch Landrieu, appeared on TV to field questions on the White House response to the debt-ceiling crisis and the banking crisis. A week later, Landrieu held a press conference at the White House to underscore the serious threat to the national economy of the 'manufactured crisis' of the debt-ceiling standoff.\n\n\n=== Treasury Department ===\n\n\n==== Secretary Yellen's comments ====\nTreasury Secretary Janet Yellen told the Associated Press that, while she expected that Congress would eventually raise the debt ceiling, demanding spending cuts in exchange for doing so would be irresponsible and that increasing it was about ensuring that the federal government could pay for spending that Congress had already approved, rather than about new spending. Yellen made similar points in her January 13, 2023, letter to Congress, also warning that if they did not suspend or raise it, they would harm the American economy, the American people, and the global financial system's stability.\n\n\n==== \"Extraordinary measures\" ====\nAs a result of reaching the debt ceiling, the Treasury Department began considering implementation of \"extraordinary measures\" to prevent a default for a few months, so as to give Congress time to increase the debt ceiling, explained in a memo it issued on January 19, 2023. However, it would only be able to use them for a few months. Extraordinary measures are accounting maneuvers that the Treasury uses to enable the federal government to continue to meet its various financial obligations while there is an impasse over the debt ceiling. Said measures were first used by it in 1985, and Congress granted the Treasury permission to continue using them the following year.Secretary Yellen also initiated a \"debt issuance suspension period\" through June 5, and has rejected the minting of a trillion-dollar coin (which would have created $1 trillion in seigniorage).\n\n\n=== Markets ===\nAnalysts were monitoring the ongoing debate over raising the debt ceiling, and were keeping investors informed of it and similarly warning about the potential consequences of a default. However, as of January 23, 2023, markets were not reacting to the debt ceiling debate, as the expectation was that the debt ceiling would be raised in time to prevent default. Analysts wrote that, with the exception of the 2011 debt ceiling crisis, markets had historically not reacted to debates over raising it. On the other hand, they wrote that if the debt ceiling wasn't increased as the deadline for doing so drew nearer, stock prices would start dropping and interest rates would begin to rise.On May 5, 2023, European credit rating agency Scope placed the United States' AA sovereign rating under review for downgrade.\n\n\n== Responses and analysis ==\n\n\n=== Comparisons to the 2011 debt ceiling crisis ===\n\nThe Associated Press has noted similarities between the 2023 debt ceiling crisis and the one in 2011, including how both involved the GOP-controlled House of Representatives demanding spending cuts in exchange for increasing the debt limit.In 2011, both the House and the Obama administration negotiated for months on it until talks collapsed. As a result, markets experienced turmoil, with the S&amp;P 500 dropping by over 16% in the final month before the deadline. In August 2011, two days before the government would have defaulted, there was a compromise between Democrats and Senate Republicans to create a committee to look into cutting spending, and to also increase the debt ceiling. As a result of the near-default, America's credit rating was downgraded to AA+ by Standard and Poor's, as American borrowing costs went up by $1.3 billion that year.\n\n\n=== Potential consequences of a default ===\nIncreasing political polarization since 2011 has made votes to raise the debt ceiling more contentious than before, with economists now considering what would happen if the federal government defaulted on its loans. One analysis from September 2021 (during a previous debt limit standoff) said that, if the federal government defaulted, America's credit rating would experience a drastic downgrade, interest rates on Treasury bonds would go up sharply, interest rates both in the U.S. and worldwide would spike, and payments on benefits (such as social security) and salaries for the military would be stopped. Other potential consequences of a default would include reduced consumer confidence, a recession, immediately stopping about 10% of the American economy, increasing the cost of a 30-year mortgage, losing three million jobs in the U.S., and increasing the national debt due to higher interest rates.Moody's Analytics warned that Congress may not be able to avoid breaching the debt limit. This warning was based on both the difficulty the House had in electing Kevin McCarthy as Speaker, and how some lawmakers (mostly Republican) were wondering if the Treasury would be able to prioritize paying bondholders if it was breached.\n\n\n=== Fundraising off of the debt ceiling fight ===\nEven with the ongoing fight over raising the debt ceiling, party leaders in Congress were busy raising money, with Republican Congressional leaders raising about $10.4 million and Democratic ones raising $5.7 million during the first three months of 2023.A number of moderate and progressive Democrats in the House and Senate had explicitly brought up the current debt ceiling fight in fundraising appeals to their supporters, and had framed it in terms of warning about potential consequences of a default. Messages about this came from Senate Majority Leader Chuck Schumer, moderates like senators Jon Tester and Sherrod Brown, and progressives like Representative Alexandria Ocasio-Cortez and Senator Elizabeth Warren.Meanwhile, Republican Senator Tim Scott explicitly brought up the debt ceiling fight in his fundraising emails, though he wrote about it in terms of limiting government spending. At the same time, far Right Republicans in Congress had been using the debt ceiling over the past few years to galvanize their supporters and to do fundraising based on it.\n\n\n=== Possible scenarios for how the impasse would end ===\nIn March 2023, economists with Moody's Analytics analyzed five different scenarios for dealing with the debt limit. They included the following in their report on this:\nIncreasing it right before x-date without any conditions (possibly by suspending it until October 1, and then increasing it again to last until sometime in early 2025), thereby avoiding damage to the economy. This would also be what they had done on previous occasions when there was debate over increasing the debt ceiling, and which report indicated would be the most likely possibility for resolving it this time.\nUnilateral action by the executive branch to avert default, which could include:President Biden invoking the 14th Amendment (Section 4) in case no agreement had been made by x-date to increase the debt ceiling. Though it would avert default, it could cause a constitutional crisis and the Supreme Court could have to intervene.\nThe Treasury minting a trillion-dollar coin with its authority under 31 U.S.C. Section 5112, depositing it at the Federal Reserve, and drawing it down to pay the government's bills.\nThe Treasury issuing premium bonds rather than par bonds as Treasury debt comes due, lowering the face amount of debt outstanding and subject to the debt limit.The Treasury prioritizing payments for a few days, which would cause interest rates to spike, would cause chaos in the markets, and would increase the odds of a mild recession starting in late 2023. As well, it is unknown if the Treasury Department would be legally allowed to do this, or if it would be able to, plus effects on the United States' credit rating are unknown.\nAdopting ideas the House Republicans were suggesting in March 2023, including cutting both Medicaid and nondefense-related discretionary spending. Results of this would include a recession and reduced economic growth for the next decade (the borrowing would be significantly reduced, so interest rates would be lower), with people with lower incomes being more likely to suffer financially due to losing both government benefits and jobs.\nA lengthy default that would last for weeks. Results of this would include Treasury debt being downgraded by credit rating agencies, reduced treasury spending, a severe recession, higher interest rates, and a long-term diminution of the U.S. dollar's status as the world's reserve currency, among other effects.\n\n\n== Potential debt ceiling workarounds ==\n\n\n=== Fourteenth Amendment ===\n\nWhile the Fourteenth Amendment, ratified in 1866, is more widely known for its provisions granting citizenship to freed slaves and establishing equal rights, it also contains a long-forgotten provision, Section 4, that states, in part, \"The validity of the public debt of the United States, authorized by law, including debts incurred for payment of pensions and bounties for services in suppressing insurrection or rebellion, shall not be questioned.\" With former Confederate states being admitted back into the Union at the time of the 14th amendment's ratification, many pro-Union members of Congress feared that if the South were to take back a significant amount of Congress, or were to retake the Presidency, they would refuse to pay the debt incurred by the Union during the Civil War, or pay debts incurred by the Confederacy to support its war effort against the United States. Section 4 confirmed the legitimacy of all U.S. debt to stop this from ever happening.\nWhile Section 4's original purpose has long become moot, many constitutional legal scholars believe that Section 4 of the 14th amendment makes the debt ceiling unconstitutional. President Biden could, in theory, end the crisis by avoiding Congress altogether, issuing an executive order invoking Section 4 and ordering the Treasury to continue making payments, even if that pushed the public debt above $31.4 trillion.\nHowever, an invocation of the 14th amendment by President Biden would come with serious pitfalls. Legal scholars are divided as to whether or not it would be legally permissible for Biden to take such an action. His executive order might not be accepted by the courts, and even if it were eventually upheld by the United States Supreme Court, the uncertainty leading up to a decision might cause turmoil in the markets and a spike in interest rates.\n\n\n=== Trillion-dollar coin ===\n\nIn 1997, Congress passed a law that vested power to the Treasury to mint commemorative platinum coins of any denomination. The law, 31 U.S.C. Section 5112, was originally intended to help the Treasury make money off of coin collectors, an idea penned by Delaware's at-large representative, Republican Mike Castle. The text of the statute did not specify any limitations on how high the denomination of the coin could be.An idea, which first emerged just prior to the 2011 debt ceiling crisis, is that the Treasury Secretary could instruct the US Mint to issue a trillion-dollar coin, and deposit it with the Federal Reserve.According to economist Mark Zandi, using the coin in such a way would be inflationary. An opinion article in National Review likened it to the government \"printing money\" to pay off debt. However, according to economist Paul Krugman, the move would not be inflationary, saying on Twitter, \"The Fed would surely sterilize any impact on the monetary base by selling off some of its huge portfolio of US debt.\"Current Treasury Secretary Janet Yellen dismissed the plan as a \"gimmick\", saying that the Federal Reserve isn't required to accept the coin for deposit, and likely would not. Krugman expressed a different opinion, saying on Twitter, \"As for claims that Powell would refuse to accept the coin, or the Supremes would block premium bonds \u2014 well, nobody knows. But my guess is that nobody wants to be the guy who destroys the world economy. Even people happy to see it burn don't want their fingerprints on it.\"\n\n\n== Attempts to raise the debt ceiling ==\nHaving recently regained control of the House, Republicans demanded deep spending cuts as a precondition to raising the debt ceiling, while Democrats insisted on a \"clean bill\" without preconditions, as had been the case in raising the ceiling in 2017, 2018, and 2019, during the Trump administration.\n\n\n=== Meetings between Biden and McCarthy ===\n\n\n==== February ====\nOn Wednesday, February 1, 2023 President Biden and Speaker McCarthy met for an hour in the Oval Office to discuss how to raise the debt ceiling. The two did not reach agreement \u2013 the president called for a clean debt ceiling increase, while the speaker demanded cuts to spending in exchange for raising it \u2013 though both agreed they would continue talking about it.\n\n\n==== May ====\nBiden and McCarthy met several times in May to try and find a way to solve the crisis, ultimately coming to an agreement on May 27.\n\n\n=== March 9 presidential budget ===\nOn March 9, 2023, President Biden released a potential budget for 2023. At 184 pages, this budget included $3 trillion to reduce the deficit, with savings largely coming from increased taxes on the wealthy and corporations.\n\n\n=== Limit, Save, Grow Act ===\nOn April 19, Speaker McCarthy unveiled the Limit, Save, Grow Act, a 320-page House bill which would have raised the debt ceiling by $1.5 trillion (enough to last until at least March 31, 2024), while at the same time providing for significant spending cuts. More specifically, the proposals contained in the draft law included eliminating the partial federal student loan forgiveness program started by the Biden administration, introducing work requirements for Medicaid, eliminating IRS enforcement funding for audits, and getting rid of many clean energy subsidies.In its April 25 analysis of the bill, the Congressional Budget Office estimated that it would reduce federal budget deficits from 2023 to 2033 by a total of around $4.8 trillion, with two-thirds of that coming from reduced discretionary outlays and the rest coming from lower mandatory spending, increased Revenue, and lower interest payments on the national debt.Responses to the bill were mixed. House Budget Committee Chairman Jodey Arrington, who filed the bill, criticized the Biden administration's spending while saying that the plan would address that. Meanwhile, the House Budget Committee's Democratic members referred to it as \"The Default on America Act\", or DOA for short. President Biden said on April 25 that, should the bill pass Congress, he will veto it.It was originally reported that a considerable amount of Republican Representatives would not have supported the bill. However, on April 26, following several days of negotiations and last-minute changes to the bill, the latter managed to pass in the House of Representatives by a vote of 217 to 215, with Republicans Andy Biggs of Arizona, Ken Buck of Colorado, Tim Burchett of Tennessee and Matt Gaetz of Florida joining all Democrats in voting against it.The bill was highly unlikely to pass in the Senate. However, it was viewed by House Republicans as a stepping stone for further negotiations with President Biden on the debt ceiling and spending cuts.\n\n\n=== Discharge petition ===\nOn May 17, Democratic Representative Brendan Boyle introduced a discharge petition to force a vote on House Resolution 350, a special rule providing for immediate consideration of the so-called Breaking the Gridlock Act and of one amendment to the same, which is to be offered by the most senior ranking minority member of the Committee on Ways and Means. Democrats intended to use the amendment to replace the original text of the draft law in its entirety, turning it into a bill raising the debt ceilingBy May 27, all 213 Democratic representatives had signed the petition. Nonetheless, the petition failed to obtain the 218 signatures needed in order for it to be successful because no Republican signed it.\n\n\n== Agreement ==\n\nOn May 29, Patrick McHenry introduced the Fiscal Responsibility Act of 2023, a bipartisan piece of legislation implementing the agreement between Biden and McCarthy. The bill, which was endorsed by both Republican and Democratic leadership, includes the following provisions:\nThe debt limit is suspended until January 1, 2025.\nDiscretionary spending is capped during fiscal years 2024 and 2025.\nAll unused funds appropriated during the COVID-19 pandemic are rescinded.\nAbout a quarter of the $80 billion of additional funding for the Internal Revenue Service provided for in the Inflation Reduction Act of 2022 are rescinded.\nThe administration is required to operate under a PAYGO system: any executive regulation whose implementation costs more money than it brings in can only be made if an equal or greater amount of money is rescinded from other federal programs; this system is waivable by the Office of Management and Budget.\nThe student loans payment moratorium enacted in 2020 ends on September 1, 2023; the partial student loan forgiveness plan introduced by the Biden administration remains unaffected.\nWork requirements for adult SNAP recipients with no dependents are broadened so as to apply to those aged under 51 in fiscal year 2023, to those aged 53 in fiscal year 2024, and to those aged under 55 in fiscal years 2025 to 2030 (currently, only those under 50 are required to work in order to be eligible). Veterans and homeless people are exempt from this provision.\nObtaining a federal permit for energy projects is made easier, especially for what concerns the Mountain Valley Pipeline.On May 30, the Rules Committee agreed to send the bill to the Floor of the House by a vote of 7 to 6, with Republicans Ralph Norman and Chip Roy joining all Democratic members of the Committee in voting against. The bill passed the House on May 31 and the Senate on June 1. Biden signed it into law on June 3.\n\n\n=== Vote summaries ===\n\n\n==== House of Representatives ====\n\n\n==== Senate ====\n\n\n== See also ==\nHistory of the United States debt ceiling\n1995\u20131996 United States federal government shutdowns, which included a dispute about the debt ceiling\n2011 United States debt-ceiling crisis\n2013 United States debt ceiling crisis\n\n\n== Notes ==\n\n\n== References ==\n\n\n== External links ==\nReport: How America Amassed $33 Trillion in Debt",
"pageid": 72793291
},
{
"title": "2013 United States debt-ceiling crisis",
"content": "In January 2013, the United States reached the, at the time, debt ceiling of $16.394 trillion that had been enacted following a crisis in 2011. President Obama and members of the Democratic Party proposed raising the debt ceiling, with some advocating for its complete dismissal. Members of the Republican Party staunchly opposed raising the debt ceiling unless spending cuts would parallel the bill, including defunding the Affordable Care Act. Previous raises of the debt ceiling have been largely bipartisan without conditions.\nThe debt ceiling issue was one of the causes for the 2013 government shutdown, and a lack of a budget bill over the issue forced the government to sequester its budget.\nThe crisis, as well as the government shutdown, ended on October 17, 2013, with the passing of the Continuing Appropriations Act, 2014.\n\n\n== Background ==\n\nAfter the passing in early January 2013 of the American Taxpayer Relief Act of 2012 to avert the projected fiscal cliff, political attention shifted to the debt ceiling. The debt ceiling had technically been reached on December 31, 2012, when the Treasury Department commenced \"extraordinary measures\" to enable the continued financing of the government.The debt ceiling is part of a law (Title 31 of the United States Code, section 3101) created by Congress. According to the Government Accountability Office, \"The debt limit does not control or limit the ability of the federal government to run deficits or incur obligations. Rather, it is a limit on the ability to pay obligations already incurred.\" It does not prohibit Congress from creating further obligations upon the United States. The ceiling was last set at $16.4 trillion in 2011.On January 15, 2013, Fitch Ratings warned that delays in raising the debt ceiling could result in a formal review of its credit rating of the U.S., potentially leading to it being downgraded from AAA. Fitch cautioned that a downgrade could also result from the absence of a plan to bring down the deficit in the medium term. Additionally, the company stated that \"In Fitch's opinion, the debt ceiling is an ineffective and potentially dangerous mechanism for enforcing fiscal discipline.\"\n\n\n== Debate ==\nIn a press conference held on January 14, 2013, President Obama stated that not raising the debt ceiling would cause delays in payments including benefits and government employees' salaries and lead to default on government debt. President Obama urged Congress to raise the debt ceiling without conditions to avoid a default by the United States on government debt. Raising the debt ceiling was also supported by Ben Bernanke, chairman of the Federal Reserve.\nRepublican Speaker of the House, John Boehner and the Senate Republican minority leader, Mitch McConnell as well as other Republicans argued that the debt ceiling should not be raised unless spending is cut by an amount equal to or greater than the debt ceiling increase. Republicans also argued that the Treasury can avoid debt default by prioritizing interest payments on government debt over other obligations. Heritage Action for America, the Family Research Council and the Club for Growth argued that a rise in the debt ceiling should be accompanied by a plan to balance the budget within ten years, through reduced spending in the discretionary budget as well as for entitlements.Several Democratic House members, including Peter Welch, proposed removing the debt ceiling altogether. This proposal found support from some economists such as Jacob Funk Kirkegaard, a senior fellow at the Peterson Institute for International Economics. A survey of 38 economists found that 84% agreed that a separate debt ceiling that is periodically increased could lead to uncertainty and poor fiscal outcomes.\n\n\n== Debt ceiling suspension ==\nIn mid-January, Paul Ryan, Chairman of the House Budget Committee, floated the idea of a short-term debt ceiling increase. He argued that giving Treasury enough borrowing power to postpone default until mid-March would allow Republicans to gain an advantage over Obama and Democrats in debt ceiling negotiations. This advantage would be due to the fact that postponing default until mid-March would allow for a triple deadline to be in March: the sequester on March 1, the default in the middle of the month, and the expiration of the current continuing resolution and the resulting federal government shutdown on March 27. This was supposed to provide extra pressure on the Senate and the President to work out a deal with the Republican-led House.Shortly after that, the House learned that the Senate had not passed an independent budget plan since April 2009. House Republicans quickly came up with an idea that would suspend the debt ceiling enough to allow time for both chambers of Congress to pass a budget.On February 4, 2013, President Obama signed into law the \"No Budget, No Pay Act of 2013\", which suspended the U.S. debt ceiling through May 18, 2013. The bill was passed in the Senate one week previously by a vote of 64\u201334, with all \"no\" votes from Republican senators, who were critical of the lack of spending cuts that accompanied an increase in the limit. In the House, the bill passed the week before by a vote of 285\u2013144, with both parties voting in favor. In the House, Republican representatives attached a provision to mandate the temporary withholding of pay to members of Congress if they did not produce a budget plan by April 15. Pay would be reinstated once a budget was passed or on January 2, 2015 (the last day of the 113th Congress), whichever came first. Under the law, the debt ceiling would be set on May 19, 2013, to a level \"necessary to fund commitment incurred by the Federal Government that required payment.\"\n\n\n=== Developments during suspension ===\n\nOn March 1, the sequester, cutting $1.2 trillion over the next decade, went into effect after the parties failed to reach a deal. On March 21, the House passed a FY 2014 budget that would balance the United States budget in 2023. This was a shorter period than envisaged in their 2013 budget, which balanced in 2035, and the 2012 budget, which balanced in 2063. It passed the House on a mostly party-line 221\u2013207 vote. However, later that day, the Senate voted 59\u201340 to reject the House Republican budget. On March 23, the Senate passed its own 2014 budget on a 50\u201349 vote. The House refused to hold a vote on the Senate budget. On April 10, the President released his own 2014 budget, which was not voted on in either house of Congress. Throughout March and April, there were several developments that reduced the sequester's impact. The bill that extended the government's continuing resolution to September 30 lessened the sequester's effect on defense, and later bills removed furloughs for air traffic control and food service industries.\n\n\n=== Debt ceiling reached again ===\nOn May 19, the debt ceiling was reinstated at just under $16.7 trillion to reflect borrowing during the suspension period. As there was no provision made for further commitments after the ceiling's reinstatement, Treasury began applying extraordinary measures once again.Despite earlier estimates of late July, Treasury announced that default would not happen \"until sometime after Labor Day\". Other organizations, including the Congressional Budget Office (CBO), projected exhaustion of the extraordinary measures in October or possibly November.On August 26, 2013, Treasury informed Congress that if the debt ceiling was not raised in time, the United States would be forced to default on its debt sometime in mid-October.On September 25, Treasury announced that extraordinary measures would be exhausted no later than October 17, leaving Treasury with about $30 billion in cash, plus incoming revenue, but no ability to borrow money. The CBO estimated that the exact date on which Treasury would have had to begin prioritizing/delaying bills and/or actually defaulting on some obligations would fall between October 22 and November 1.\n\n\n== October 2013 debt ceiling debate ==\nObama and Republicans disagreed on the terms of raising the nation's debt limit, and even as to whether the debt limit should even be a subject of negotiation.\nHouse Republicans described a number of policies they wanted to enact before they would agree to increasing the debt ceiling beyond October 2013:\nLong term debt ceiling increase (allowing Treasury to borrow for the rest of Obama's term): privatize Medicare and/or Social Security.\nMedium term debt ceiling increase (allowing Treasury to borrow until sometime in 2015): cut food stamps, use the chained consumer price index (CPI), tax reform, agree to enact block-grant Medicaid or a large raise in the retirement age.\nShort term debt ceiling increase (postponing default until sometime in the first half of 2014): means testing of Social Security, a small raise in the retirement age or ending agricultural subsidies.Obama, in turn, asserted that the 2013 sequestration cuts already represented a budget compromise, and that he did not intend to negotiate further on the issue of debt repayment. However, the president said that he would be willing to negotiate on almost any issue after a clean bill to reopen the government and increase the debt ceiling had been passed.In September 2013 the House of Representatives drafted a bill that would postpone default for approximately twelve months from its passage. The bill also included a one-year delay in implementation of the Patient Protection and Affordable Care Act, a requirement for both houses of Congress to vote on tax reform plans by the end of 2013, and a fast-track process to begin construction of the Keystone XL Pipeline. However, the bill was not voted on by the House or Senate due to some members of the House Republican caucus believing that the bill did not make deep enough spending cuts to be worthy of Republican support.\nThe US Government went into a partial shutdown on October 1, 2013, with about 800,000 Federal employees being put on temporary leave. Treasury Secretary Jack Lew reiterated that the debt ceiling would need to be raised by October 17.In early October 2013, the House drafted a bill that would raise the debt ceiling without conditions through November 22, but keep the partial government shutdown in place. However, it died due to insufficient support among both House Republicans and House Democrats.\n\n\n== Resolution ==\nOn October 16, the Senate passed the Continuing Appropriations Act, 2014, a continuing resolution, to fund the government until January 15, 2014, and suspending the debt ceiling until February 7, 2014, thus ending the 2013 United States federal government shutdown and debt-ceiling crisis.\nIt set up a House\u2013Senate budget conference to negotiate a long-term spending agreement, and strengthened income verification for subsidies under the Patient Protection and Affordable Care Act. The Senate vote was 81\u201318 in favor, with 1 member absent due to illness. The House passed the bill unamended later that day, by a vote of 285\u2013144, with 3 members absent due to illness. The President signed the bill early the next morning on October 17. Under the resolution, the debt ceiling debate and partial government shutdown were postponed, with federal workers returning to work on October 17.On January 14, 2014, the House and the Senate Appropriations Committees agreed on a spending plan that would fund the federal government for two years. A bill extending the previous continuing resolution through January 18 was also passed. On January 16, 2014, Congress passed a $1.1 trillion appropriations bill that will keep the federal government funded until October 2014. President Obama signed the appropriations bill into law on January 18.On February 7, 2014, the debt limit suspension expired and treasury began applying extraordinary measures once again, warning that such measures would not last beyond February 27 due to large tax refunds that would need to be paid during February. On February 11, after finding insufficient support for various conditions for increasing the debt ceiling, the House passed a bill suspending the debt ceiling without conditions through March 15, 2015. The Senate passed the bill unamended on February 12, 2014, and it was signed into law as Public Law 113-83 by the President on February 15.\n\n\n== Reaction ==\n\n\n=== Effect on United States debt rating ===\nJust as during the 2011 debt ceiling crisis, the 2013 crisis caused rating agencies to re-evaluate the rating of US government debt. On October 15, Fitch Ratings placed the United States under a \"Rating watch negative\" in response to the crisis. On October 17, Dagong Global Credit Rating downgraded the United States from A to A\u2212, and maintained a negative outlook on the country's credit.\n\n\n=== Effect on the U.S. Stock Market ===\nAccording to a Morningstar analysis of debt-ceiling and government shutdown situations, the U.S. stock market remained relatively unchanged during the 2013 crisis period.\n\n\n=== Political aftermath ===\nIn the immediate aftermath of the crisis opinion polls showed approval to drop for the Republican Party. Polls showed that Americans blamed the Republicans more for the shutdown than President Barack Obama by a margin of 22 points (53 percent to 31 percent). Another poll showed a 74% disapproval rating of the way Republicans handled the crisis while 61% disapproved of the way Democrats handled the budget talks. According to a Gallup Poll, \"60 percent of respondents said that a third major party is needed to represent the American people\", an all-time high.\n\n\n== See also ==\nBudget Control Act of 2011\nEuropean sovereign debt crisis\nHistory of United States debt ceiling\n2007\u20132008 financial crisis\nUnited States Congress Joint Select Committee on Deficit Reduction\nUnited States federal government credit-rating downgrades\n2011 United States debt-ceiling crisis\n2023 United States debt-ceiling crisis\n2013 United States federal government shutdown\n1995\u20131996 United States federal government shutdowns\n\n\n== References ==",
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"title": "United States debt ceiling",
"content": "In the United States, the debt ceiling or debt limit is a legislative limit on the amount of national debt that can be incurred by the U.S. Treasury, thus limiting how much money the federal government may pay by borrowing more money, on the debt it already borrowed. The debt ceiling is an aggregate figure that applies to gross debt, which includes debt in the hands of the public and intra-government accounts. About 0.5 percent of the debt is not covered by the ceiling (as of 10/2013). Because expenditures are authorized by separate legislation, the debt ceiling does not directly limit government deficits. In effect, it can only restrain the Treasury from paying for expenditures and other financial obligations after the limit has been reached, but which have already been approved (in the budget) and appropriated.\nThere is a debate among legal scholars regarding the constitutionality of the debt ceiling. Some scholars argue that the debt ceiling does not provide the legal authority for the United States to default on its debt. Some also argue that the debt ceiling itself is unconstitutional since it does not provide a clear mechanism for the government to meet its constitutional obligation to repay its debts once it meets the borrowing limit.When the debt ceiling is reached without an increase in the limit having been enacted, Treasury will need to resort to \"extraordinary measures\" to temporarily finance government expenditures and obligations until a resolution can be reached. The Treasury has never reached the point of exhausting extraordinary measures, resulting in a constitutionally questionable default, although, on some occasions, it appeared that Congress might allow a default to take place. If this situation were to occur, it is unclear whether the Treasury would be able to prioritize debt payments to avoid a default on its bond obligations. A protracted default could trigger a variety of economic problems including a financial crisis, and a decline in output that would put the country into an economic recession.Management of the United States public debt is an important part of the macroeconomics of the United States economy and finance system, and the debt ceiling is designed to be a constraint on the executive's ability to manage the U.S. economy. There is debate, however, on how the U.S. economy should be managed, and whether a debt ceiling is an appropriate or constitutional mechanism for restraining government spending.The most recent time that the debt ceiling was raised was on June 3, 2023, when U.S. president Joe Biden signed the Fiscal Responsibility Act of 2023 into law ending the 2023 United States debt-ceiling crisis that began on January 19, 2023. The debt limit extends into 2025. Previously, in December 2021, the debt ceiling was raised when it was increased by $2.5 trillion, to $31.381 trillion, which lasted until January 2023.\n\n\n== Background ==\nUnder Article I Section 8 of the United States Constitution, only Congress can authorize the borrowing of money on the credit of the United States. From the founding of the U.S. until 1917, Congress directly authorized each debt issued. To provide more flexibility to finance the United States' involvement in World War I, Congress modified the method by which it authorized debt in the Second Liberty Bond Act of 1917. Under this Act, Congress established an aggregate limit, or \"ceiling,\" on the total amount of new bonds that could be issued.\nThe present debt ceiling is an aggregate limit applied to nearly all federal debt, which was substantially established by the Public Debt Acts of 1939 and 1941 which have subsequently been amended to change the ceiling amount.\nFrom time to time, political disputes arise when the Treasury advises Congress that the debt ceiling is about to be reached and indicates that a default is imminent. When the debt ceiling is reached, and pending an increase in the limit, Treasury may resort to \"extraordinary measures\" to buy more time before the ceiling can be raised by Congress. The U.S. has never reached the point of default where the Treasury was incapable of paying U.S. debt obligations, though it has been close on several occasions. The only exception was during the War of 1812 when parts of Washington D.C. including the Treasury were burned.In 2011, the U.S. reached a crisis point of near default on public debt. The delay in raising the debt ceiling resulted in the first downgrade in the United States credit rating, a sharp drop in the stock market, and an increase in borrowing costs. Congress raised the debt limit with the Budget Control Act of 2011, which added to the fiscal cliff when the new ceiling was reached on December 31, 2012.\n\n\n== Relationship to federal budget ==\nThe process of setting the debt ceiling is separate and distinct from the United States budget process, and raising the debt ceiling neither directly increases nor decreases the budget deficit, and vice versa. The Government Accountability Office explains, \"the debt limit does not control or limit the ability of the federal government to run deficits or incur obligations. Rather, it is a limit on the ability to pay obligations already incurred.\"The President formulates a federal budget every year, which Congress must pass, sometimes with amendments, in a concurrent resolution, which does not require the President's signature and is not binding. The budget details projected tax collections and expenditures and, therefore, specifies the estimated amount of borrowing the government would have to do in that fiscal year.\n\n\n=== Debt not covered by ceiling ===\nIn December 2012, the Treasury calculated that $239 million in United States Notes were in circulation, which in accordance with the debt ceiling legislation, are excluded from the statutory debt limit. The $239 million excludes $25 million in U.S. Notes issued prior to July 1, 1929, determined pursuant to Act of June 30, 1961, 31 U.S.C. 5119, to have been destroyed or irretrievably lost.Debts of the Federal Financing Bank are not debts of the government per se and therefore are also not subject to the ceiling, but have a separate limit of $15 billion.\n\n\n== Legislative history ==\n\nBefore 1917, the U.S. had no debt ceiling. Congress either authorized specific loans or allowed the Treasury to issue certain debt instruments and individual debt issues for specific purposes. Sometimes Congress gave the Treasury discretion over what type of debt instrument would be issued. 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.In 1953, the U.S. Treasury risked reaching the debt ceiling of $275 billion. Though President Eisenhower requested that Congress increase it on July 30, 1953, the Senate refused to act on it. As a result, the president asked federal agencies to reduce how much they spent, plus the Treasury Department used its cash balances with banks to stay under the debt ceiling. And, starting in November 1953, Treasury monetized close to $1 billion of gold left over in its vaults, which helped keep it from exceeding the $275 billion limit. During spring and summer 1954, the Senate and the executive branch negotiated on a debt ceiling increase, and a $6 billion one was passed on August 28, 1954.Before the Budget and Impoundment Control Act of 1974, the debt ceiling played an important role in enabling Congress to hold hearings and debates on the budget. James Surowiecki argued that the debt ceiling lost its usefulness after these reforms to the budget process.In 1979, noting the potential problems of hitting a default, Dick Gephardt imposed the \"Gephardt Rule,\" a parliamentary rule that deemed the debt ceiling was 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-controlled Congress in 1995.A vote to increase the debt ceiling has usually been (since the 1950s) a legal budgetary formality between the President and Congress. As of 1993 the debt ceiling had not historically been a political issue that would make the elected government fail to pass a yearly budget.\n\n\n=== Debt ceiling increases under Presidents Ronald Reagan and George H. W. Bush ===\nUnder the two terms of President Ronald Reagan, the House was controlled by Democrats, and the Senate was, at various points, under the control of both parties. Early in his term, Reagan faced some bipartisan resistance from Congress for a 1981 raising of the debt limit. But Democrats, using the Gephardt Rule, joined with Republicans to increase the debt ceiling eighteen separate times.Under President George H.W. Bush, Democrats controlled both the House and Senate. Again using the Gephardt Rule, Congress increased the debt ceiling nine times without controversy.\n\n\n=== Debt ceiling increases under President Bill Clinton ===\n\nThe debt-ceiling debate of 1995 led to a showdown on the federal budget and resulted in the U.S. federal government shutdowns of 1995 and 1996.\n\n\n=== Debt ceiling increases under President George W. Bush ===\nWhile George W. Bush was President, both Republicans and Democrats controlled the House and the Senate at various points during his term. Congress increased the debt ceiling eight times in 2002, 2003, 2004, 2006, 2007, and twice in 2008.When Republicans were in the majority, they consistently voted to increase the debt ceiling. While some Democrats did vote against the debt ceiling when the process was controlled by a Republican majority, Democrats did not filibuster debt limit increases in 2003, 2004 and 2006, allowing Senate Republicans to raise the debt limit with a simple majority.When Democrats controlled the House and the Senate in the last two years of George W. Bush's term, Democratic majorities in the House and the Senate reinstated the automatic Gephardt Rule and increased the debt ceiling three times without attaching preconditions.\n\n\n=== Debt ceiling increases under President Barack Obama ===\n\nIn 2011, Republicans took control of Congress and again suspended the Gephardt Rule as they had under Clinton. The Republican majority in Congress demanded deficit reduction as part of raising the debt ceiling. The resulting contention was resolved on August 2, 2011, by the Budget Control Act of 2011. Under the \"McConnell Rule,\" the president was allowed to unilaterally raise the debt ceiling. This action could be overturned by an act of Congress, but this would require a 2\u20443 majority vote in both houses assuming that the president vetoed the act.On August 5, 2011, Standard &amp; Poors issued the first ever downgrade in the federal government's credit rating, citing their April warnings, the difficulty of bridging the parties and that the resulting agreement fell well short of the hoped-for comprehensive 'grand bargain'. The credit downgrade and debt ceiling debacle contributed to the Dow Jones Industrial Average (DJIA) falling nearly 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.Following the increase in the debt ceiling to $16.394 trillion in 2011, the U.S. 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. Extraordinary measures were expected to be exhausted by February 15.Another debt ceiling crisis arose in early 2013 when the ceiling was reached again, and the Treasury adopted extraordinary measures to avoid a default. The Treasury said it was not set up to prioritize payments and had given the opinion that it is unclear whether 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 was not raised. Economists estimated that such an action would cause GDP to contract by 7 percent, which is larger than the contraction during 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 the freeze in their revenue.The 2013 crisis was temporarily resolved on February 4, 2013, when President Barack Obama signed the No Budget, No Pay Act of 2013 which suspended the debt ceiling 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. During the suspension period, the Treasury was authorized to borrow to the extent that it \"is required to meet existing commitments\". On May 19, the debt ceiling was raised by $306 billion to cover the borrowings done during the suspension period, as well as commitments that accrued in the preceding period that extraordinary measures were in place, which commenced on December 31, 2012.Treasury Secretary Jack Lew notified Congress that these measures would be exhausted by October 17, 2013 and that a default would occur on October 17 when interest payments came due. From October 17, 2013 until February 7, 2014, the debt ceiling was again suspended. On February 12, 2014, the Temporary Debt Limit Extension Act was passed, suspending the debt ceiling until March 15, 2015. At that time, the Treasury Department took extraordinary measures.The debt ceiling would again have been reached on November 3, 2015. But on October 30, 2015, the debt ceiling was again suspended to March 2017.\n\n\n=== Debt ceiling increases under President Donald Trump ===\nWhen Donald Trump was President, the debt ceiling was subject to less partisan controversy. The administration and the Republicans who controlled the House and the Senate prioritized tax cuts over a balanced budget.\nThe ceiling was suspended three times: from September 30, 2017, to December 8, 2017; from December 8, 2017 to March 1, 2019; and, after concerns were raised from Treasury in July 2019 of an unexpected shortfall due to reduced tax receipts under Trump's tax legislation, from August 2, 2019 to July 31, 2021.Congress did not impose any preconditions or significant spending cuts. Democrats in the Senate could have threatened to stop the debt ceiling increase by use of the filibuster but declined to do so.\n\n\n=== Debt ceiling increases under President Joe Biden ===\n\nDuring Biden's first two years as president, the House and Senate were both controlled by the Democratic Party. In October 2021, the debt ceiling was increased by $480 billion, as a temporary measure requiring fresh legislation by December 3, 2021. That month, Congress voted to increase it by $2.5 trillion, which President Biden signed into effect on December 16, 2021. At that point, it was set at about $31.4 trillion.On January 19, 2023, the United States hit its debt ceiling of $31.4 trillion. By this time, Republicans had taken control of the House during the 2022 midterm elections. Although Republicans were a minority in the Senate, they threatened for the first time in American history to use the filibuster to stop the debt ceiling increase. The crisis was resolved by negotiation of the Fiscal Responsibility Act of 2023.\n\n\n== Extraordinary measures ==\nThe Treasury Department is permitted to borrow funds needed to fund government operations, as had been authorized by congressional appropriations, up to the debt ceiling, with some small exceptions. In a letter to Congress on April 4, 2011, Treasury Secretary Timothy Geithner explained that when the debt ceiling is reached, the Treasury can declare a \"debt issuance suspension period\" during which it can take \"extraordinary measures\" to continue meeting federal obligations provided that it does not involve the issue of new debt. These measures are taken to avoid, as far as resources permit, a partial government shutdown or a default on the debt. These methods have been used on several previous occasions in which federal debt neared its statutory limit.Extraordinary measures can include suspending investments in the G Fund of the Thrift Savings Plan of individual retirement funds of federal employees. In 2011, extraordinary measures included suspending investments in the Civil Service Retirement and Disability Fund (CSRDF), the Postal Service Retiree Health Benefits Fund (Postal Benefits Fund), and the Exchange Stabilization Fund (ESF). In addition, certain CSRDF investments were also redeemed early. In 1985, the Treasury had also exchanged Treasury securities for non-Treasury securities held by the Federal Financing Bank.However, these amounts are not sufficient to cover government operations for extended periods. Treasury first implemented these measures on December 16, 2009, to avoid a government shutdown. These measures were implemented again on May 16, 2011, when Treasury Secretary Geithner declared a \"debt issuance suspension period\". According to his letter to Congress, this period could \"last until August 2, 2011, when the Department of the Treasury projects that the borrowing authority of the United States will be exhausted\".The measures were again implemented on December 31, 2012, the start of the debt ceiling crisis of 2013 with the default trigger date ticking to February 2013. The crisis was deferred with the suspension of the limit on February 4, and the cancellation of the extraordinary measures. The measures were again invoked at the end of the ceiling's suspension on May 19, 2013, with the date of exhaustion of the resources and the default trigger date being estimated by the Treasury as October 17. The ceiling was again suspended by legislation on that date until February 4, 2014.\n\n\n== Default on financial obligations ==\nAccording to the text of the debt ceiling law, if the debt ceiling is not raised and extraordinary measures are exhausted, the U.S. government is legally unable to borrow money to pay its financial obligations. At that point, the law indicates that the government must cease making payments unless the treasury has cash on hand to cover them. In addition, the law indicates that the government would not have the resources to pay the interest on (and some time redeem) government securities when due, which would be characterized as a default. A default may affect the United States' sovereign risk rating and the interest rate that it will be required to pay on future debt. As of 2012, the U.S. defaulted on its financial obligations once in 1979, due to a computer backlog, but the periodic crises relating to the debt ceiling have led several rating agencies to United States federal government credit-rating downgrades. As of 2012, the GAO estimated that the delay in raising the debt ceiling during the debt ceiling crisis of 2011 raised borrowing costs for the government by $1.3 billion in the fiscal year 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.As of 2012, some writers expressed the view that if extraordinary measures are exhausted, the executive branch has the authority to determine which obligations are paid and which are not, though the Treasury has argued that all obligations are on equal footing under the law. The writers have argued that the executive branch can choose to prioritize interest payments on bonds, which would avoid an immediate, direct default on sovereign debt. During the debt ceiling crisis of 2011, Treasury Secretary Timothy Geitner argued that prioritization of interest payments would not help since government expenditures would have needed to be cut by an unrealistic 40% if the debt ceiling is not raised. Also, a default on non-debt obligations would still undermine American creditworthiness according to at least one rating agency. In 2011, the Treasury suggested that it could not prioritize certain types of expenditures because all expenditures are on equal footing under the law. In this view, when extraordinary measures are exhausted, no payments could be made except when money (such as tax receipts) is in the treasury, at all and the U.S. would be in default on all of its obligations. The CBO notes, that prioritization would not avoid the technical definition found in Black's Law Dictionary where default is defined as \u201cthe failure to make a payment when due.\u201dMany scholars argue that debt ceiling law is unconstitutional and there is no legal basis by which the U.S. government may default on any of its debt. They point to Section Four of the 14th Amendment of the United States Constitution, which states that \"the validity of the public debt of the United States...shall not be questioned.\" They argue that it was unconstitutional for the U.S. Congress to pass the debt ceiling law in the first place, since the law does not provide a clear way for the U.S. to pay its debts and implicitly requires a default. Harvard University legal scholar Laurence Tribe argues that \"using the ceiling to make us default on our debts clearly would be unconstitutional.\" This argument has also been endorsed by various politicians, including President Bill Clinton, former labor secretary Robert Reich, Representative Jerry Nadler, and Representative James Clyburn. In 2023, a group of lawmakers from the Senate and House of Representatives sent a letter to President Biden encouraging him to consider invoking the 14th Amendment to pay government debts. However, there are scholars who argue that even if the law itself is unconstitutional, that determination must be made by the courts and the President does not have the authority to unilaterally ignore the debt ceiling law. In practice, the administrations of Presidents Barack Obama and Joe Biden have rejected relying on legal arguments against the constitutionality of the debt ceiling. Obama said in 2011 that his lawyers \"were not persuaded that that is a winning argument.\" In 2023, Biden's Treasury Secretary Janet Yellen called this strategy \"legally questionable.\" Biden himself said \"I think we have the authority\" to invoke the 14th Amendment to pay government debts, suggesting that he would explore this question in the future, but he questioned the practicality of relying on this approach to defuse a debt ceiling standoff. In May 2023, the National Association of Government Employees filed a lawsuit in federal court alleging that the debt ceiling law is unconstitutional.\n\n\n== Debate on debt ceiling ==\nReports to Congress from the OMB and other sources in the 1990s have repeatedly stated that the debt limit is an ineffective means to restrain the growth of debt.In 2011, James Surowiecki argued that the debt ceiling originally served a useful purpose. When introduced, presidents had stronger authority to borrow and spend as they pleased. However, after 1974 the Congress began passing comprehensive budget resolutions which specified exactly how much money the government could spend.The apparent redundancy of the debt ceiling has led to suggestions that it should be abolished altogether. Several Democratic House members, including Peter Welch, proposed abolishing the debt ceiling. The proposal found support from some economists such as Jacob Funk Kirkegaard, a senior fellow at the Peterson Institute for International Economics.\nIn January 2013, a survey of 38 highly regarded economists found that 84 percent agreed that, since Congress already approves spending and taxation, \"a separate debt ceiling that has to be increased periodically creates unneeded uncertainty and can potentially lead to worse fiscal outcomes.\" Only one member of the panel, Luigi Zingales, disagreed with the statement. Rating agency Moody's has stated that \"the debt limit creates a high level of uncertainty\" and that the government should change \"its framework for managing government debt to lessen or eliminate that uncertainty\".In 2021, the U.S. debt ceiling has been described as \"anachronistic\", with the two major parties criticized for utilizing the debt ceiling to play a dangerous game of chicken for purely partisan political purposes.\n\n\n=== Modern Monetary Theory ===\nProponents of Modern Monetary Theory (MMT), a heterodox, post-Keynesian economic theory which arose in the late 20th century, have critiqued the concept of the debt ceiling and its theoretical and practical uses. A core tenet of MMT is that currency arose from and is wholly controlled as fiat money by governments, the latter claim is dependent on the government as the sovereign issuer of the given currency. As of 2019, MMT theorists believed that governments have the power to create and spend money within a limit of reason without creating hyperinflation, as well as the ability to forgive its debt or repay itself; in contrast, as of 2020, orthodox economic theorists tended to focus on national deficit as a debt that needs to be repaid eventually. As a result, MMT theorists argue the debt ceiling is largely a symbolic limit on government spending; in 2020 Stephanie Kelton, a prominent supporter of MMT, wrote that \"there are no constraints on the federal budget.\"After the turn of the 20th century, and particularly during and since the Great Recession (2007-2009) political landscape, MMT has been the subject of political debate between post-Keynsian, mainstream, and free-market economic theorists and politicians alike. As of 2019, MMT debates on the debt ceiling have pervaded Congress, with progressive representatives, prominently Alexandria Ocasio-Cortez, boosting the theory to the mainstream, while conservative representatives have been critiquing MMT's potential impacts on government spending and inflation.As of January 2023 Treasury Secretary Janet Yellen supported legislation to abolish the debt limit, which President Biden has ruled out.\n\n\n== References ==\n\n\n== Sources ==\n\"Amerikanere kan l\u00e6re af dansk g\u00e6ldsloft\" (in Danish). DR Nyheder. August 3, 2011. Retrieved May 6, 2013.\n\"Analysis of 2011-2012 Actions Taken and Effect of Delayed Increase on Borrowing Costs\" (PDF). GAO. July 2012. Retrieved January 13, 2013.\nAustin, D. Andrew (August 9, 2017). The Debt Limit Since 2011 (PDF). Washington, DC: Congressional Research Service. Retrieved November 22, 2017.\nMurray, Justin (November 6, 2017). Votes on Measures to Adjust the Statutory Debt Limit, 1978 to Present (PDF). Washington, DC: Congressional Research Service. Retrieved November 22, 2017.\n\"Federal Debt and the Statutory Limit, November 2012\" (PDF). Congressional Budget Office. November 2012.\n\"Delays Create Debt Management Challenges and Increase Uncertainty in the Treasury Market\" (PDF). GAO-11-203. GAO. February 2011. Retrieved January 13, 2013.\nGreen, Joshua (May 9, 2011). \"How Dick Gephardt Fixed the Debt-Ceiling Problem\". The Atlantic.\nKowalcky, Linda W.; LeLoup, Lance T. (1993). \"Congress and the Politics of Statutory Debt Limitation\". Public Administration Review. 53 (1): 14. CiteSeerX 10.1.1.397.5755. doi:10.2307/977272. JSTOR 977272.\nLawder, David (June 29, 2011). \"Prioritizing debt payments won't work: Geithner\". Reuters.\nLevit, Mandy R.; Brass, Clinton T.; Nicola, Timothy J.; Nuschler, Dawn (January 4, 2013). \"Reaching the Debt Limit: Background and Potential Effects on Government Operations\" (PDF). Archived from the original (PDF) on January 23, 2013.\nMasters, Jonathan. \"U.S. Debt Ceiling: Costs and Consequences\". Renewing America. Council on Foreign Relations.\nSahadi, Jeanne (January 7, 2013). \"Debt Ceiling: 'Chaotic' choices on 100 million payments\". CNNMoney. Retrieved January 13, 2013.\nSahadi, Jeanne (May 17, 2013). \"Debt ceiling: Treasury starts juggling act\". CNNMoney. Archived from the original on June 7, 2013.\nSurowiecki, James (August 1, 2011). \"Smash the Ceiling\". The New Yorker.\nSweet, Ken (August 8, 2011). \"Dow plunges after S&amp;P downgrade\". CNNMoney.\nYglesias, Matthew (January 16, 2013). \"What if Congress Doesn't Raise the Debt Ceiling?\". Slate.\n\n\n== Further reading ==\nEisner, Robert (1993). \"Federal Debt\". In David R. Henderson (ed.). Concise Encyclopedia of Economics (1st ed.). Library of Economics and Liberty. OCLC 317650570, 50016270, 163149563\nGeorge J. Hall and Thomas J. Sargent. 2018. \"Brief history of US debt limits before 1939.\" PNAS March 20, 2018. 115 (12) 2942-2945",
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"content": "In the United States, the debt ceiling or debt limit is a legislative limit on the amount of national debt that can be incurred by the U.S. Treasury, thus limiting how much money the federal government may pay by borrowing more money, on the debt it already borrowed. The debt ceiling is an aggregate figure that applies to gross debt, which includes debt in the hands of the public and intra-government accounts. About 0.5 percent of the debt is not covered by the ceiling (as of 10/2013). Because expenditures are authorized by separate legislation, the debt ceiling does not directly limit government deficits. In effect, it can only restrain the Treasury from paying for expenditures and other financial obligations after the limit has been reached, but which have already been approved (in the budget) and appropriated.\nThere is a debate among legal scholars regarding the constitutionality of the debt ceiling. Some scholars argue that the debt ceiling does not provide the legal authority for the United States to default on its debt. Some also argue that the debt ceiling itself is unconstitutional since it does not provide a clear mechanism for the government to meet its constitutional obligation to repay its debts once it meets the borrowing limit.When the debt ceiling is reached without an increase in the limit having been enacted, Treasury will need to resort to \"extraordinary measures\" to temporarily finance government expenditures and obligations until a resolution can be reached. The Treasury has never reached the point of exhausting extraordinary measures, resulting in a constitutionally questionable default, although, on some occasions, it appeared that Congress might allow a default to take place. If this situation were to occur, it is unclear whether the Treasury would be able to prioritize debt payments to avoid a default on its bond obligations. A protracted default could trigger a variety of economic problems including a financial crisis, and a decline in output that would put the country into an economic recession.Management of the United States public debt is an important part of the macroeconomics of the United States economy and finance system, and the debt ceiling is designed to be a constraint on the executive's ability to manage the U.S. economy. There is debate, however, on how the U.S. economy should be managed, and whether a debt ceiling is an appropriate or constitutional mechanism for restraining government spending.The most recent time that the debt ceiling was raised was on June 3, 2023, when U.S. president Joe Biden signed the Fiscal Responsibility Act of 2023 into law ending the 2023 United States debt-ceiling crisis that began on January 19, 2023. The debt limit extends into 2025. Previously, in December 2021, the debt ceiling was raised when it was increased by $2.5 trillion, to $31.381 trillion, which lasted until January 2023.\n\n\n== Background ==\nUnder Article I Section 8 of the United States Constitution, only Congress can authorize the borrowing of money on the credit of the United States. From the founding of the U.S. until 1917, Congress directly authorized each debt issued. To provide more flexibility to finance the United States' involvement in World War I, Congress modified the method by which it authorized debt in the Second Liberty Bond Act of 1917. Under this Act, Congress established an aggregate limit, or \"ceiling,\" on the total amount of new bonds that could be issued.\nThe present debt ceiling is an aggregate limit applied to nearly all federal debt, which was substantially established by the Public Debt Acts of 1939 and 1941 which have subsequently been amended to change the ceiling amount.\nFrom time to time, political disputes arise when the Treasury advises Congress that the debt ceiling is about to be reached and indicates that a default is imminent. When the debt ceiling is reached, and pending an increase in the limit, Treasury may resort to \"extraordinary measures\" to buy more time before the ceiling can be raised by Congress. The U.S. has never reached the point of default where the Treasury was incapable of paying U.S. debt obligations, though it has been close on several occasions. The only exception was during the War of 1812 when parts of Washington D.C. including the Treasury were burned.In 2011, the U.S. reached a crisis point of near default on public debt. The delay in raising the debt ceiling resulted in the first downgrade in the United States credit rating, a sharp drop in the stock market, and an increase in borrowing costs. Congress raised the debt limit with the Budget Control Act of 2011, which added to the fiscal cliff when the new ceiling was reached on December 31, 2012.\n\n\n== Relationship to federal budget ==\nThe process of setting the debt ceiling is separate and distinct from the United States budget process, and raising the debt ceiling neither directly increases nor decreases the budget deficit, and vice versa. The Government Accountability Office explains, \"the debt limit does not control or limit the ability of the federal government to run deficits or incur obligations. Rather, it is a limit on the ability to pay obligations already incurred.\"The President formulates a federal budget every year, which Congress must pass, sometimes with amendments, in a concurrent resolution, which does not require the President's signature and is not binding. The budget details projected tax collections and expenditures and, therefore, specifies the estimated amount of borrowing the government would have to do in that fiscal year.\n\n\n=== Debt not covered by ceiling ===\nIn December 2012, the Treasury calculated that $239 million in United States Notes were in circulation, which in accordance with the debt ceiling legislation, are excluded from the statutory debt limit. The $239 million excludes $25 million in U.S. Notes issued prior to July 1, 1929, determined pursuant to Act of June 30, 1961, 31 U.S.C. 5119, to have been destroyed or irretrievably lost.Debts of the Federal Financing Bank are not debts of the government per se and therefore are also not subject to the ceiling, but have a separate limit of $15 billion.\n\n\n== Legislative history ==\n\nBefore 1917, the U.S. had no debt ceiling. Congress either authorized specific loans or allowed the Treasury to issue certain debt instruments and individual debt issues for specific purposes. Sometimes Congress gave the Treasury discretion over what type of debt instrument would be issued. 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.In 1953, the U.S. Treasury risked reaching the debt ceiling of $275 billion. Though President Eisenhower requested that Congress increase it on July 30, 1953, the Senate refused to act on it. As a result, the president asked federal agencies to reduce how much they spent, plus the Treasury Department used its cash balances with banks to stay under the debt ceiling. And, starting in November 1953, Treasury monetized close to $1 billion of gold left over in its vaults, which helped keep it from exceeding the $275 billion limit. During spring and summer 1954, the Senate and the executive branch negotiated on a debt ceiling increase, and a $6 billion one was passed on August 28, 1954.Before the Budget and Impoundment Control Act of 1974, the debt ceiling played an important role in enabling Congress to hold hearings and debates on the budget. James Surowiecki argued that the debt ceiling lost its usefulness after these reforms to the budget process.In 1979, noting the potential problems of hitting a default, Dick Gephardt imposed the \"Gephardt Rule,\" a parliamentary rule that deemed the debt ceiling was 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-controlled Congress in 1995.A vote to increase the debt ceiling has usually been (since the 1950s) a legal budgetary formality between the President and Congress. As of 1993 the debt ceiling had not historically been a political issue that would make the elected government fail to pass a yearly budget.\n\n\n=== Debt ceiling increases under Presidents Ronald Reagan and George H. W. Bush ===\nUnder the two terms of President Ronald Reagan, the House was controlled by Democrats, and the Senate was, at various points, under the control of both parties. Early in his term, Reagan faced some bipartisan resistance from Congress for a 1981 raising of the debt limit. But Democrats, using the Gephardt Rule, joined with Republicans to increase the debt ceiling eighteen separate times.Under President George H.W. Bush, Democrats controlled both the House and Senate. Again using the Gephardt Rule, Congress increased the debt ceiling nine times without controversy.\n\n\n=== Debt ceiling increases under President Bill Clinton ===\n\nThe debt-ceiling debate of 1995 led to a showdown on the federal budget and resulted in the U.S. federal government shutdowns of 1995 and 1996.\n\n\n=== Debt ceiling increases under President George W. Bush ===\nWhile George W. Bush was President, both Republicans and Democrats controlled the House and the Senate at various points during his term. Congress increased the debt ceiling eight times in 2002, 2003, 2004, 2006, 2007, and twice in 2008.When Republicans were in the majority, they consistently voted to increase the debt ceiling. While some Democrats did vote against the debt ceiling when the process was controlled by a Republican majority, Democrats did not filibuster debt limit increases in 2003, 2004 and 2006, allowing Senate Republicans to raise the debt limit with a simple majority.When Democrats controlled the House and the Senate in the last two years of George W. Bush's term, Democratic majorities in the House and the Senate reinstated the automatic Gephardt Rule and increased the debt ceiling three times without attaching preconditions.\n\n\n=== Debt ceiling increases under President Barack Obama ===\n\nIn 2011, Republicans took control of Congress and again suspended the Gephardt Rule as they had under Clinton. The Republican majority in Congress demanded deficit reduction as part of raising the debt ceiling. The resulting contention was resolved on August 2, 2011, by the Budget Control Act of 2011. Under the \"McConnell Rule,\" the president was allowed to unilaterally raise the debt ceiling. This action could be overturned by an act of Congress, but this would require a 2\u20443 majority vote in both houses assuming that the president vetoed the act.On August 5, 2011, Standard &amp; Poors issued the first ever downgrade in the federal government's credit rating, citing their April warnings, the difficulty of bridging the parties and that the resulting agreement fell well short of the hoped-for comprehensive 'grand bargain'. The credit downgrade and debt ceiling debacle contributed to the Dow Jones Industrial Average (DJIA) falling nearly 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.Following the increase in the debt ceiling to $16.394 trillion in 2011, the U.S. 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. Extraordinary measures were expected to be exhausted by February 15.Another debt ceiling crisis arose in early 2013 when the ceiling was reached again, and the Treasury adopted extraordinary measures to avoid a default. The Treasury said it was not set up to prioritize payments and had given the opinion that it is unclear whether 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 was not raised. Economists estimated that such an action would cause GDP to contract by 7 percent, which is larger than the contraction during 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 the freeze in their revenue.The 2013 crisis was temporarily resolved on February 4, 2013, when President Barack Obama signed the No Budget, No Pay Act of 2013 which suspended the debt ceiling 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. During the suspension period, the Treasury was authorized to borrow to the extent that it \"is required to meet existing commitments\". On May 19, the debt ceiling was raised by $306 billion to cover the borrowings done during the suspension period, as well as commitments that accrued in the preceding period that extraordinary measures were in place, which commenced on December 31, 2012.Treasury Secretary Jack Lew notified Congress that these measures would be exhausted by October 17, 2013 and that a default would occur on October 17 when interest payments came due. From October 17, 2013 until February 7, 2014, the debt ceiling was again suspended. On February 12, 2014, the Temporary Debt Limit Extension Act was passed, suspending the debt ceiling until March 15, 2015. At that time, the Treasury Department took extraordinary measures.The debt ceiling would again have been reached on November 3, 2015. But on October 30, 2015, the debt ceiling was again suspended to March 2017.\n\n\n=== Debt ceiling increases under President Donald Trump ===\nWhen Donald Trump was President, the debt ceiling was subject to less partisan controversy. The administration and the Republicans who controlled the House and the Senate prioritized tax cuts over a balanced budget.\nThe ceiling was suspended three times: from September 30, 2017, to December 8, 2017; from December 8, 2017 to March 1, 2019; and, after concerns were raised from Treasury in July 2019 of an unexpected shortfall due to reduced tax receipts under Trump's tax legislation, from August 2, 2019 to July 31, 2021.Congress did not impose any preconditions or significant spending cuts. Democrats in the Senate could have threatened to stop the debt ceiling increase by use of the filibuster but declined to do so.\n\n\n=== Debt ceiling increases under President Joe Biden ===\n\nDuring Biden's first two years as president, the House and Senate were both controlled by the Democratic Party. In October 2021, the debt ceiling was increased by $480 billion, as a temporary measure requiring fresh legislation by December 3, 2021. That month, Congress voted to increase it by $2.5 trillion, which President Biden signed into effect on December 16, 2021. At that point, it was set at about $31.4 trillion.On January 19, 2023, the United States hit its debt ceiling of $31.4 trillion. By this time, Republicans had taken control of the House during the 2022 midterm elections. Although Republicans were a minority in the Senate, they threatened for the first time in American history to use the filibuster to stop the debt ceiling increase. The crisis was resolved by negotiation of the Fiscal Responsibility Act of 2023.\n\n\n== Extraordinary measures ==\nThe Treasury Department is permitted to borrow funds needed to fund government operations, as had been authorized by congressional appropriations, up to the debt ceiling, with some small exceptions. In a letter to Congress on April 4, 2011, Treasury Secretary Timothy Geithner explained that when the debt ceiling is reached, the Treasury can declare a \"debt issuance suspension period\" during which it can take \"extraordinary measures\" to continue meeting federal obligations provided that it does not involve the issue of new debt. These measures are taken to avoid, as far as resources permit, a partial government shutdown or a default on the debt. These methods have been used on several previous occasions in which federal debt neared its statutory limit.Extraordinary measures can include suspending investments in the G Fund of the Thrift Savings Plan of individual retirement funds of federal employees. In 2011, extraordinary measures included suspending investments in the Civil Service Retirement and Disability Fund (CSRDF), the Postal Service Retiree Health Benefits Fund (Postal Benefits Fund), and the Exchange Stabilization Fund (ESF). In addition, certain CSRDF investments were also redeemed early. In 1985, the Treasury had also exchanged Treasury securities for non-Treasury securities held by the Federal Financing Bank.However, these amounts are not sufficient to cover government operations for extended periods. Treasury first implemented these measures on December 16, 2009, to avoid a government shutdown. These measures were implemented again on May 16, 2011, when Treasury Secretary Geithner declared a \"debt issuance suspension period\". According to his letter to Congress, this period could \"last until August 2, 2011, when the Department of the Treasury projects that the borrowing authority of the United States will be exhausted\".The measures were again implemented on December 31, 2012, the start of the debt ceiling crisis of 2013 with the default trigger date ticking to February 2013. The crisis was deferred with the suspension of the limit on February 4, and the cancellation of the extraordinary measures. The measures were again invoked at the end of the ceiling's suspension on May 19, 2013, with the date of exhaustion of the resources and the default trigger date being estimated by the Treasury as October 17. The ceiling was again suspended by legislation on that date until February 4, 2014.\n\n\n== Default on financial obligations ==\nAccording to the text of the debt ceiling law, if the debt ceiling is not raised and extraordinary measures are exhausted, the U.S. government is legally unable to borrow money to pay its financial obligations. At that point, the law indicates that the government must cease making payments unless the treasury has cash on hand to cover them. In addition, the law indicates that the government would not have the resources to pay the interest on (and some time redeem) government securities when due, which would be characterized as a default. A default may affect the United States' sovereign risk rating and the interest rate that it will be required to pay on future debt. As of 2012, the U.S. defaulted on its financial obligations once in 1979, due to a computer backlog, but the periodic crises relating to the debt ceiling have led several rating agencies to United States federal government credit-rating downgrades. As of 2012, the GAO estimated that the delay in raising the debt ceiling during the debt ceiling crisis of 2011 raised borrowing costs for the government by $1.3 billion in the fiscal year 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.As of 2012, some writers expressed the view that if extraordinary measures are exhausted, the executive branch has the authority to determine which obligations are paid and which are not, though the Treasury has argued that all obligations are on equal footing under the law. The writers have argued that the executive branch can choose to prioritize interest payments on bonds, which would avoid an immediate, direct default on sovereign debt. During the debt ceiling crisis of 2011, Treasury Secretary Timothy Geitner argued that prioritization of interest payments would not help since government expenditures would have needed to be cut by an unrealistic 40% if the debt ceiling is not raised. Also, a default on non-debt obligations would still undermine American creditworthiness according to at least one rating agency. In 2011, the Treasury suggested that it could not prioritize certain types of expenditures because all expenditures are on equal footing under the law. In this view, when extraordinary measures are exhausted, no payments could be made except when money (such as tax receipts) is in the treasury, at all and the U.S. would be in default on all of its obligations. The CBO notes, that prioritization would not avoid the technical definition found in Black's Law Dictionary where default is defined as \u201cthe failure to make a payment when due.\u201dMany scholars argue that debt ceiling law is unconstitutional and there is no legal basis by which the U.S. government may default on any of its debt. They point to Section Four of the 14th Amendment of the United States Constitution, which states that \"the validity of the public debt of the United States...shall not be questioned.\" They argue that it was unconstitutional for the U.S. Congress to pass the debt ceiling law in the first place, since the law does not provide a clear way for the U.S. to pay its debts and implicitly requires a default. Harvard University legal scholar Laurence Tribe argues that \"using the ceiling to make us default on our debts clearly would be unconstitutional.\" This argument has also been endorsed by various politicians, including President Bill Clinton, former labor secretary Robert Reich, Representative Jerry Nadler, and Representative James Clyburn. In 2023, a group of lawmakers from the Senate and House of Representatives sent a letter to President Biden encouraging him to consider invoking the 14th Amendment to pay government debts. However, there are scholars who argue that even if the law itself is unconstitutional, that determination must be made by the courts and the President does not have the authority to unilaterally ignore the debt ceiling law. In practice, the administrations of Presidents Barack Obama and Joe Biden have rejected relying on legal arguments against the constitutionality of the debt ceiling. Obama said in 2011 that his lawyers \"were not persuaded that that is a winning argument.\" In 2023, Biden's Treasury Secretary Janet Yellen called this strategy \"legally questionable.\" Biden himself said \"I think we have the authority\" to invoke the 14th Amendment to pay government debts, suggesting that he would explore this question in the future, but he questioned the practicality of relying on this approach to defuse a debt ceiling standoff. In May 2023, the National Association of Government Employees filed a lawsuit in federal court alleging that the debt ceiling law is unconstitutional.\n\n\n== Debate on debt ceiling ==\nReports to Congress from the OMB and other sources in the 1990s have repeatedly stated that the debt limit is an ineffective means to restrain the growth of debt.In 2011, James Surowiecki argued that the debt ceiling originally served a useful purpose. When introduced, presidents had stronger authority to borrow and spend as they pleased. However, after 1974 the Congress began passing comprehensive budget resolutions which specified exactly how much money the government could spend.The apparent redundancy of the debt ceiling has led to suggestions that it should be abolished altogether. Several Democratic House members, including Peter Welch, proposed abolishing the debt ceiling. The proposal found support from some economists such as Jacob Funk Kirkegaard, a senior fellow at the Peterson Institute for International Economics.\nIn January 2013, a survey of 38 highly regarded economists found that 84 percent agreed that, since Congress already approves spending and taxation, \"a separate debt ceiling that has to be increased periodically creates unneeded uncertainty and can potentially lead to worse fiscal outcomes.\" Only one member of the panel, Luigi Zingales, disagreed with the statement. Rating agency Moody's has stated that \"the debt limit creates a high level of uncertainty\" and that the government should change \"its framework for managing government debt to lessen or eliminate that uncertainty\".In 2021, the U.S. debt ceiling has been described as \"anachronistic\", with the two major parties criticized for utilizing the debt ceiling to play a dangerous game of chicken for purely partisan political purposes.\n\n\n=== Modern Monetary Theory ===\nProponents of Modern Monetary Theory (MMT), a heterodox, post-Keynesian economic theory which arose in the late 20th century, have critiqued the concept of the debt ceiling and its theoretical and practical uses. A core tenet of MMT is that currency arose from and is wholly controlled as fiat money by governments, the latter claim is dependent on the government as the sovereign issuer of the given currency. As of 2019, MMT theorists believed that governments have the power to create and spend money within a limit of reason without creating hyperinflation, as well as the ability to forgive its debt or repay itself; in contrast, as of 2020, orthodox economic theorists tended to focus on national deficit as a debt that needs to be repaid eventually. As a result, MMT theorists argue the debt ceiling is largely a symbolic limit on government spending; in 2020 Stephanie Kelton, a prominent supporter of MMT, wrote that \"there are no constraints on the federal budget.\"After the turn of the 20th century, and particularly during and since the Great Recession (2007-2009) political landscape, MMT has been the subject of political debate between post-Keynsian, mainstream, and free-market economic theorists and politicians alike. As of 2019, MMT debates on the debt ceiling have pervaded Congress, with progressive representatives, prominently Alexandria Ocasio-Cortez, boosting the theory to the mainstream, while conservative representatives have been critiquing MMT's potential impacts on government spending and inflation.As of January 2023 Treasury Secretary Janet Yellen supported legislation to abolish the debt limit, which President Biden has ruled out.\n\n\n== References ==\n\n\n== Sources ==\n\"Amerikanere kan l\u00e6re af dansk g\u00e6ldsloft\" (in Danish). DR Nyheder. August 3, 2011. Retrieved May 6, 2013.\n\"Analysis of 2011-2012 Actions Taken and Effect of Delayed Increase on Borrowing Costs\" (PDF). GAO. July 2012. Retrieved January 13, 2013.\nAustin, D. Andrew (August 9, 2017). The Debt Limit Since 2011 (PDF). Washington, DC: Congressional Research Service. Retrieved November 22, 2017.\nMurray, Justin (November 6, 2017). Votes on Measures to Adjust the Statutory Debt Limit, 1978 to Present (PDF). Washington, DC: Congressional Research Service. Retrieved November 22, 2017.\n\"Federal Debt and the Statutory Limit, November 2012\" (PDF). Congressional Budget Office. November 2012.\n\"Delays Create Debt Management Challenges and Increase Uncertainty in the Treasury Market\" (PDF). GAO-11-203. GAO. February 2011. Retrieved January 13, 2013.\nGreen, Joshua (May 9, 2011). \"How Dick Gephardt Fixed the Debt-Ceiling Problem\". The Atlantic.\nKowalcky, Linda W.; LeLoup, Lance T. (1993). \"Congress and the Politics of Statutory Debt Limitation\". Public Administration Review. 53 (1): 14. CiteSeerX 10.1.1.397.5755. doi:10.2307/977272. JSTOR 977272.\nLawder, David (June 29, 2011). \"Prioritizing debt payments won't work: Geithner\". Reuters.\nLevit, Mandy R.; Brass, Clinton T.; Nicola, Timothy J.; Nuschler, Dawn (January 4, 2013). \"Reaching the Debt Limit: Background and Potential Effects on Government Operations\" (PDF). Archived from the original (PDF) on January 23, 2013.\nMasters, Jonathan. \"U.S. Debt Ceiling: Costs and Consequences\". Renewing America. Council on Foreign Relations.\nSahadi, Jeanne (January 7, 2013). \"Debt Ceiling: 'Chaotic' choices on 100 million payments\". CNNMoney. Retrieved January 13, 2013.\nSahadi, Jeanne (May 17, 2013). \"Debt ceiling: Treasury starts juggling act\". CNNMoney. Archived from the original on June 7, 2013.\nSurowiecki, James (August 1, 2011). \"Smash the Ceiling\". The New Yorker.\nSweet, Ken (August 8, 2011). \"Dow plunges after S&amp;P downgrade\". CNNMoney.\nYglesias, Matthew (January 16, 2013). \"What if Congress Doesn't Raise the Debt Ceiling?\". Slate.\n\n\n== Further reading ==\nEisner, Robert (1993). \"Federal Debt\". In David R. Henderson (ed.). Concise Encyclopedia of Economics (1st ed.). Library of Economics and Liberty. OCLC 317650570, 50016270, 163149563\nGeorge J. Hall and Thomas J. Sargent. 2018. \"Brief history of US debt limits before 1939.\" PNAS March 20, 2018. 115 (12) 2942-2945",
"pageid": 31461654
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"returned": [
"In the United States, the debt ceiling or debt limit is a legislative limit on the amount of national debt that can be incurred by the U.S. Treasury, thus limiting how much money the federal government may pay by borrowing more money, on the debt it already borrowed. The debt ceiling is an aggregate figure that applies to gross debt, which includes debt in the hands of the public and intra-government accounts. About 0.5 percent of the debt is not covered by the ceiling (as of 10/2013). Because expenditures are authorized by separate legislation, the debt ceiling does not directly limit government deficits. In effect, it can only restrain the Treasury from paying for expenditures and other financial obligations after the limit has been reached, but which have already been approved (in the budget) and appropriated.\nThere is a debate among legal scholars regarding the constitutionality of the debt ceiling. Some scholars argue that the debt ceiling does not provide the legal authority for the United States to default on its debt. Some also argue that the debt ceiling itself is unconstitutional since it does not provide a clear mechanism for the government to meet its constitutional obligation to repay its debts once it meets the borrowing limit.When the debt ceiling is reached without an increase in the limit having been enacted, Treasury will need to resort to \"extraordinary measures\" to temporarily finance government expenditures and obligations until a resolution can be reached. The Treasury has never reached the point of exhausting extraordinary measures, resulting in a constitutionally questionable default, although, on some occasions, it appeared that Congress might allow a default to take place. If this situation were to occur, it is unclear whether the Treasury would be able to prioritize debt payments to avoid a default on its bond obligations. A protracted default could trigger a variety of economic problems including a financial crisis, and a decline in output that would put the country into an economic recession.Management of the United States public debt is an important part of the macroeconomics of the United States economy and finance system, and the debt ceiling is designed to be a constraint on the executive's ability to manage the U.S. economy. There is debate, however, on how the U.S. economy should be managed, and whether a debt ceiling is an appropriate or constitutional mechanism for restraining government spending.The most recent time that the debt ceiling was raised was on June 3, 2023, when U.S. president Joe Biden signed the Fiscal Responsibility Act of 2023 into law ending the 2023 United States debt-ceiling crisis that began on January 19, 2023. The debt limit extends into 2025. Previously, in December 2021, the debt ceiling was raised when it was increased by $2.5 trillion, to $31.381 trillion, which lasted until January 2023.\n\n\n== Background ==\nUnder Article I Section 8 of the United States Constitution, only Congress can authorize the borrowing of money on the credit of the United States. From the founding of the U.S. until 1917, Congress directly authorized each debt issued. To provide more flexibility to finance the United States' involvement in World War I, Congress modified the method by which it authorized debt in the Second Liberty Bond Act of 1917. Under this Act, Congress established an aggregate limit, or \"ceiling,\" on the total amount of new bonds that could be issued.\nThe present debt ceiling is an aggregate limit applied to nearly all federal debt, which was substantially established by the Public Debt Acts of 1939 and 1941 which have subsequently been amended to change the ceiling amount.\nFrom time to time, political disputes arise when the Treasury advises Congress that the debt ceiling is about to be reached and indicates that a default is imminent. When the debt ceiling is reached, and pending an increase in the limit, Treasury may resort to \"extraordinary measures\" to buy more time before the ceiling can be raised by Congress. The U.S. has never reached the point of default where the Treasury was incapable of paying U.S. debt obligations, though it has been close on several occasions. The only exception was during the War of 1812 when parts of Washington D.C. including the Treasury were burned.In 2011, the U.S. reached a crisis point of near default on public debt. The delay in raising the debt ceiling resulted in the first downgrade in the United States credit rating, a sharp drop in the stock market, and an increase in borrowing costs. Congress raised the debt limit with the Budget Control Act of 2011, which added to the fiscal cliff when the new ceiling was reached on December 31, 2012.\n\n\n== Relationship to federal budget ==\nThe process of setting the debt ceiling is separate and distinct from the United States budget process, and raising the debt ceiling neither directly increases nor decreases the budget deficit, and vice versa. The Government Accountability Office explains, \"the debt limit does not control or limit the ability of the federal government to run deficits or incur obligations. Rather, it is a limit on the ability to pay obligations already incurred.\"The President formulates a federal budget every year, which Congress must pass, sometimes with amendments, in a concurrent resolution, which does not require the President's signature and is not binding. The budget details projected tax collections and expenditures and, therefore, specifies the estimated amount of borrowing the government would have to do in that fiscal year.\n\n\n=== Debt not covered by ceiling ===\nIn December 2012, the Treasury calculated that $239 million in United States Notes were in circulation, which in accordance with the debt ceiling legislation, are excluded from the statutory debt limit. The $239 million excludes $25 million in U.S. Notes issued prior to July 1, 1929, determined pursuant to Act of June 30, 1961, 31 U.S.C. 5119, to have been destroyed or irretrievably lost.Debts of the Federal Financing Bank are not debts of the government per se and therefore are also not subject to the ceiling, but have a separate limit of $15 billion.\n\n\n== Legislative history ==\n\nBefore 1917, the U.S. had no debt ceiling. Congress either authorized specific loans or allowed the Treasury to issue certain debt instruments and individual debt issues for specific purposes. Sometimes Congress gave the Treasury discretion over what type of debt instrument would be issued. 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.In 1953, the U.S. Treasury risked reaching the debt ceiling of $275 billion. Though President Eisenhower requested that Congress increase it on July 30, 1953, the Senate refused to act on it. As a result, the president asked federal agencies to reduce how much they spent, plus the Treasury Department used its cash balances with banks to stay under the debt ceiling. And, starting in November 1953, Treasury monetized close to $1 billion of gold left over in its vaults, which helped keep it from exceeding the $275 billion limit. During spring and summer 1954, the Senate and the executive branch negotiated on a debt ceiling increase, and a $6 billion one was passed on August 28, 1954.Before the Budget and Impoundment Control Act of 1974, the debt ceiling played an important role in enabling Congress to hold hearings and debates on the budget. James Surowiecki argued that the debt ceiling lost its usefulness after these reforms to the budget process.In 1979, noting the potential problems of hitting a default, Dick Gephardt imposed the \"Gephardt Rule,\" a parliamentary rule that deemed the debt ceiling was 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-controlled Congress in 1995.A vote to increase the debt ceiling has usually been (since the 1950s) a legal budgetary formality between the President and Congress. As of 1993 the debt ceiling had not historically been a political issue that would make the elected government fail to pass a yearly budget.\n\n\n=== Debt ceiling increases under Presidents Ronald Reagan and George H. W. Bush ===\nUnder the two terms of President Ronald Reagan, the House was controlled by Democrats, and the Senate was, at various points, under the control of both parties. Early in his term, Reagan faced some bipartisan resistance from Congress for a 1981 raising of the debt limit. But Democrats, using the Gephardt Rule, joined with Republicans to increase the debt ceiling eighteen separate times.Under President George H.W. Bush, Democrats controlled both the House and Senate. Again using the Gephardt Rule, Congress increased the debt ceiling nine times without controversy.\n\n\n=== Debt ceiling increases under President Bill Clinton ===\n\nThe debt-ceiling debate of 1995 led to a showdown on the federal budget and resulted in the U.S. federal government shutdowns of 1995 and 1996.\n\n\n=== Debt ceiling increases under President George W. Bush ===\nWhile George W. Bush was President, both Republicans and Democrats controlled the House and the Senate at various points during his term. Congress increased the debt ceiling eight times in 2002, 2003, 2004, 2006, 2007, and twice in 2008.When Republicans were in the majority, they consistently voted to increase the debt ceiling. While some Democrats did vote against the debt ceiling when the process was controlled by a Republican majority, Democrats did not filibuster debt limit increases in 2003, 2004 and 2006, allowing Senate Republicans to raise the debt limit with a simple majority.When Democrats controlled the House and the Senate in the last two years of George W. Bush's term, Democratic majorities in the House and the Senate reinstated the automatic Gephardt Rule and increased the debt ceiling three times without attaching preconditions.\n\n\n=== Debt ceiling increases under President Barack Obama ===\n\nIn 2011, Republicans took control of Congress and again suspended the Gephardt Rule as they had under Clinton. The Republican majority in Congress demanded deficit reduction as part of raising the debt ceiling. The resulting contention was resolved on August 2, 2011, by the Budget Control Act of 2011. Under the \"McConnell Rule,\" the president was allowed to unilaterally raise the debt ceiling. This action could be overturned by an act of Congress, but this would require a 2\u20443 majority vote in both houses assuming that the president vetoed the act.On August 5, 2011, Standard &amp; Poors issued the first ever downgrade in the federal government's credit rating, citing their April warnings, the difficulty of bridging the parties and that the resulting agreement fell well short of the hoped-for comprehensive 'grand bargain'. The credit downgrade and debt ceiling debacle contributed to the Dow Jones Industrial Average (DJIA) falling nearly 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.Following the increase in the debt ceiling to $16.394 trillion in 2011, the U.S. 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. Extraordinary measures were expected to be exhausted by February 15.Another debt ceiling crisis arose in early 2013 when the ceiling was reached again, and the Treasury adopted extraordinary measures to avoid a default. The Treasury said it was not set up to prioritize payments and had given the opinion that it is unclear whether 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 was not raised. Economists estimated that such an action would cause GDP to contract by 7 percent, which is larger than the contraction during 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 the freeze in their revenue.The 2013 crisis was temporarily resolved on February 4, 2013, when President Barack Obama signed the No Budget, No Pay Act of 2013 which suspended the debt ceiling 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. During the suspension period, the Treasury was authorized to borrow to the extent that it \"is required to meet existing commitments\". On May 19, the debt ceiling was raised by $306 billion to cover the borrowings done during the suspension period, as well as commitments that accrued in the preceding period that extraordinary measures were in place, which commenced on December 31, 2012.Treasury Secretary Jack Lew notified Congress that these measures would be exhausted by October 17, 2013 and that a default would occur on October 17 when interest payments came due. From October 17, 2013 until February 7, 2014, the debt ceiling was again suspended. On February 12, 2014, the Temporary Debt Limit Extension Act was passed, suspending the debt ceiling until March 15, 2015. At that time, the Treasury Department took extraordinary measures.The debt ceiling would again have been reached on November 3, 2015. But on October 30, 2015, the debt ceiling was again suspended to March 2017.\n\n\n=== Debt ceiling increases under President Donald Trump ===\nWhen Donald Trump was President, the debt ceiling was subject to less partisan controversy. The administration and the Republicans who controlled the House and the Senate prioritized tax cuts over a balanced budget.\nThe ceiling was suspended three times: from September 30, 2017, to December 8, 2017; from December 8, 2017 to March 1, 2019; and, after concerns were raised from Treasury in July 2019 of an unexpected shortfall due to reduced tax receipts under Trump's tax legislation, from August 2, 2019 to July 31, 2021.Congress did not impose any preconditions or significant spending cuts. Democrats in the Senate could have threatened to stop the debt ceiling increase by use of the filibuster but declined to do so.\n\n\n=== Debt ceiling increases under President Joe Biden ===\n\nDuring Biden's first two years as president, the House and Senate were both controlled by the Democratic Party. In October 2021, the debt ceiling was increased by $480 billion, as a temporary measure requiring fresh legislation by December 3, 2021. That month, Congress voted to increase it by $2.5 trillion, which President Biden signed into effect on December 16, 2021. At that point, it was set at about $31.4 trillion.On January 19, 2023, the United States hit its debt ceiling of $31.4 trillion. By this time, Republicans had taken control of the House during the 2022 midterm elections. Although Republicans were a minority in the Senate, they threatened for the first time in American history to use the filibuster to stop the debt ceiling increase. The crisis was resolved by negotiation of the Fiscal Responsibility Act of 2023.\n\n\n== Extraordinary measures ==\nThe Treasury Department is permitted to borrow funds needed to fund government operations, as had been authorized by congressional appropriations, up to the debt ceiling, with some small exceptions. In a letter to Congress on April 4, 2011, Treasury Secretary Timothy Geithner explained that when the debt ceiling is reached, the Treasury can declare a \"debt issuance suspension period\" during which it can take \"extraordinary measures\" to continue meeting federal obligations provided that it does not involve the issue of new debt. These measures are taken to avoid, as far as resources permit, a partial government shutdown or a default on the debt. These methods have been used on several previous occasions in which federal debt neared its statutory limit.Extraordinary measures can include suspending investments in the G Fund of the Thrift Savings Plan of individual retirement funds of federal employees. In 2011, extraordinary measures included suspending investments in the Civil Service Retirement and Disability Fund (CSRDF), the Postal Service Retiree Health Benefits Fund (Postal Benefits Fund), and the Exchange Stabilization Fund (ESF). In addition, certain CSRDF investments were also redeemed early. In 1985, the Treasury had also exchanged Treasury securities for non-Treasury securities held by the Federal Financing Bank.However, these amounts are not sufficient to cover government operations for extended periods. Treasury first implemented these measures on December 16, 2009, to avoid a government shutdown. These measures were implemented again on May 16, 2011, when Treasury Secretary Geithner declared a \"debt issuance suspension period\". According to his letter to Congress, this period could \"last until August 2, 2011, when the Department of the Treasury projects that the borrowing authority of the United States will be exhausted\".The measures were again implemented on December 31, 2012, the start of the debt ceiling crisis of 2013 with the default trigger date ticking to February 2013. The crisis was deferred with the suspension of the limit on February 4, and the cancellation of the extraordinary measures. The measures were again invoked at the end of the ceiling's suspension on May 19, 2013, with the date of exhaustion of the resources and the default trigger date being estimated by the Treasury as October 17. The ceiling was again suspended by legislation on that date until February 4, 2014.\n\n\n== Default on financial obligations ==\nAccording to the text of the debt ceiling law, if the debt ceiling is not raised and extraordinary measures are exhausted, the U.S. government is legally unable to borrow money to pay its financial obligations. At that point, the law indicates that the government must cease making payments unless the treasury has cash on hand to cover them. In addition, the law indicates that the government would not have the resources to pay the interest on (and some time redeem) government securities when due, which would be characterized as a default. A default may affect the United States' sovereign risk rating and the interest rate that it will be required to pay on future debt. As of 2012, the U.S. defaulted on its financial obligations once in 1979, due to a computer backlog, but the periodic crises relating to the debt ceiling have led several rating agencies to United States federal government credit-rating downgrades. As of 2012, the GAO estimated that the delay in raising the debt ceiling during the debt ceiling crisis of 2011 raised borrowing costs for the government by $1.3 billion in the fiscal year 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.As of 2012, some writers expressed the view that if extraordinary measures are exhausted, the executive branch has the authority to determine which obligations are paid and which are not, though the Treasury has argued that all obligations are on equal footing under the law. The writers have argued that the executive branch can choose to prioritize interest payments on bonds, which would avoid an immediate, direct default on sovereign debt. During the debt ceiling crisis of 2011, Treasury Secretary Timothy Geitner argued that prioritization of interest payments would not help since government expenditures would have needed to be cut by an unrealistic 40% if the debt ceiling is not raised. Also, a default on non-debt obligations would still undermine American creditworthiness according to at least one rating agency. In 2011, the Treasury suggested that it could not prioritize certain types of expenditures because all expenditures are on equal footing under the law. In this view, when extraordinary measures are exhausted, no payments could be made except when money (such as tax receipts) is in the treasury, at all and the U.S. would be in default on all of its obligations. The CBO notes, that prioritization would not avoid the technical definition found in Black's Law Dictionary where default is defined as \u201cthe failure to make a payment when due.\u201dMany scholars argue that debt ceiling law is unconstitutional and there is no legal basis by which the U.S. government may default on any of its debt. They point to Section Four of the 14th Amendment of the United States Constitution, which states that \"the validity of the public debt of the United States...shall not be questioned.\" They argue that it was unconstitutional for the U.S. Congress to pass the debt ceiling law in the first place, since the law does not provide a clear way for the U.S. to pay its debts and implicitly requires a default. Harvard University legal scholar Laurence Tribe argues that \"using the ceiling to make us default on our debts clearly would be unconstitutional.\" This argument has also been endorsed by various politicians, including President Bill Clinton, former labor secretary Robert Reich, Representative Jerry Nadler, and Representative James Clyburn. In 2023, a group of lawmakers from the Senate and House of Representatives sent a letter to President Biden encouraging him to consider invoking the 14th Amendment to pay government debts. However, there are scholars who argue that even if the law itself is unconstitutional, that determination must be made by the courts and the President does not have the authority to unilaterally ignore the debt ceiling law. In practice, the administrations of Presidents Barack Obama and Joe Biden have rejected relying on legal arguments against the constitutionality of the debt ceiling. Obama said in 2011 that his lawyers \"were not persuaded that that is a winning argument.\" In 2023, Biden's Treasury Secretary Janet Yellen called this strategy \"legally questionable.\" Biden himself said \"I think we have the authority\" to invoke the 14th Amendment to pay government debts, suggesting that he would explore this question in the future, but he questioned the practicality of relying on this approach to defuse a debt ceiling standoff. In May 2023, the National Association of Government Employees filed a lawsuit in federal court alleging that the debt ceiling law is unconstitutional.\n\n\n== Debate on debt ceiling ==\nReports to Congress from the OMB and other sources in the 1990s have repeatedly stated that the debt limit is an ineffective means to restrain the growth of debt.In 2011, James Surowiecki argued that the debt ceiling originally served a useful purpose. When introduced, presidents had stronger authority to borrow and spend as they pleased. However, after 1974 the Congress began passing comprehensive budget resolutions which specified exactly how much money the government could spend.The apparent redundancy of the debt ceiling has led to suggestions that it should be abolished altogether. Several Democratic House members, including Peter Welch, proposed abolishing the debt ceiling. The proposal found support from some economists such as Jacob Funk Kirkegaard, a senior fellow at the Peterson Institute for International Economics.\nIn January 2013, a survey of 38 highly regarded economists found that 84 percent agreed that, since Congress already approves spending and taxation, \"a separate debt ceiling that has to be increased periodically creates unneeded uncertainty and can potentially lead to worse fiscal outcomes.\" Only one member of the panel, Luigi Zingales, disagreed with the statement. Rating agency Moody's has stated that \"the debt limit creates a high level of uncertainty\" and that the government should change \"its framework for managing government debt to lessen or eliminate that uncertainty\".In 2021, the U.S. debt ceiling has been described as \"anachronistic\", with the two major parties criticized for utilizing the debt ceiling to play a dangerous game of chicken for purely partisan political purposes.\n\n\n=== Modern Monetary Theory ===\nProponents of Modern Monetary Theory (MMT), a heterodox, post-Keynesian economic theory which arose in the late 20th century, have critiqued the concept of the debt ceiling and its theoretical and practical uses. A core tenet of MMT is that currency arose from and is wholly controlled as fiat money by governments, the latter claim is dependent on the government as the sovereign issuer of the given currency. As of 2019, MMT theorists believed that governments have the power to create and spend money within a limit of reason without creating hyperinflation, as well as the ability to forgive its debt or repay itself; in contrast, as of 2020, orthodox economic theorists tended to focus on national deficit as a debt that needs to be repaid eventually. As a result, MMT theorists argue the debt ceiling is largely a symbolic limit on government spending; in 2020 Stephanie Kelton, a prominent supporter of MMT, wrote that \"there are no constraints on the federal budget.\"After the turn of the 20th century, and particularly during and since the Great Recession (2007-2009) political landscape, MMT has been the subject of political debate between post-Keynsian, mainstream, and free-market economic theorists and politicians alike. As of 2019, MMT debates on the debt ceiling have pervaded Congress, with progressive representatives, prominently Alexandria Ocasio-Cortez, boosting the theory to the mainstream, while conservative representatives have been critiquing MMT's potential impacts on government spending and inflation.As of January 2023 Treasury Secretary Janet Yellen supported legislation to abolish the debt limit, which President Biden has ruled out.\n\n\n== References ==\n\n\n== Sources ==\n\"Amerikanere kan l\u00e6re af dansk g\u00e6ldsloft\" (in Danish). DR Nyheder. August 3, 2011. Retrieved May 6, 2013.\n\"Analysis of 2011-2012 Actions Taken and Effect of Delayed Increase on Borrowing Costs\" (PDF). GAO. July 2012. Retrieved January 13, 2013.\nAustin, D. Andrew (August 9, 2017). The Debt Limit Since 2011 (PDF). Washington, DC: Congressional Research Service. Retrieved November 22, 2017.\nMurray, Justin (November 6, 2017). Votes on Measures to Adjust the Statutory Debt Limit, 1978 to Present (PDF). Washington, DC: Congressional Research Service. Retrieved November 22, 2017.\n\"Federal Debt and the Statutory Limit, November 2012\" (PDF). Congressional Budget Office. November 2012.\n\"Delays Create Debt Management Challenges and Increase Uncertainty in the Treasury Market\" (PDF). GAO-11-203. GAO. February 2011. Retrieved January 13, 2013.\nGreen, Joshua (May 9, 2011). \"How Dick Gephardt Fixed the Debt-Ceiling Problem\". The Atlantic.\nKowalcky, Linda W.; LeLoup, Lance T. (1993). \"Congress and the Politics of Statutory Debt Limitation\". Public Administration Review. 53 (1): 14. CiteSeerX 10.1.1.397.5755. doi:10.2307/977272. JSTOR 977272.\nLawder, David (June 29, 2011). \"Prioritizing debt payments won't work: Geithner\". Reuters.\nLevit, Mandy R.; Brass, Clinton T.; Nicola, Timothy J.; Nuschler, Dawn (January 4, 2013). \"Reaching the Debt Limit: Background and Potential Effects on Government Operations\" (PDF). Archived from the original (PDF) on January 23, 2013.\nMasters, Jonathan. \"U.S. Debt Ceiling: Costs and Consequences\". Renewing America. Council on Foreign Relations.\nSahadi, Jeanne (January 7, 2013). \"Debt Ceiling: 'Chaotic' choices on 100 million payments\". CNNMoney. Retrieved January 13, 2013.\nSahadi, Jeanne (May 17, 2013). \"Debt ceiling: Treasury starts juggling act\". CNNMoney. Archived from the original on June 7, 2013.\nSurowiecki, James (August 1, 2011). \"Smash the Ceiling\". The New Yorker.\nSweet, Ken (August 8, 2011). \"Dow plunges after S&amp;P downgrade\". CNNMoney.\nYglesias, Matthew (January 16, 2013). \"What if Congress Doesn't Raise the Debt Ceiling?\". Slate.\n\n\n== Further reading ==\nEisner, Robert (1993). \"Federal Debt\". In David R. Henderson (ed.). Concise Encyclopedia of Economics (1st ed.). Library of Economics and Liberty. OCLC 317650570, 50016270, 163149563\nGeorge J. Hall and Thomas J. Sargent. 2018. \"Brief history of US debt limits before 1939.\" PNAS March 20, 2018. 115 (12) 2942-2945"
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"In the United States, the debt ceiling or debt limit is a legislative limit on the amount of national debt that can be incurred by the U.S. Treasury, thus limiting how much money the federal government may pay by borrowing more money, on the debt it already borrowed. The debt ceiling is an aggregate figure that applies to gross debt, which includes debt in the hands of the public and intra-government accounts. About 0.5 percent of the debt is not covered by the ceiling (as of 10/2013). Because expenditures are authorized by separate legislation, the debt ceiling does not directly limit government deficits. In effect, it can only restrain the Treasury from paying for expenditures and other financial obligations after the limit has been reached, but which have already been approved (in the budget) and appropriated.\nThere is a debate among legal scholars regarding the constitutionality of the debt ceiling. Some scholars argue that the debt ceiling does not provide the legal authority for the United States to default on its debt. Some also argue that the debt ceiling itself is unconstitutional since it does not provide a clear mechanism for the government to meet its constitutional obligation to repay its debts once it meets the borrowing limit.When the debt ceiling is reached without an increase in the limit having been enacted, Treasury will need to resort to \"extraordinary measures\" to temporarily finance government expenditures and obligations until a resolution can be reached. The Treasury has never reached the point of exhausting extraordinary measures, resulting in a constitutionally questionable default, although, on some occasions, it appeared that Congress might allow a default to take place. If this situation were to occur, it is unclear whether the Treasury would be able to prioritize debt payments to avoid a default on its bond obligations. A protracted default could trigger a variety of economic problems including a financial crisis, and a decline in output that would put the country into an economic recession.Management of the United States public debt is an important part of the macroeconomics of the United States economy and finance system, and the debt ceiling is designed to be a constraint on the executive's ability to manage the U.S. economy. There is debate, however, on how the U.S. economy should be managed, and whether a debt ceiling is an appropriate or constitutional mechanism for restraining government spending.The most recent time that the debt ceiling was raised was on June 3, 2023, when U.S. president Joe Biden signed the Fiscal Responsibility Act of 2023 into law ending the 2023 United States debt-ceiling crisis that began on January 19, 2023. The debt limit extends into 2025. Previously, in December 2021, the debt ceiling was raised when it was increased by $2.5 trillion, to $31.381 trillion, which lasted until January 2023.\n\n\n== Background ==\nUnder Article I Section 8 of the United States Constitution, only Congress can authorize the borrowing of money on the credit of the United States. From the founding of the U.S. until 1917, Congress directly authorized each debt issued. To provide more flexibility to finance the United States' involvement in World War I, Congress modified the method by which it authorized debt in the Second Liberty Bond Act of 1917. Under this Act, Congress established an aggregate limit, or \"ceiling,\" on the total amount of new bonds that could be issued.\nThe present debt ceiling is an aggregate limit applied to nearly all federal debt, which was substantially established by the Public Debt Acts of 1939 and 1941 which have subsequently been amended to change the ceiling amount.\nFrom time to time, political disputes arise when the Treasury advises Congress that the debt ceiling is about to be reached and indicates that a default is imminent. When the debt ceiling is reached, and pending an increase in the limit, Treasury may resort to \"extraordinary measures\" to buy more time before the ceiling can be raised by Congress. The U.S. has never reached the point of default where the Treasury was incapable of paying U.S. debt obligations, though it has been close on several occasions. The only exception was during the War of 1812 when parts of Washington D.C. including the Treasury were burned.In 2011, the U.S. reached a crisis point of near default on public debt. The delay in raising the debt ceiling resulted in the first downgrade in the United States credit rating, a sharp drop in the stock market, and an increase in borrowing costs. Congress raised the debt limit with the Budget Control Act of 2011, which added to the fiscal cliff when the new ceiling was reached on December 31, 2012.\n\n\n== Relationship to federal budget ==\nThe process of setting the debt ceiling is separate and distinct from the United States budget process, and raising the debt ceiling neither directly increases nor decreases the budget deficit, and vice versa. The Government Accountability Office explains, \"the debt limit does not control or limit the ability of the federal government to run deficits or incur obligations. Rather, it is a limit on the ability to pay obligations already incurred.\"The President formulates a federal budget every year, which Congress must pass, sometimes with amendments, in a concurrent resolution, which does not require the President's signature and is not binding. The budget details projected tax collections and expenditures and, therefore, specifies the estimated amount of borrowing the government would have to do in that fiscal year.\n\n\n=== Debt not covered by ceiling ===\nIn December 2012, the Treasury calculated that $239 million in United States Notes were in circulation, which in accordance with the debt ceiling legislation, are excluded from the statutory debt limit. The $239 million excludes $25 million in U.S. Notes issued prior to July 1, 1929, determined pursuant to Act of June 30, 1961, 31 U.S.C. 5119, to have been destroyed or irretrievably lost.Debts of the Federal Financing Bank are not debts of the government per se and therefore are also not subject to the ceiling, but have a separate limit of $15 billion.\n\n\n== Legislative history ==\n\nBefore 1917, the U.S. had no debt ceiling. Congress either authorized specific loans or allowed the Treasury to issue certain debt instruments and individual debt issues for specific purposes. Sometimes Congress gave the Treasury discretion over what type of debt instrument would be issued. 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.In 1953, the U.S. Treasury risked reaching the debt ceiling of $275 billion. Though President Eisenhower requested that Congress increase it on July 30, 1953, the Senate refused to act on it. As a result, the president asked federal agencies to reduce how much they spent, plus the Treasury Department used its cash balances with banks to stay under the debt ceiling. And, starting in November 1953, Treasury monetized close to $1 billion of gold left over in its vaults, which helped keep it from exceeding the $275 billion limit. During spring and summer 1954, the Senate and the executive branch negotiated on a debt ceiling increase, and a $6 billion one was passed on August 28, 1954.Before the Budget and Impoundment Control Act of 1974, the debt ceiling played an important role in enabling Congress to hold hearings and debates on the budget. James Surowiecki argued that the debt ceiling lost its usefulness after these reforms to the budget process.In 1979, noting the potential problems of hitting a default, Dick Gephardt imposed the \"Gephardt Rule,\" a parliamentary rule that deemed the debt ceiling was 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-controlled Congress in 1995.A vote to increase the debt ceiling has usually been (since the 1950s) a legal budgetary formality between the President and Congress. As of 1993 the debt ceiling had not historically been a political issue that would make the elected government fail to pass a yearly budget.\n\n\n=== Debt ceiling increases under Presidents Ronald Reagan and George H. W. Bush ===\nUnder the two terms of President Ronald Reagan, the House was controlled by Democrats, and the Senate was, at various points, under the control of both parties. Early in his term, Reagan faced some bipartisan resistance from Congress for a 1981 raising of the debt limit. But Democrats, using the Gephardt Rule, joined with Republicans to increase the debt ceiling eighteen separate times.Under President George H.W. Bush, Democrats controlled both the House and Senate. Again using the Gephardt Rule, Congress increased the debt ceiling nine times without controversy.\n\n\n=== Debt ceiling increases under President Bill Clinton ===\n\nThe debt-ceiling debate of 1995 led to a showdown on the federal budget and resulted in the U.S. federal government shutdowns of 1995 and 1996.\n\n\n=== Debt ceiling increases under President George W. Bush ===\nWhile George W. Bush was President, both Republicans and Democrats controlled the House and the Senate at various points during his term. Congress increased the debt ceiling eight times in 2002, 2003, 2004, 2006, 2007, and twice in 2008.When Republicans were in the majority, they consistently voted to increase the debt ceiling. While some Democrats did vote against the debt ceiling when the process was controlled by a Republican majority, Democrats did not filibuster debt limit increases in 2003, 2004 and 2006, allowing Senate Republicans to raise the debt limit with a simple majority.When Democrats controlled the House and the Senate in the last two years of George W. Bush's term, Democratic majorities in the House and the Senate reinstated the automatic Gephardt Rule and increased the debt ceiling three times without attaching preconditions.\n\n\n=== Debt ceiling increases under President Barack Obama ===\n\nIn 2011, Republicans took control of Congress and again suspended the Gephardt Rule as they had under Clinton. The Republican majority in Congress demanded deficit reduction as part of raising the debt ceiling. The resulting contention was resolved on August 2, 2011, by the Budget Control Act of 2011. Under the \"McConnell Rule,\" the president was allowed to unilaterally raise the debt ceiling. This action could be overturned by an act of Congress, but this would require a 2\u20443 majority vote in both houses assuming that the president vetoed the act.On August 5, 2011, Standard &amp; Poors issued the first ever downgrade in the federal government's credit rating, citing their April warnings, the difficulty of bridging the parties and that the resulting agreement fell well short of the hoped-for comprehensive 'grand bargain'. The credit downgrade and debt ceiling debacle contributed to the Dow Jones Industrial Average (DJIA) falling nearly 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.Following the increase in the debt ceiling to $16.394 trillion in 2011, the U.S. 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. Extraordinary measures were expected to be exhausted by February 15.Another debt ceiling crisis arose in early 2013 when the ceiling was reached again, and the Treasury adopted extraordinary measures to avoid a default. The Treasury said it was not set up to prioritize payments and had given the opinion that it is unclear whether 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 was not raised. Economists estimated that such an action would cause GDP to contract by 7 percent, which is larger than the contraction during 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 the freeze in their revenue.The 2013 crisis was temporarily resolved on February 4, 2013, when President Barack Obama signed the No Budget, No Pay Act of 2013 which suspended the debt ceiling 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. During the suspension period, the Treasury was authorized to borrow to the extent that it \"is required to meet existing commitments\". On May 19, the debt ceiling was raised by $306 billion to cover the borrowings done during the suspension period, as well as commitments that accrued in the preceding period that extraordinary measures were in place, which commenced on December 31, 2012.Treasury Secretary Jack Lew notified Congress that these measures would be exhausted by October 17, 2013 and that a default would occur on October 17 when interest payments came due. From October 17, 2013 until February 7, 2014, the debt ceiling was again suspended. On February 12, 2014, the Temporary Debt Limit Extension Act was passed, suspending the debt ceiling until March 15, 2015. At that time, the Treasury Department took extraordinary measures.The debt ceiling would again have been reached on November 3, 2015. But on October 30, 2015, the debt ceiling was again suspended to March 2017.\n\n\n=== Debt ceiling increases under President Donald Trump ===\nWhen Donald Trump was President, the debt ceiling was subject to less partisan controversy. The administration and the Republicans who controlled the House and the Senate prioritized tax cuts over a balanced budget.\nThe ceiling was suspended three times: from September 30, 2017, to December 8, 2017; from December 8, 2017 to March 1, 2019; and, after concerns were raised from Treasury in July 2019 of an unexpected shortfall due to reduced tax receipts under Trump's tax legislation, from August 2, 2019 to July 31, 2021.Congress did not impose any preconditions or significant spending cuts. Democrats in the Senate could have threatened to stop the debt ceiling increase by use of the filibuster but declined to do so.\n\n\n=== Debt ceiling increases under President Joe Biden ===\n\nDuring Biden's first two years as president, the House and Senate were both controlled by the Democratic Party. In October 2021, the debt ceiling was increased by $480 billion, as a temporary measure requiring fresh legislation by December 3, 2021. That month, Congress voted to increase it by $2.5 trillion, which President Biden signed into effect on December 16, 2021. At that point, it was set at about $31.4 trillion.On January 19, 2023, the United States hit its debt ceiling of $31.4 trillion. By this time, Republicans had taken control of the House during the 2022 midterm elections. Although Republicans were a minority in the Senate, they threatened for the first time in American history to use the filibuster to stop the debt ceiling increase. The crisis was resolved by negotiation of the Fiscal Responsibility Act of 2023.\n\n\n== Extraordinary measures ==\nThe Treasury Department is permitted to borrow funds needed to fund government operations, as had been authorized by congressional appropriations, up to the debt ceiling, with some small exceptions. In a letter to Congress on April 4, 2011, Treasury Secretary Timothy Geithner explained that when the debt ceiling is reached, the Treasury can declare a \"debt issuance suspension period\" during which it can take \"extraordinary measures\" to continue meeting federal obligations provided that it does not involve the issue of new debt. These measures are taken to avoid, as far as resources permit, a partial government shutdown or a default on the debt. These methods have been used on several previous occasions in which federal debt neared its statutory limit.Extraordinary measures can include suspending investments in the G Fund of the Thrift Savings Plan of individual retirement funds of federal employees. In 2011, extraordinary measures included suspending investments in the Civil Service Retirement and Disability Fund (CSRDF), the Postal Service Retiree Health Benefits Fund (Postal Benefits Fund), and the Exchange Stabilization Fund (ESF). In addition, certain CSRDF investments were also redeemed early. In 1985, the Treasury had also exchanged Treasury securities for non-Treasury securities held by the Federal Financing Bank.However, these amounts are not sufficient to cover government operations for extended periods. Treasury first implemented these measures on December 16, 2009, to avoid a government shutdown. These measures were implemented again on May 16, 2011, when Treasury Secretary Geithner declared a \"debt issuance suspension period\". According to his letter to Congress, this period could \"last until August 2, 2011, when the Department of the Treasury projects that the borrowing authority of the United States will be exhausted\".The measures were again implemented on December 31, 2012, the start of the debt ceiling crisis of 2013 with the default trigger date ticking to February 2013. The crisis was deferred with the suspension of the limit on February 4, and the cancellation of the extraordinary measures. The measures were again invoked at the end of the ceiling's suspension on May 19, 2013, with the date of exhaustion of the resources and the default trigger date being estimated by the Treasury as October 17. The ceiling was again suspended by legislation on that date until February 4, 2014.\n\n\n== Default on financial obligations ==\nAccording to the text of the debt ceiling law, if the debt ceiling is not raised and extraordinary measures are exhausted, the U.S. government is legally unable to borrow money to pay its financial obligations. At that point, the law indicates that the government must cease making payments unless the treasury has cash on hand to cover them. In addition, the law indicates that the government would not have the resources to pay the interest on (and some time redeem) government securities when due, which would be characterized as a default. A default may affect the United States' sovereign risk rating and the interest rate that it will be required to pay on future debt. As of 2012, the U.S. defaulted on its financial obligations once in 1979, due to a computer backlog, but the periodic crises relating to the debt ceiling have led several rating agencies to United States federal government credit-rating downgrades. As of 2012, the GAO estimated that the delay in raising the debt ceiling during the debt ceiling crisis of 2011 raised borrowing costs for the government by $1.3 billion in the fiscal year 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.As of 2012, some writers expressed the view that if extraordinary measures are exhausted, the executive branch has the authority to determine which obligations are paid and which are not, though the Treasury has argued that all obligations are on equal footing under the law. The writers have argued that the executive branch can choose to prioritize interest payments on bonds, which would avoid an immediate, direct default on sovereign debt. During the debt ceiling crisis of 2011, Treasury Secretary Timothy Geitner argued that prioritization of interest payments would not help since government expenditures would have needed to be cut by an unrealistic 40% if the debt ceiling is not raised. Also, a default on non-debt obligations would still undermine American creditworthiness according to at least one rating agency. In 2011, the Treasury suggested that it could not prioritize certain types of expenditures because all expenditures are on equal footing under the law. In this view, when extraordinary measures are exhausted, no payments could be made except when money (such as tax receipts) is in the treasury, at all and the U.S. would be in default on all of its obligations. The CBO notes, that prioritization would not avoid the technical definition found in Black's Law Dictionary where default is defined as \u201cthe failure to make a payment when due.\u201dMany scholars argue that debt ceiling law is unconstitutional and there is no legal basis by which the U.S. government may default on any of its debt. They point to Section Four of the 14th Amendment of the United States Constitution, which states that \"the validity of the public debt of the United States...shall not be questioned.\" They argue that it was unconstitutional for the U.S. Congress to pass the debt ceiling law in the first place, since the law does not provide a clear way for the U.S. to pay its debts and implicitly requires a default. Harvard University legal scholar Laurence Tribe argues that \"using the ceiling to make us default on our debts clearly would be unconstitutional.\" This argument has also been endorsed by various politicians, including President Bill Clinton, former labor secretary Robert Reich, Representative Jerry Nadler, and Representative James Clyburn. In 2023, a group of lawmakers from the Senate and House of Representatives sent a letter to President Biden encouraging him to consider invoking the 14th Amendment to pay government debts. However, there are scholars who argue that even if the law itself is unconstitutional, that determination must be made by the courts and the President does not have the authority to unilaterally ignore the debt ceiling law. In practice, the administrations of Presidents Barack Obama and Joe Biden have rejected relying on legal arguments against the constitutionality of the debt ceiling. Obama said in 2011 that his lawyers \"were not persuaded that that is a winning argument.\" In 2023, Biden's Treasury Secretary Janet Yellen called this strategy \"legally questionable.\" Biden himself said \"I think we have the authority\" to invoke the 14th Amendment to pay government debts, suggesting that he would explore this question in the future, but he questioned the practicality of relying on this approach to defuse a debt ceiling standoff. In May 2023, the National Association of Government Employees filed a lawsuit in federal court alleging that the debt ceiling law is unconstitutional.\n\n\n== Debate on debt ceiling ==\nReports to Congress from the OMB and other sources in the 1990s have repeatedly stated that the debt limit is an ineffective means to restrain the growth of debt.In 2011, James Surowiecki argued that the debt ceiling originally served a useful purpose. When introduced, presidents had stronger authority to borrow and spend as they pleased. However, after 1974 the Congress began passing comprehensive budget resolutions which specified exactly how much money the government could spend.The apparent redundancy of the debt ceiling has led to suggestions that it should be abolished altogether. Several Democratic House members, including Peter Welch, proposed abolishing the debt ceiling. The proposal found support from some economists such as Jacob Funk Kirkegaard, a senior fellow at the Peterson Institute for International Economics.\nIn January 2013, a survey of 38 highly regarded economists found that 84 percent agreed that, since Congress already approves spending and taxation, \"a separate debt ceiling that has to be increased periodically creates unneeded uncertainty and can potentially lead to worse fiscal outcomes.\" Only one member of the panel, Luigi Zingales, disagreed with the statement. Rating agency Moody's has stated that \"the debt limit creates a high level of uncertainty\" and that the government should change \"its framework for managing government debt to lessen or eliminate that uncertainty\".In 2021, the U.S. debt ceiling has been described as \"anachronistic\", with the two major parties criticized for utilizing the debt ceiling to play a dangerous game of chicken for purely partisan political purposes.\n\n\n=== Modern Monetary Theory ===\nProponents of Modern Monetary Theory (MMT), a heterodox, post-Keynesian economic theory which arose in the late 20th century, have critiqued the concept of the debt ceiling and its theoretical and practical uses. A core tenet of MMT is that currency arose from and is wholly controlled as fiat money by governments, the latter claim is dependent on the government as the sovereign issuer of the given currency. As of 2019, MMT theorists believed that governments have the power to create and spend money within a limit of reason without creating hyperinflation, as well as the ability to forgive its debt or repay itself; in contrast, as of 2020, orthodox economic theorists tended to focus on national deficit as a debt that needs to be repaid eventually. As a result, MMT theorists argue the debt ceiling is largely a symbolic limit on government spending; in 2020 Stephanie Kelton, a prominent supporter of MMT, wrote that \"there are no constraints on the federal budget.\"After the turn of the 20th century, and particularly during and since the Great Recession (2007-2009) political landscape, MMT has been the subject of political debate between post-Keynsian, mainstream, and free-market economic theorists and politicians alike. As of 2019, MMT debates on the debt ceiling have pervaded Congress, with progressive representatives, prominently Alexandria Ocasio-Cortez, boosting the theory to the mainstream, while conservative representatives have been critiquing MMT's potential impacts on government spending and inflation.As of January 2023 Treasury Secretary Janet Yellen supported legislation to abolish the debt limit, which President Biden has ruled out.\n\n\n== References ==\n\n\n== Sources ==\n\"Amerikanere kan l\u00e6re af dansk g\u00e6ldsloft\" (in Danish). DR Nyheder. August 3, 2011. Retrieved May 6, 2013.\n\"Analysis of 2011-2012 Actions Taken and Effect of Delayed Increase on Borrowing Costs\" (PDF). GAO. July 2012. Retrieved January 13, 2013.\nAustin, D. Andrew (August 9, 2017). The Debt Limit Since 2011 (PDF). Washington, DC: Congressional Research Service. Retrieved November 22, 2017.\nMurray, Justin (November 6, 2017). Votes on Measures to Adjust the Statutory Debt Limit, 1978 to Present (PDF). Washington, DC: Congressional Research Service. Retrieved November 22, 2017.\n\"Federal Debt and the Statutory Limit, November 2012\" (PDF). Congressional Budget Office. November 2012.\n\"Delays Create Debt Management Challenges and Increase Uncertainty in the Treasury Market\" (PDF). GAO-11-203. GAO. February 2011. Retrieved January 13, 2013.\nGreen, Joshua (May 9, 2011). \"How Dick Gephardt Fixed the Debt-Ceiling Problem\". The Atlantic.\nKowalcky, Linda W.; LeLoup, Lance T. (1993). \"Congress and the Politics of Statutory Debt Limitation\". Public Administration Review. 53 (1): 14. CiteSeerX 10.1.1.397.5755. doi:10.2307/977272. JSTOR 977272.\nLawder, David (June 29, 2011). \"Prioritizing debt payments won't work: Geithner\". Reuters.\nLevit, Mandy R.; Brass, Clinton T.; Nicola, Timothy J.; Nuschler, Dawn (January 4, 2013). \"Reaching the Debt Limit: Background and Potential Effects on Government Operations\" (PDF). Archived from the original (PDF) on January 23, 2013.\nMasters, Jonathan. \"U.S. Debt Ceiling: Costs and Consequences\". Renewing America. Council on Foreign Relations.\nSahadi, Jeanne (January 7, 2013). \"Debt Ceiling: 'Chaotic' choices on 100 million payments\". CNNMoney. Retrieved January 13, 2013.\nSahadi, Jeanne (May 17, 2013). \"Debt ceiling: Treasury starts juggling act\". CNNMoney. Archived from the original on June 7, 2013.\nSurowiecki, James (August 1, 2011). \"Smash the Ceiling\". The New Yorker.\nSweet, Ken (August 8, 2011). \"Dow plunges after S&amp;P downgrade\". CNNMoney.\nYglesias, Matthew (January 16, 2013). \"What if Congress Doesn't Raise the Debt Ceiling?\". Slate.\n\n\n== Further reading ==\nEisner, Robert (1993). \"Federal Debt\". In David R. Henderson (ed.). Concise Encyclopedia of Economics (1st ed.). Library of Economics and Liberty. OCLC 317650570, 50016270, 163149563\nGeorge J. Hall and Thomas J. Sargent. 2018. \"Brief history of US debt limits before 1939.\" PNAS March 20, 2018. 115 (12) 2942-2945"
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"chunk": "In the United States, the debt ceiling or debt limit is a legislative limit on the amount of national debt that can be incurred by the U.S. Treasury, thus limiting how much money the federal government may pay by borrowing more money, on the debt it already borrowed. The debt ceiling is an aggregate figure that applies to gross debt, which includes debt in the hands of the public and intra-government accounts. About 0.5 percent of the debt is not covered by the ceiling (as of 10/2013). Because expenditures are authorized by separate legislation, the debt ceiling does not directly limit government deficits. In effect, it can only restrain the Treasury from paying for expenditures and other financial obligations after the limit has been reached, but which have already been approved (in the budget) and appropriated.\nThere is a debate among legal scholars regarding the constitutionality of the debt ceiling. Some scholars argue that the debt ceiling does not provide the legal authority for the United States to default on its debt. Some also argue that the debt ceiling itself is unconstitutional since it does not provide a clear mechanism for the government to meet its constitutional obligation to repay its debts once it meets the borrowing limit.When the debt ceiling is reached without an increase in the limit having been enacted, Treasury will need to resort to \"extraordinary measures\" to temporarily finance government expenditures and obligations until a resolution can be reached. The Treasury has never reached the point of exhausting extraordinary measures, resulting in a constitutionally questionable default, although, on some occasions, it appeared that Congress might allow a default to take place. If this situation were to occur, it is unclear whether the Treasury would be able to prioritize debt payments to avoid a default on its bond obligations. A protracted default could trigger a variety of economic problems including a financial crisis, and a decline in output that would put the country into an economic recession.Management of the United States public debt is an important part of the macroeconomics of the United States economy and finance system, and the debt ceiling is designed to be a constraint on the executive's ability to manage the U.S. economy. There is debate, however, on how the U.S. economy should be managed, and whether a debt ceiling is an appropriate or constitutional mechanism for restraining government spending.The most recent time that the debt ceiling was raised was on June 3, 2023, when U.S. president Joe Biden signed the Fiscal Responsibility Act of 2023 into law ending the 2023 United States debt-ceiling crisis that began on January 19, 2023. The debt limit extends into 2025. Previously, in December 2021, the debt ceiling was raised when it was increased by $2.5 trillion, to $31.381 trillion, which lasted until January 2023.\n\n\n== Background ==\nUnder Article I Section 8 of the United States Constitution, only Congress can authorize the borrowing of money on the credit of the United States. From the founding of the U.S. until 1917, Congress directly authorized each debt issued. To provide more flexibility to finance the United States' involvement in World War I, Congress modified the method by which it authorized debt in the Second Liberty Bond Act of 1917. Under this Act, Congress established an aggregate limit, or \"ceiling,\" on the total amount of new bonds that could be issued.\nThe present debt ceiling is an aggregate limit applied to nearly all federal debt, which was substantially established by the Public Debt Acts of 1939 and 1941 which have subsequently been amended to change the ceiling amount.\nFrom time to time, political disputes arise when the Treasury advises Congress that the debt ceiling is about to be reached and indicates that a default is imminent. When the debt ceiling is reached, and pending an increase in the limit, Treasury may resort to \"extraordinary measures\" to buy more time before the ceiling can be raised by Congress. The U.S. has never reached the point of default where the Treasury was incapable of paying U.S. debt obligations, though it has been close on several occasions. The only exception was during the War of 1812 when parts of Washington D.C. including the Treasury were burned.In 2011, the U.S. reached a crisis point of near default on public debt. The delay in raising the debt ceiling resulted in the first downgrade in the United States credit rating, a sharp drop in the stock market, and an increase in borrowing costs. Congress raised the debt limit with the Budget Control Act of 2011, which added to the fiscal cliff when the new ceiling was reached on December 31, 2012.\n\n\n== Relationship to federal budget ==\nThe process of setting the debt ceiling is separate and distinct from the United States budget process, and raising the debt ceiling neither directly increases nor decreases the budget deficit, and vice versa. The Government Accountability Office explains, \"the debt limit does not control or limit the ability of the federal government to run deficits or incur obligations. Rather, it is a limit on the ability to pay obligations already incurred.\"The President formulates a federal budget every year, which Congress must pass, sometimes with amendments, in a concurrent resolution, which does not require the President's signature and is not binding. The budget details projected tax collections and expenditures and, therefore, specifies the estimated amount of borrowing the government would have to do in that fiscal year.\n\n\n=== Debt not covered by ceiling ===\nIn December 2012, the Treasury calculated that $239 million in United States Notes were in circulation, which in accordance with the debt ceiling legislation, are excluded from the statutory debt limit. The $239 million excludes $25 million in U.S. Notes issued prior to July 1, 1929, determined pursuant to Act of June 30, 1961, 31 U.S.C. 5119, to have been destroyed or irretrievably lost.Debts of the Federal Financing Bank are not debts of the government per se and therefore are also not subject to the ceiling, but have a separate limit of $15 billion.\n\n\n== Legislative history ==\n\nBefore 1917, the U.S. had no debt ceiling. Congress either authorized specific loans or allowed the Treasury to issue certain debt instruments and individual debt issues for specific purposes. Sometimes Congress gave the Treasury discretion over what type of debt instrument would be issued. 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.In 1953, the U.S. Treasury risked reaching the debt ceiling of $275 billion. Though President Eisenhower requested that Congress increase it on July 30, 1953, the Senate refused to act on it. As a result, the president asked federal agencies to reduce how much they spent, plus the Treasury Department used its cash balances with banks to stay under the debt ceiling. And, starting in November 1953, Treasury monetized close to $1 billion of gold left over in its vaults, which helped keep it from exceeding the $275 billion limit. During spring and summer 1954, the Senate and the executive branch negotiated on a debt ceiling increase, and a $6 billion one was passed on August 28, 1954.Before the Budget and Impoundment Control Act of 1974, the debt ceiling played an important role in enabling Congress to hold hearings and debates on the budget. James Surowiecki argued that the debt ceiling lost its usefulness after these reforms to the budget process.In 1979, noting the potential problems of hitting a default, Dick Gephardt imposed the \"Gephardt Rule,\" a parliamentary rule that deemed the debt ceiling was 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-controlled Congress in 1995.A vote to increase the debt ceiling has usually been (since the 1950s) a legal budgetary formality between the President and Congress. As of 1993 the debt ceiling had not historically been a political issue that would make the elected government fail to pass a yearly budget.\n\n\n=== Debt ceiling increases under Presidents Ronald Reagan and George H. W. Bush ===\nUnder the two terms of President Ronald Reagan, the House was controlled by Democrats, and the Senate was, at various points, under the control of both parties. Early in his term, Reagan faced some bipartisan resistance from Congress for a 1981 raising of the debt limit. But Democrats, using the Gephardt Rule, joined with Republicans to increase the debt ceiling eighteen separate times.Under President George H.W. Bush, Democrats controlled both the House and Senate. Again using the Gephardt Rule, Congress increased the debt ceiling nine times without controversy.\n\n\n=== Debt ceiling increases under President Bill Clinton ===\n\nThe debt-ceiling debate of 1995 led to a showdown on the federal budget and resulted in the U.S. federal government shutdowns of 1995 and 1996.\n\n\n=== Debt ceiling increases under President George W. Bush ===\nWhile George W. Bush was President, both Republicans and Democrats controlled the House and the Senate at various points during his term. Congress increased the debt ceiling eight times in 2002, 2003, 2004, 2006, 2007, and twice in 2008.When Republicans were in the majority, they consistently voted to increase the debt ceiling. While some Democrats did vote against the debt ceiling when the process was controlled by a Republican majority, Democrats did not filibuster debt limit increases in 2003, 2004 and 2006, allowing Senate Republicans to raise the debt limit with a simple majority.When Democrats controlled the House and the Senate in the last two years of George W. Bush's term, Democratic majorities in the House and the Senate reinstated the automatic Gephardt Rule and increased the debt ceiling three times without attaching preconditions.\n\n\n=== Debt ceiling increases under President Barack Obama ===\n\nIn 2011, Republicans took control of Congress and again suspended the Gephardt Rule as they had under Clinton. The Republican majority in Congress demanded deficit reduction as part of raising the debt ceiling. The resulting contention was resolved on August 2, 2011, by the Budget Control Act of 2011. Under the \"McConnell Rule,\" the president was allowed to unilaterally raise the debt ceiling. This action could be overturned by an act of Congress, but this would require a 2\u20443 majority vote in both houses assuming that the president vetoed the act.On August 5, 2011, Standard &amp; Poors issued the first ever downgrade in the federal government's credit rating, citing their April warnings, the difficulty of bridging the parties and that the resulting agreement fell well short of the hoped-for comprehensive 'grand bargain'. The credit downgrade and debt ceiling debacle contributed to the Dow Jones Industrial Average (DJIA) falling nearly 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.Following the increase in the debt ceiling to $16.394 trillion in 2011, the U.S. 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. Extraordinary measures were expected to be exhausted by February 15.Another debt ceiling crisis arose in early 2013 when the ceiling was reached again, and the Treasury adopted extraordinary measures to avoid a default. The Treasury said it was not set up to prioritize payments and had given the opinion that it is unclear whether 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 was not raised. Economists estimated that such an action would cause GDP to contract by 7 percent, which is larger than the contraction during 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 the freeze in their revenue.The 2013 crisis was temporarily resolved on February 4, 2013, when President Barack Obama signed the No Budget, No Pay Act of 2013 which suspended the debt ceiling 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. During the suspension period, the Treasury was authorized to borrow to the extent that it \"is required to meet existing commitments\". On May 19, the debt ceiling was raised by $306 billion to cover the borrowings done during the suspension period, as well as commitments that accrued in the preceding period that extraordinary measures were in place, which commenced on December 31, 2012.Treasury Secretary Jack Lew notified Congress that these measures would be exhausted by October 17, 2013 and that a default would occur on October 17 when interest payments came due. From October 17, 2013 until February 7, 2014, the debt ceiling was again suspended. On February 12, 2014, the Temporary Debt Limit Extension Act was passed, suspending the debt ceiling until March 15, 2015. At that time, the Treasury Department took extraordinary measures.The debt ceiling would again have been reached on November 3, 2015. But on October 30, 2015, the debt ceiling was again suspended to March 2017.\n\n\n=== Debt ceiling increases under President Donald Trump ===\nWhen Donald Trump was President, the debt ceiling was subject to less partisan controversy. The administration and the Republicans who controlled the House and the Senate prioritized tax cuts over a balanced budget.\nThe ceiling was suspended three times: from September 30, 2017, to December 8, 2017; from December 8, 2017 to March 1, 2019; and, after concerns were raised from Treasury in July 2019 of an unexpected shortfall due to reduced tax receipts under Trump's tax legislation, from August 2, 2019 to July 31, 2021.Congress did not impose any preconditions or significant spending cuts. Democrats in the Senate could have threatened to stop the debt ceiling increase by use of the filibuster but declined to do so.\n\n\n=== Debt ceiling increases under President Joe Biden ===\n\nDuring Biden's first two years as president, the House and Senate were both controlled by the Democratic Party. In October 2021, the debt ceiling was increased by $480 billion, as a temporary measure requiring fresh legislation by December 3, 2021. That month, Congress voted to increase it by $2.5 trillion, which President Biden signed into effect on December 16, 2021. At that point, it was set at about $31.4 trillion.On January 19, 2023, the United States hit its debt ceiling of $31.4 trillion. By this time, Republicans had taken control of the House during the 2022 midterm elections. Although Republicans were a minority in the Senate, they threatened for the first time in American history to use the filibuster to stop the debt ceiling increase. The crisis was resolved by negotiation of the Fiscal Responsibility Act of 2023.\n\n\n== Extraordinary measures ==\nThe Treasury Department is permitted to borrow funds needed to fund government operations, as had been authorized by congressional appropriations, up to the debt ceiling, with some small exceptions. In a letter to Congress on April 4, 2011, Treasury Secretary Timothy Geithner explained that when the debt ceiling is reached, the Treasury can declare a \"debt issuance suspension period\" during which it can take \"extraordinary measures\" to continue meeting federal obligations provided that it does not involve the issue of new debt. These measures are taken to avoid, as far as resources permit, a partial government shutdown or a default on the debt. These methods have been used on several previous occasions in which federal debt neared its statutory limit.Extraordinary measures can include suspending investments in the G Fund of the Thrift Savings Plan of individual retirement funds of federal employees. In 2011, extraordinary measures included suspending investments in the Civil Service Retirement and Disability Fund (CSRDF), the Postal Service Retiree Health Benefits Fund (Postal Benefits Fund), and the Exchange Stabilization Fund (ESF). In addition, certain CSRDF investments were also redeemed early. In 1985, the Treasury had also exchanged Treasury securities for non-Treasury securities held by the Federal Financing Bank.However, these amounts are not sufficient to cover government operations for extended periods. Treasury first implemented these measures on December 16, 2009, to avoid a government shutdown. These measures were implemented again on May 16, 2011, when Treasury Secretary Geithner declared a \"debt issuance suspension period\". According to his letter to Congress, this period could \"last until August 2, 2011, when the Department of the Treasury projects that the borrowing authority of the United States will be exhausted\".The measures were again implemented on December 31, 2012, the start of the debt ceiling crisis of 2013 with the default trigger date ticking to February 2013. The crisis was deferred with the suspension of the limit on February 4, and the cancellation of the extraordinary measures. The measures were again invoked at the end of the ceiling's suspension on May 19, 2013, with the date of exhaustion of the resources and the default trigger date being estimated by the Treasury as October 17. The ceiling was again suspended by legislation on that date until February 4, 2014.\n\n\n== Default on financial obligations ==\nAccording to the text of the debt ceiling law, if the debt ceiling is not raised and extraordinary measures are exhausted, the U.S. government is legally unable to borrow money to pay its financial obligations. At that point, the law indicates that the government must cease making payments unless the treasury has cash on hand to cover them. In addition, the law indicates that the government would not have the resources to pay the interest on (and some time redeem) government securities when due, which would be characterized as a default. A default may affect the United States' sovereign risk rating and the interest rate that it will be required to pay on future debt. As of 2012, the U.S. defaulted on its financial obligations once in 1979, due to a computer backlog, but the periodic crises relating to the debt ceiling have led several rating agencies to United States federal government credit-rating downgrades. As of 2012, the GAO estimated that the delay in raising the debt ceiling during the debt ceiling crisis of 2011 raised borrowing costs for the government by $1.3 billion in the fiscal year 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.As of 2012, some writers expressed the view that if extraordinary measures are exhausted, the executive branch has the authority to determine which obligations are paid and which are not, though the Treasury has argued that all obligations are on equal footing under the law. The writers have argued that the executive branch can choose to prioritize interest payments on bonds, which would avoid an immediate, direct default on sovereign debt. During the debt ceiling crisis of 2011, Treasury Secretary Timothy Geitner argued that prioritization of interest payments would not help since government expenditures would have needed to be cut by an unrealistic 40% if the debt ceiling is not raised. Also, a default on non-debt obligations would still undermine American creditworthiness according to at least one rating agency. In 2011, the Treasury suggested that it could not prioritize certain types of expenditures because all expenditures are on equal footing under the law. In this view, when extraordinary measures are exhausted, no payments could be made except when money (such as tax receipts) is in the treasury, at all and the U.S. would be in default on all of its obligations. The CBO notes, that prioritization would not avoid the technical definition found in Black's Law Dictionary where default is defined as \u201cthe failure to make a payment when due.\u201dMany scholars argue that debt ceiling law is unconstitutional and there is no legal basis by which the U.S. government may default on any of its debt. They point to Section Four of the 14th Amendment of the United States Constitution, which states that \"the validity of the public debt of the United States...shall not be questioned.\" They argue that it was unconstitutional for the U.S. Congress to pass the debt ceiling law in the first place, since the law does not provide a clear way for the U.S. to pay its debts and implicitly requires a default. Harvard University legal scholar Laurence Tribe argues that \"using the ceiling to make us default on our debts clearly would be unconstitutional.\" This argument has also been endorsed by various politicians, including President Bill Clinton, former labor secretary Robert Reich, Representative Jerry Nadler, and Representative James Clyburn. In 2023, a group of lawmakers from the Senate and House of Representatives sent a letter to President Biden encouraging him to consider invoking the 14th Amendment to pay government debts. However, there are scholars who argue that even if the law itself is unconstitutional, that determination must be made by the courts and the President does not have the authority to unilaterally ignore the debt ceiling law. In practice, the administrations of Presidents Barack Obama and Joe Biden have rejected relying on legal arguments against the constitutionality of the debt ceiling. Obama said in 2011 that his lawyers \"were not persuaded that that is a winning argument.\" In 2023, Biden's Treasury Secretary Janet Yellen called this strategy \"legally questionable.\" Biden himself said \"I think we have the authority\" to invoke the 14th Amendment to pay government debts, suggesting that he would explore this question in the future, but he questioned the practicality of relying on this approach to defuse a debt ceiling standoff. In May 2023, the National Association of Government Employees filed a lawsuit in federal court alleging that the debt ceiling law is unconstitutional.\n\n\n== Debate on debt ceiling ==\nReports to Congress from the OMB and other sources in the 1990s have repeatedly stated that the debt limit is an ineffective means to restrain the growth of debt.In 2011, James Surowiecki argued that the debt ceiling originally served a useful purpose. When introduced, presidents had stronger authority to borrow and spend as they pleased. However, after 1974 the Congress began passing comprehensive budget resolutions which specified exactly how much money the government could spend.The apparent redundancy of the debt ceiling has led to suggestions that it should be abolished altogether. Several Democratic House members, including Peter Welch, proposed abolishing the debt ceiling. The proposal found support from some economists such as Jacob Funk Kirkegaard, a senior fellow at the Peterson Institute for International Economics.\nIn January 2013, a survey of 38 highly regarded economists found that 84 percent agreed that, since Congress already approves spending and taxation, \"a separate debt ceiling that has to be increased periodically creates unneeded uncertainty and can potentially lead to worse fiscal outcomes.\" Only one member of the panel, Luigi Zingales, disagreed with the statement. Rating agency Moody's has stated that \"the debt limit creates a high level of uncertainty\" and that the government should change \"its framework for managing government debt to lessen or eliminate that uncertainty\".In 2021, the U.S. debt ceiling has been described as \"anachronistic\", with the two major parties criticized for utilizing the debt ceiling to play a dangerous game of chicken for purely partisan political purposes.\n\n\n=== Modern Monetary Theory ===\nProponents of Modern Monetary Theory (MMT), a heterodox, post-Keynesian economic theory which arose in the late 20th century, have critiqued the concept of the debt ceiling and its theoretical and practical uses. A core tenet of MMT is that currency arose from and is wholly controlled as fiat money by governments, the latter claim is dependent on the government as the sovereign issuer of the given currency. As of 2019, MMT theorists believed that governments have the power to create and spend money within a limit of reason without creating hyperinflation, as well as the ability to forgive its debt or repay itself; in contrast, as of 2020, orthodox economic theorists tended to focus on national deficit as a debt that needs to be repaid eventually. As a result, MMT theorists argue the debt ceiling is largely a symbolic limit on government spending; in 2020 Stephanie Kelton, a prominent supporter of MMT, wrote that \"there are no constraints on the federal budget.\"After the turn of the 20th century, and particularly during and since the Great Recession (2007-2009) political landscape, MMT has been the subject of political debate between post-Keynsian, mainstream, and free-market economic theorists and politicians alike. As of 2019, MMT debates on the debt ceiling have pervaded Congress, with progressive representatives, prominently Alexandria Ocasio-Cortez, boosting the theory to the mainstream, while conservative representatives have been critiquing MMT's potential impacts on government spending and inflation.As of January 2023 Treasury Secretary Janet Yellen supported legislation to abolish the debt limit, which President Biden has ruled out.\n\n\n== References ==\n\n\n== Sources ==\n\"Amerikanere kan l\u00e6re af dansk g\u00e6ldsloft\" (in Danish). DR Nyheder. August 3, 2011. Retrieved May 6, 2013.\n\"Analysis of 2011-2012 Actions Taken and Effect of Delayed Increase on Borrowing Costs\" (PDF). GAO. July 2012. Retrieved January 13, 2013.\nAustin, D. Andrew (August 9, 2017). The Debt Limit Since 2011 (PDF). Washington, DC: Congressional Research Service. Retrieved November 22, 2017.\nMurray, Justin (November 6, 2017). Votes on Measures to Adjust the Statutory Debt Limit, 1978 to Present (PDF). Washington, DC: Congressional Research Service. Retrieved November 22, 2017.\n\"Federal Debt and the Statutory Limit, November 2012\" (PDF). Congressional Budget Office. November 2012.\n\"Delays Create Debt Management Challenges and Increase Uncertainty in the Treasury Market\" (PDF). GAO-11-203. GAO. February 2011. Retrieved January 13, 2013.\nGreen, Joshua (May 9, 2011). \"How Dick Gephardt Fixed the Debt-Ceiling Problem\". The Atlantic.\nKowalcky, Linda W.; LeLoup, Lance T. (1993). \"Congress and the Politics of Statutory Debt Limitation\". Public Administration Review. 53 (1): 14. CiteSeerX 10.1.1.397.5755. doi:10.2307/977272. JSTOR 977272.\nLawder, David (June 29, 2011). \"Prioritizing debt payments won't work: Geithner\". Reuters.\nLevit, Mandy R.; Brass, Clinton T.; Nicola, Timothy J.; Nuschler, Dawn (January 4, 2013). \"Reaching the Debt Limit: Background and Potential Effects on Government Operations\" (PDF). Archived from the original (PDF) on January 23, 2013.\nMasters, Jonathan. \"U.S. Debt Ceiling: Costs and Consequences\". Renewing America. Council on Foreign Relations.\nSahadi, Jeanne (January 7, 2013). \"Debt Ceiling: 'Chaotic' choices on 100 million payments\". CNNMoney. Retrieved January 13, 2013.\nSahadi, Jeanne (May 17, 2013). \"Debt ceiling: Treasury starts juggling act\". CNNMoney. Archived from the original on June 7, 2013.\nSurowiecki, James (August 1, 2011). \"Smash the Ceiling\". The New Yorker.\nSweet, Ken (August 8, 2011). \"Dow plunges after S&amp;P downgrade\". CNNMoney.\nYglesias, Matthew (January 16, 2013). \"What if Congress Doesn't Raise the Debt Ceiling?\". Slate.\n\n\n== Further reading ==\nEisner, Robert (1993). \"Federal Debt\". In David R. Henderson (ed.). Concise Encyclopedia of Economics (1st ed.). Library of Economics and Liberty. OCLC 317650570, 50016270, 163149563\nGeorge J. Hall and Thomas J. Sargent. 2018. \"Brief history of US debt limits before 1939.\" PNAS March 20, 2018. 115 (12) 2942-2945"
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"prompt": "Answer the following quoted question: \"When was the last time the US debt ceiling was raised?\" based on the following excerpt from the \"United States debt ceiling\" Wikipedia page.\n\nExcerpt:\n----------------\nIn the United States, the debt ceiling or debt limit is a legislative limit on the amount of national debt that can be incurred by the U.S. Treasury, thus limiting how much money the federal government may pay by borrowing more money, on the debt it already borrowed. The debt ceiling is an aggregate figure that applies to gross debt, which includes debt in the hands of the public and intra-government accounts. About 0.5 percent of the debt is not covered by the ceiling (as of 10/2013). Because expenditures are authorized by separate legislation, the debt ceiling does not directly limit government deficits. In effect, it can only restrain the Treasury from paying for expenditures and other financial obligations after the limit has been reached, but which have already been approved (in the budget) and appropriated.\nThere is a debate among legal scholars regarding the constitutionality of the debt ceiling. Some scholars argue that the debt ceiling does not provide the legal authority for the United States to default on its debt. Some also argue that the debt ceiling itself is unconstitutional since it does not provide a clear mechanism for the government to meet its constitutional obligation to repay its debts once it meets the borrowing limit.When the debt ceiling is reached without an increase in the limit having been enacted, Treasury will need to resort to \"extraordinary measures\" to temporarily finance government expenditures and obligations until a resolution can be reached. The Treasury has never reached the point of exhausting extraordinary measures, resulting in a constitutionally questionable default, although, on some occasions, it appeared that Congress might allow a default to take place. If this situation were to occur, it is unclear whether the Treasury would be able to prioritize debt payments to avoid a default on its bond obligations. A protracted default could trigger a variety of economic problems including a financial crisis, and a decline in output that would put the country into an economic recession.Management of the United States public debt is an important part of the macroeconomics of the United States economy and finance system, and the debt ceiling is designed to be a constraint on the executive's ability to manage the U.S. economy. There is debate, however, on how the U.S. economy should be managed, and whether a debt ceiling is an appropriate or constitutional mechanism for restraining government spending.The most recent time that the debt ceiling was raised was on June 3, 2023, when U.S. president Joe Biden signed the Fiscal Responsibility Act of 2023 into law ending the 2023 United States debt-ceiling crisis that began on January 19, 2023. The debt limit extends into 2025. Previously, in December 2021, the debt ceiling was raised when it was increased by $2.5 trillion, to $31.381 trillion, which lasted until January 2023.\n\n\n== Background ==\nUnder Article I Section 8 of the United States Constitution, only Congress can authorize the borrowing of money on the credit of the United States. From the founding of the U.S. until 1917, Congress directly authorized each debt issued. To provide more flexibility to finance the United States' involvement in World War I, Congress modified the method by which it authorized debt in the Second Liberty Bond Act of 1917. Under this Act, Congress established an aggregate limit, or \"ceiling,\" on the total amount of new bonds that could be issued.\nThe present debt ceiling is an aggregate limit applied to nearly all federal debt, which was substantially established by the Public Debt Acts of 1939 and 1941 which have subsequently been amended to change the ceiling amount.\nFrom time to time, political disputes arise when the Treasury advises Congress that the debt ceiling is about to be reached and indicates that a default is imminent. When the debt ceiling is reached, and pending an increase in the limit, Treasury may resort to \"extraordinary measures\" to buy more time before the ceiling can be raised by Congress. The U.S. has never reached the point of default where the Treasury was incapable of paying U.S. debt obligations, though it has been close on several occasions. The only exception was during the War of 1812 when parts of Washington D.C. including the Treasury were burned.In 2011, the U.S. reached a crisis point of near default on public debt. The delay in raising the debt ceiling resulted in the first downgrade in the United States credit rating, a sharp drop in the stock market, and an increase in borrowing costs. Congress raised the debt limit with the Budget Control Act of 2011, which added to the fiscal cliff when the new ceiling was reached on December 31, 2012.\n\n\n== Relationship to federal budget ==\nThe process of setting the debt ceiling is separate and distinct from the United States budget process, and raising the debt ceiling neither directly increases nor decreases the budget deficit, and vice versa. The Government Accountability Office explains, \"the debt limit does not control or limit the ability of the federal government to run deficits or incur obligations. Rather, it is a limit on the ability to pay obligations already incurred.\"The President formulates a federal budget every year, which Congress must pass, sometimes with amendments, in a concurrent resolution, which does not require the President's signature and is not binding. The budget details projected tax collections and expenditures and, therefore, specifies the estimated amount of borrowing the government would have to do in that fiscal year.\n\n\n=== Debt not covered by ceiling ===\nIn December 2012, the Treasury calculated that $239 million in United States Notes were in circulation, which in accordance with the debt ceiling legislation, are excluded from the statutory debt limit. The $239 million excludes $25 million in U.S. Notes issued prior to July 1, 1929, determined pursuant to Act of June 30, 1961, 31 U.S.C. 5119, to have been destroyed or irretrievably lost.Debts of the Federal Financing Bank are not debts of the government per se and therefore are also not subject to the ceiling, but have a separate limit of $15 billion.\n\n\n== Legislative history ==\n\nBefore 1917, the U.S. had no debt ceiling. Congress either authorized specific loans or allowed the Treasury to issue certain debt instruments and individual debt issues for specific purposes. Sometimes Congress gave the Treasury discretion over what type of debt instrument would be issued. 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.In 1953, the U.S. Treasury risked reaching the debt ceiling of $275 billion. Though President Eisenhower requested that Congress increase it on July 30, 1953, the Senate refused to act on it. As a result, the president asked federal agencies to reduce how much they spent, plus the Treasury Department used its cash balances with banks to stay under the debt ceiling. And, starting in November 1953, Treasury monetized close to $1 billion of gold left over in its vaults, which helped keep it from exceeding the $275 billion limit. During spring and summer 1954, the Senate and the executive branch negotiated on a debt ceiling increase, and a $6 billion one was passed on August 28, 1954.Before the Budget and Impoundment Control Act of 1974, the debt ceiling played an important role in enabling Congress to hold hearings and debates on the budget. James Surowiecki argued that the debt ceiling lost its usefulness after these reforms to the budget process.In 1979, noting the potential problems of hitting a default, Dick Gephardt imposed the \"Gephardt Rule,\" a parliamentary rule that deemed the debt ceiling was 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-controlled Congress in 1995.A vote to increase the debt ceiling has usually been (since the 1950s) a legal budgetary formality between the President and Congress. As of 1993 the debt ceiling had not historically been a political issue that would make the elected government fail to pass a yearly budget.\n\n\n=== Debt ceiling increases under Presidents Ronald Reagan and George H. W. Bush ===\nUnder the two terms of President Ronald Reagan, the House was controlled by Democrats, and the Senate was, at various points, under the control of both parties. Early in his term, Reagan faced some bipartisan resistance from Congress for a 1981 raising of the debt limit. But Democrats, using the Gephardt Rule, joined with Republicans to increase the debt ceiling eighteen separate times.Under President George H.W. Bush, Democrats controlled both the House and Senate. Again using the Gephardt Rule, Congress increased the debt ceiling nine times without controversy.\n\n\n=== Debt ceiling increases under President Bill Clinton ===\n\nThe debt-ceiling debate of 1995 led to a showdown on the federal budget and resulted in the U.S. federal government shutdowns of 1995 and 1996.\n\n\n=== Debt ceiling increases under President George W. Bush ===\nWhile George W. Bush was President, both Republicans and Democrats controlled the House and the Senate at various points during his term. Congress increased the debt ceiling eight times in 2002, 2003, 2004, 2006, 2007, and twice in 2008.When Republicans were in the majority, they consistently voted to increase the debt ceiling. While some Democrats did vote against the debt ceiling when the process was controlled by a Republican majority, Democrats did not filibuster debt limit increases in 2003, 2004 and 2006, allowing Senate Republicans to raise the debt limit with a simple majority.When Democrats controlled the House and the Senate in the last two years of George W. Bush's term, Democratic majorities in the House and the Senate reinstated the automatic Gephardt Rule and increased the debt ceiling three times without attaching preconditions.\n\n\n=== Debt ceiling increases under President Barack Obama ===\n\nIn 2011, Republicans took control of Congress and again suspended the Gephardt Rule as they had under Clinton. The Republican majority in Congress demanded deficit reduction as part of raising the debt ceiling. The resulting contention was resolved on August 2, 2011, by the Budget Control Act of 2011. Under the \"McConnell Rule,\" the president was allowed to unilaterally raise the debt ceiling. This action could be overturned by an act of Congress, but this would require a 2\u20443 majority vote in both houses assuming that the president vetoed the act.On August 5, 2011, Standard &amp; Poors issued the first ever downgrade in the federal government's credit rating, citing their April warnings, the difficulty of bridging the parties and that the resulting agreement fell well short of the hoped-for comprehensive 'grand bargain'. The credit downgrade and debt ceiling debacle contributed to the Dow Jones Industrial Average (DJIA) falling nearly 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.Following the increase in the debt ceiling to $16.394 trillion in 2011, the U.S. 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. Extraordinary measures were expected to be exhausted by February 15.Another debt ceiling crisis arose in early 2013 when the ceiling was reached again, and the Treasury adopted extraordinary measures to avoid a default. The Treasury said it was not set up to prioritize payments and had given the opinion that it is unclear whether 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 was not raised. Economists estimated that such an action would cause GDP to contract by 7 percent, which is larger than the contraction during 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 the freeze in their revenue.The 2013 crisis was temporarily resolved on February 4, 2013, when President Barack Obama signed the No Budget, No Pay Act of 2013 which suspended the debt ceiling 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. During the suspension period, the Treasury was authorized to borrow to the extent that it \"is required to meet existing commitments\". On May 19, the debt ceiling was raised by $306 billion to cover the borrowings done during the suspension period, as well as commitments that accrued in the preceding period that extraordinary measures were in place, which commenced on December 31, 2012.Treasury Secretary Jack Lew notified Congress that these measures would be exhausted by October 17, 2013 and that a default would occur on October 17 when interest payments came due. From October 17, 2013 until February 7, 2014, the debt ceiling was again suspended. On February 12, 2014, the Temporary Debt Limit Extension Act was passed, suspending the debt ceiling until March 15, 2015. At that time, the Treasury Department took extraordinary measures.The debt ceiling would again have been reached on November 3, 2015. But on October 30, 2015, the debt ceiling was again suspended to March 2017.\n\n\n=== Debt ceiling increases under President Donald Trump ===\nWhen Donald Trump was President, the debt ceiling was subject to less partisan controversy. The administration and the Republicans who controlled the House and the Senate prioritized tax cuts over a balanced budget.\nThe ceiling was suspended three times: from September 30, 2017, to December 8, 2017; from December 8, 2017 to March 1, 2019; and, after concerns were raised from Treasury in July 2019 of an unexpected shortfall due to reduced tax receipts under Trump's tax legislation, from August 2, 2019 to July 31, 2021.Congress did not impose any preconditions or significant spending cuts. Democrats in the Senate could have threatened to stop the debt ceiling increase by use of the filibuster but declined to do so.\n\n\n=== Debt ceiling increases under President Joe Biden ===\n\nDuring Biden's first two years as president, the House and Senate were both controlled by the Democratic Party. In October 2021, the debt ceiling was increased by $480 billion, as a temporary measure requiring fresh legislation by December 3, 2021. That month, Congress voted to increase it by $2.5 trillion, which President Biden signed into effect on December 16, 2021. At that point, it was set at about $31.4 trillion.On January 19, 2023, the United States hit its debt ceiling of $31.4 trillion. By this time, Republicans had taken control of the House during the 2022 midterm elections. Although Republicans were a minority in the Senate, they threatened for the first time in American history to use the filibuster to stop the debt ceiling increase. The crisis was resolved by negotiation of the Fiscal Responsibility Act of 2023.\n\n\n== Extraordinary measures ==\nThe Treasury Department is permitted to borrow funds needed to fund government operations, as had been authorized by congressional appropriations, up to the debt ceiling, with some small exceptions. In a letter to Congress on April 4, 2011, Treasury Secretary Timothy Geithner explained that when the debt ceiling is reached, the Treasury can declare a \"debt issuance suspension period\" during which it can take \"extraordinary measures\" to continue meeting federal obligations provided that it does not involve the issue of new debt. These measures are taken to avoid, as far as resources permit, a partial government shutdown or a default on the debt. These methods have been used on several previous occasions in which federal debt neared its statutory limit.Extraordinary measures can include suspending investments in the G Fund of the Thrift Savings Plan of individual retirement funds of federal employees. In 2011, extraordinary measures included suspending investments in the Civil Service Retirement and Disability Fund (CSRDF), the Postal Service Retiree Health Benefits Fund (Postal Benefits Fund), and the Exchange Stabilization Fund (ESF). In addition, certain CSRDF investments were also redeemed early. In 1985, the Treasury had also exchanged Treasury securities for non-Treasury securities held by the Federal Financing Bank.However, these amounts are not sufficient to cover government operations for extended periods. Treasury first implemented these measures on December 16, 2009, to avoid a government shutdown. These measures were implemented again on May 16, 2011, when Treasury Secretary Geithner declared a \"debt issuance suspension period\". According to his letter to Congress, this period could \"last until August 2, 2011, when the Department of the Treasury projects that the borrowing authority of the United States will be exhausted\".The measures were again implemented on December 31, 2012, the start of the debt ceiling crisis of 2013 with the default trigger date ticking to February 2013. The crisis was deferred with the suspension of the limit on February 4, and the cancellation of the extraordinary measures. The measures were again invoked at the end of the ceiling's suspension on May 19, 2013, with the date of exhaustion of the resources and the default trigger date being estimated by the Treasury as October 17. The ceiling was again suspended by legislation on that date until February 4, 2014.\n\n\n== Default on financial obligations ==\nAccording to the text of the debt ceiling law, if the debt ceiling is not raised and extraordinary measures are exhausted, the U.S. government is legally unable to borrow money to pay its financial obligations. At that point, the law indicates that the government must cease making payments unless the treasury has cash on hand to cover them. In addition, the law indicates that the government would not have the resources to pay the interest on (and some time redeem) government securities when due, which would be characterized as a default. A default may affect the United States' sovereign risk rating and the interest rate that it will be required to pay on future debt. As of 2012, the U.S. defaulted on its financial obligations once in 1979, due to a computer backlog, but the periodic crises relating to the debt ceiling have led several rating agencies to United States federal government credit-rating downgrades. As of 2012, the GAO estimated that the delay in raising the debt ceiling during the debt ceiling crisis of 2011 raised borrowing costs for the government by $1.3 billion in the fiscal year 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.As of 2012, some writers expressed the view that if extraordinary measures are exhausted, the executive branch has the authority to determine which obligations are paid and which are not, though the Treasury has argued that all obligations are on equal footing under the law. The writers have argued that the executive branch can choose to prioritize interest payments on bonds, which would avoid an immediate, direct default on sovereign debt. During the debt ceiling crisis of 2011, Treasury Secretary Timothy Geitner argued that prioritization of interest payments would not help since government expenditures would have needed to be cut by an unrealistic 40% if the debt ceiling is not raised. Also, a default on non-debt obligations would still undermine American creditworthiness according to at least one rating agency. In 2011, the Treasury suggested that it could not prioritize certain types of expenditures because all expenditures are on equal footing under the law. In this view, when extraordinary measures are exhausted, no payments could be made except when money (such as tax receipts) is in the treasury, at all and the U.S. would be in default on all of its obligations. The CBO notes, that prioritization would not avoid the technical definition found in Black's Law Dictionary where default is defined as \u201cthe failure to make a payment when due.\u201dMany scholars argue that debt ceiling law is unconstitutional and there is no legal basis by which the U.S. government may default on any of its debt. They point to Section Four of the 14th Amendment of the United States Constitution, which states that \"the validity of the public debt of the United States...shall not be questioned.\" They argue that it was unconstitutional for the U.S. Congress to pass the debt ceiling law in the first place, since the law does not provide a clear way for the U.S. to pay its debts and implicitly requires a default. Harvard University legal scholar Laurence Tribe argues that \"using the ceiling to make us default on our debts clearly would be unconstitutional.\" This argument has also been endorsed by various politicians, including President Bill Clinton, former labor secretary Robert Reich, Representative Jerry Nadler, and Representative James Clyburn. In 2023, a group of lawmakers from the Senate and House of Representatives sent a letter to President Biden encouraging him to consider invoking the 14th Amendment to pay government debts. However, there are scholars who argue that even if the law itself is unconstitutional, that determination must be made by the courts and the President does not have the authority to unilaterally ignore the debt ceiling law. In practice, the administrations of Presidents Barack Obama and Joe Biden have rejected relying on legal arguments against the constitutionality of the debt ceiling. Obama said in 2011 that his lawyers \"were not persuaded that that is a winning argument.\" In 2023, Biden's Treasury Secretary Janet Yellen called this strategy \"legally questionable.\" Biden himself said \"I think we have the authority\" to invoke the 14th Amendment to pay government debts, suggesting that he would explore this question in the future, but he questioned the practicality of relying on this approach to defuse a debt ceiling standoff. In May 2023, the National Association of Government Employees filed a lawsuit in federal court alleging that the debt ceiling law is unconstitutional.\n\n\n== Debate on debt ceiling ==\nReports to Congress from the OMB and other sources in the 1990s have repeatedly stated that the debt limit is an ineffective means to restrain the growth of debt.In 2011, James Surowiecki argued that the debt ceiling originally served a useful purpose. When introduced, presidents had stronger authority to borrow and spend as they pleased. However, after 1974 the Congress began passing comprehensive budget resolutions which specified exactly how much money the government could spend.The apparent redundancy of the debt ceiling has led to suggestions that it should be abolished altogether. Several Democratic House members, including Peter Welch, proposed abolishing the debt ceiling. The proposal found support from some economists such as Jacob Funk Kirkegaard, a senior fellow at the Peterson Institute for International Economics.\nIn January 2013, a survey of 38 highly regarded economists found that 84 percent agreed that, since Congress already approves spending and taxation, \"a separate debt ceiling that has to be increased periodically creates unneeded uncertainty and can potentially lead to worse fiscal outcomes.\" Only one member of the panel, Luigi Zingales, disagreed with the statement. Rating agency Moody's has stated that \"the debt limit creates a high level of uncertainty\" and that the government should change \"its framework for managing government debt to lessen or eliminate that uncertainty\".In 2021, the U.S. debt ceiling has been described as \"anachronistic\", with the two major parties criticized for utilizing the debt ceiling to play a dangerous game of chicken for purely partisan political purposes.\n\n\n=== Modern Monetary Theory ===\nProponents of Modern Monetary Theory (MMT), a heterodox, post-Keynesian economic theory which arose in the late 20th century, have critiqued the concept of the debt ceiling and its theoretical and practical uses. A core tenet of MMT is that currency arose from and is wholly controlled as fiat money by governments, the latter claim is dependent on the government as the sovereign issuer of the given currency. As of 2019, MMT theorists believed that governments have the power to create and spend money within a limit of reason without creating hyperinflation, as well as the ability to forgive its debt or repay itself; in contrast, as of 2020, orthodox economic theorists tended to focus on national deficit as a debt that needs to be repaid eventually. As a result, MMT theorists argue the debt ceiling is largely a symbolic limit on government spending; in 2020 Stephanie Kelton, a prominent supporter of MMT, wrote that \"there are no constraints on the federal budget.\"After the turn of the 20th century, and particularly during and since the Great Recession (2007-2009) political landscape, MMT has been the subject of political debate between post-Keynsian, mainstream, and free-market economic theorists and politicians alike. As of 2019, MMT debates on the debt ceiling have pervaded Congress, with progressive representatives, prominently Alexandria Ocasio-Cortez, boosting the theory to the mainstream, while conservative representatives have been critiquing MMT's potential impacts on government spending and inflation.As of January 2023 Treasury Secretary Janet Yellen supported legislation to abolish the debt limit, which President Biden has ruled out.\n\n\n== References ==\n\n\n== Sources ==\n\"Amerikanere kan l\u00e6re af dansk g\u00e6ldsloft\" (in Danish). DR Nyheder. August 3, 2011. Retrieved May 6, 2013.\n\"Analysis of 2011-2012 Actions Taken and Effect of Delayed Increase on Borrowing Costs\" (PDF). GAO. July 2012. Retrieved January 13, 2013.\nAustin, D. Andrew (August 9, 2017). The Debt Limit Since 2011 (PDF). Washington, DC: Congressional Research Service. Retrieved November 22, 2017.\nMurray, Justin (November 6, 2017). Votes on Measures to Adjust the Statutory Debt Limit, 1978 to Present (PDF). Washington, DC: Congressional Research Service. Retrieved November 22, 2017.\n\"Federal Debt and the Statutory Limit, November 2012\" (PDF). Congressional Budget Office. November 2012.\n\"Delays Create Debt Management Challenges and Increase Uncertainty in the Treasury Market\" (PDF). GAO-11-203. GAO. February 2011. Retrieved January 13, 2013.\nGreen, Joshua (May 9, 2011). \"How Dick Gephardt Fixed the Debt-Ceiling Problem\". The Atlantic.\nKowalcky, Linda W.; LeLoup, Lance T. (1993). \"Congress and the Politics of Statutory Debt Limitation\". Public Administration Review. 53 (1): 14. CiteSeerX 10.1.1.397.5755. doi:10.2307/977272. JSTOR 977272.\nLawder, David (June 29, 2011). \"Prioritizing debt payments won't work: Geithner\". Reuters.\nLevit, Mandy R.; Brass, Clinton T.; Nicola, Timothy J.; Nuschler, Dawn (January 4, 2013). \"Reaching the Debt Limit: Background and Potential Effects on Government Operations\" (PDF). Archived from the original (PDF) on January 23, 2013.\nMasters, Jonathan. \"U.S. Debt Ceiling: Costs and Consequences\". Renewing America. Council on Foreign Relations.\nSahadi, Jeanne (January 7, 2013). \"Debt Ceiling: 'Chaotic' choices on 100 million payments\". CNNMoney. Retrieved January 13, 2013.\nSahadi, Jeanne (May 17, 2013). \"Debt ceiling: Treasury starts juggling act\". CNNMoney. Archived from the original on June 7, 2013.\nSurowiecki, James (August 1, 2011). \"Smash the Ceiling\". The New Yorker.\nSweet, Ken (August 8, 2011). \"Dow plunges after S&amp;P downgrade\". CNNMoney.\nYglesias, Matthew (January 16, 2013). \"What if Congress Doesn't Raise the Debt Ceiling?\". Slate.\n\n\n== Further reading ==\nEisner, Robert (1993). \"Federal Debt\". In David R. Henderson (ed.). Concise Encyclopedia of Economics (1st ed.). Library of Economics and Liberty. OCLC 317650570, 50016270, 163149563\nGeorge J. Hall and Thomas J. Sargent. 2018. \"Brief history of US debt limits before 1939.\" PNAS March 20, 2018. 115 (12) 2942-2945\n----------------\n\nBased on the previous excerpt, can you answer the stated question?\nReply with \"Answer not found in excerpt\" if the question cannot be answered based on the excerpt! Else, reply with a single verbatim answer.\n\nQUESTION:\nWhen was the last time the US debt ceiling was raised?\n\nANSWER:",
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"content": "Answer the following quoted question: \"When was the last time the US debt ceiling was raised?\" based on the following excerpt from the \"United States debt ceiling\" Wikipedia page.\n\nExcerpt:\n----------------\nIn the United States, the debt ceiling or debt limit is a legislative limit on the amount of national debt that can be incurred by the U.S. Treasury, thus limiting how much money the federal government may pay by borrowing more money, on the debt it already borrowed. The debt ceiling is an aggregate figure that applies to gross debt, which includes debt in the hands of the public and intra-government accounts. About 0.5 percent of the debt is not covered by the ceiling (as of 10/2013). Because expenditures are authorized by separate legislation, the debt ceiling does not directly limit government deficits. In effect, it can only restrain the Treasury from paying for expenditures and other financial obligations after the limit has been reached, but which have already been approved (in the budget) and appropriated.\nThere is a debate among legal scholars regarding the constitutionality of the debt ceiling. Some scholars argue that the debt ceiling does not provide the legal authority for the United States to default on its debt. Some also argue that the debt ceiling itself is unconstitutional since it does not provide a clear mechanism for the government to meet its constitutional obligation to repay its debts once it meets the borrowing limit.When the debt ceiling is reached without an increase in the limit having been enacted, Treasury will need to resort to \"extraordinary measures\" to temporarily finance government expenditures and obligations until a resolution can be reached. The Treasury has never reached the point of exhausting extraordinary measures, resulting in a constitutionally questionable default, although, on some occasions, it appeared that Congress might allow a default to take place. If this situation were to occur, it is unclear whether the Treasury would be able to prioritize debt payments to avoid a default on its bond obligations. A protracted default could trigger a variety of economic problems including a financial crisis, and a decline in output that would put the country into an economic recession.Management of the United States public debt is an important part of the macroeconomics of the United States economy and finance system, and the debt ceiling is designed to be a constraint on the executive's ability to manage the U.S. economy. There is debate, however, on how the U.S. economy should be managed, and whether a debt ceiling is an appropriate or constitutional mechanism for restraining government spending.The most recent time that the debt ceiling was raised was on June 3, 2023, when U.S. president Joe Biden signed the Fiscal Responsibility Act of 2023 into law ending the 2023 United States debt-ceiling crisis that began on January 19, 2023. The debt limit extends into 2025. Previously, in December 2021, the debt ceiling was raised when it was increased by $2.5 trillion, to $31.381 trillion, which lasted until January 2023.\n\n\n== Background ==\nUnder Article I Section 8 of the United States Constitution, only Congress can authorize the borrowing of money on the credit of the United States. From the founding of the U.S. until 1917, Congress directly authorized each debt issued. To provide more flexibility to finance the United States' involvement in World War I, Congress modified the method by which it authorized debt in the Second Liberty Bond Act of 1917. Under this Act, Congress established an aggregate limit, or \"ceiling,\" on the total amount of new bonds that could be issued.\nThe present debt ceiling is an aggregate limit applied to nearly all federal debt, which was substantially established by the Public Debt Acts of 1939 and 1941 which have subsequently been amended to change the ceiling amount.\nFrom time to time, political disputes arise when the Treasury advises Congress that the debt ceiling is about to be reached and indicates that a default is imminent. When the debt ceiling is reached, and pending an increase in the limit, Treasury may resort to \"extraordinary measures\" to buy more time before the ceiling can be raised by Congress. The U.S. has never reached the point of default where the Treasury was incapable of paying U.S. debt obligations, though it has been close on several occasions. The only exception was during the War of 1812 when parts of Washington D.C. including the Treasury were burned.In 2011, the U.S. reached a crisis point of near default on public debt. The delay in raising the debt ceiling resulted in the first downgrade in the United States credit rating, a sharp drop in the stock market, and an increase in borrowing costs. Congress raised the debt limit with the Budget Control Act of 2011, which added to the fiscal cliff when the new ceiling was reached on December 31, 2012.\n\n\n== Relationship to federal budget ==\nThe process of setting the debt ceiling is separate and distinct from the United States budget process, and raising the debt ceiling neither directly increases nor decreases the budget deficit, and vice versa. The Government Accountability Office explains, \"the debt limit does not control or limit the ability of the federal government to run deficits or incur obligations. Rather, it is a limit on the ability to pay obligations already incurred.\"The President formulates a federal budget every year, which Congress must pass, sometimes with amendments, in a concurrent resolution, which does not require the President's signature and is not binding. The budget details projected tax collections and expenditures and, therefore, specifies the estimated amount of borrowing the government would have to do in that fiscal year.\n\n\n=== Debt not covered by ceiling ===\nIn December 2012, the Treasury calculated that $239 million in United States Notes were in circulation, which in accordance with the debt ceiling legislation, are excluded from the statutory debt limit. The $239 million excludes $25 million in U.S. Notes issued prior to July 1, 1929, determined pursuant to Act of June 30, 1961, 31 U.S.C. 5119, to have been destroyed or irretrievably lost.Debts of the Federal Financing Bank are not debts of the government per se and therefore are also not subject to the ceiling, but have a separate limit of $15 billion.\n\n\n== Legislative history ==\n\nBefore 1917, the U.S. had no debt ceiling. Congress either authorized specific loans or allowed the Treasury to issue certain debt instruments and individual debt issues for specific purposes. Sometimes Congress gave the Treasury discretion over what type of debt instrument would be issued. 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.In 1953, the U.S. Treasury risked reaching the debt ceiling of $275 billion. Though President Eisenhower requested that Congress increase it on July 30, 1953, the Senate refused to act on it. As a result, the president asked federal agencies to reduce how much they spent, plus the Treasury Department used its cash balances with banks to stay under the debt ceiling. And, starting in November 1953, Treasury monetized close to $1 billion of gold left over in its vaults, which helped keep it from exceeding the $275 billion limit. During spring and summer 1954, the Senate and the executive branch negotiated on a debt ceiling increase, and a $6 billion one was passed on August 28, 1954.Before the Budget and Impoundment Control Act of 1974, the debt ceiling played an important role in enabling Congress to hold hearings and debates on the budget. James Surowiecki argued that the debt ceiling lost its usefulness after these reforms to the budget process.In 1979, noting the potential problems of hitting a default, Dick Gephardt imposed the \"Gephardt Rule,\" a parliamentary rule that deemed the debt ceiling was 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-controlled Congress in 1995.A vote to increase the debt ceiling has usually been (since the 1950s) a legal budgetary formality between the President and Congress. As of 1993 the debt ceiling had not historically been a political issue that would make the elected government fail to pass a yearly budget.\n\n\n=== Debt ceiling increases under Presidents Ronald Reagan and George H. W. Bush ===\nUnder the two terms of President Ronald Reagan, the House was controlled by Democrats, and the Senate was, at various points, under the control of both parties. Early in his term, Reagan faced some bipartisan resistance from Congress for a 1981 raising of the debt limit. But Democrats, using the Gephardt Rule, joined with Republicans to increase the debt ceiling eighteen separate times.Under President George H.W. Bush, Democrats controlled both the House and Senate. Again using the Gephardt Rule, Congress increased the debt ceiling nine times without controversy.\n\n\n=== Debt ceiling increases under President Bill Clinton ===\n\nThe debt-ceiling debate of 1995 led to a showdown on the federal budget and resulted in the U.S. federal government shutdowns of 1995 and 1996.\n\n\n=== Debt ceiling increases under President George W. Bush ===\nWhile George W. Bush was President, both Republicans and Democrats controlled the House and the Senate at various points during his term. Congress increased the debt ceiling eight times in 2002, 2003, 2004, 2006, 2007, and twice in 2008.When Republicans were in the majority, they consistently voted to increase the debt ceiling. While some Democrats did vote against the debt ceiling when the process was controlled by a Republican majority, Democrats did not filibuster debt limit increases in 2003, 2004 and 2006, allowing Senate Republicans to raise the debt limit with a simple majority.When Democrats controlled the House and the Senate in the last two years of George W. Bush's term, Democratic majorities in the House and the Senate reinstated the automatic Gephardt Rule and increased the debt ceiling three times without attaching preconditions.\n\n\n=== Debt ceiling increases under President Barack Obama ===\n\nIn 2011, Republicans took control of Congress and again suspended the Gephardt Rule as they had under Clinton. The Republican majority in Congress demanded deficit reduction as part of raising the debt ceiling. The resulting contention was resolved on August 2, 2011, by the Budget Control Act of 2011. Under the \"McConnell Rule,\" the president was allowed to unilaterally raise the debt ceiling. This action could be overturned by an act of Congress, but this would require a 2\u20443 majority vote in both houses assuming that the president vetoed the act.On August 5, 2011, Standard &amp; Poors issued the first ever downgrade in the federal government's credit rating, citing their April warnings, the difficulty of bridging the parties and that the resulting agreement fell well short of the hoped-for comprehensive 'grand bargain'. The credit downgrade and debt ceiling debacle contributed to the Dow Jones Industrial Average (DJIA) falling nearly 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.Following the increase in the debt ceiling to $16.394 trillion in 2011, the U.S. 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. Extraordinary measures were expected to be exhausted by February 15.Another debt ceiling crisis arose in early 2013 when the ceiling was reached again, and the Treasury adopted extraordinary measures to avoid a default. The Treasury said it was not set up to prioritize payments and had given the opinion that it is unclear whether 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 was not raised. Economists estimated that such an action would cause GDP to contract by 7 percent, which is larger than the contraction during 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 the freeze in their revenue.The 2013 crisis was temporarily resolved on February 4, 2013, when President Barack Obama signed the No Budget, No Pay Act of 2013 which suspended the debt ceiling 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. During the suspension period, the Treasury was authorized to borrow to the extent that it \"is required to meet existing commitments\". On May 19, the debt ceiling was raised by $306 billion to cover the borrowings done during the suspension period, as well as commitments that accrued in the preceding period that extraordinary measures were in place, which commenced on December 31, 2012.Treasury Secretary Jack Lew notified Congress that these measures would be exhausted by October 17, 2013 and that a default would occur on October 17 when interest payments came due. From October 17, 2013 until February 7, 2014, the debt ceiling was again suspended. On February 12, 2014, the Temporary Debt Limit Extension Act was passed, suspending the debt ceiling until March 15, 2015. At that time, the Treasury Department took extraordinary measures.The debt ceiling would again have been reached on November 3, 2015. But on October 30, 2015, the debt ceiling was again suspended to March 2017.\n\n\n=== Debt ceiling increases under President Donald Trump ===\nWhen Donald Trump was President, the debt ceiling was subject to less partisan controversy. The administration and the Republicans who controlled the House and the Senate prioritized tax cuts over a balanced budget.\nThe ceiling was suspended three times: from September 30, 2017, to December 8, 2017; from December 8, 2017 to March 1, 2019; and, after concerns were raised from Treasury in July 2019 of an unexpected shortfall due to reduced tax receipts under Trump's tax legislation, from August 2, 2019 to July 31, 2021.Congress did not impose any preconditions or significant spending cuts. Democrats in the Senate could have threatened to stop the debt ceiling increase by use of the filibuster but declined to do so.\n\n\n=== Debt ceiling increases under President Joe Biden ===\n\nDuring Biden's first two years as president, the House and Senate were both controlled by the Democratic Party. In October 2021, the debt ceiling was increased by $480 billion, as a temporary measure requiring fresh legislation by December 3, 2021. That month, Congress voted to increase it by $2.5 trillion, which President Biden signed into effect on December 16, 2021. At that point, it was set at about $31.4 trillion.On January 19, 2023, the United States hit its debt ceiling of $31.4 trillion. By this time, Republicans had taken control of the House during the 2022 midterm elections. Although Republicans were a minority in the Senate, they threatened for the first time in American history to use the filibuster to stop the debt ceiling increase. The crisis was resolved by negotiation of the Fiscal Responsibility Act of 2023.\n\n\n== Extraordinary measures ==\nThe Treasury Department is permitted to borrow funds needed to fund government operations, as had been authorized by congressional appropriations, up to the debt ceiling, with some small exceptions. In a letter to Congress on April 4, 2011, Treasury Secretary Timothy Geithner explained that when the debt ceiling is reached, the Treasury can declare a \"debt issuance suspension period\" during which it can take \"extraordinary measures\" to continue meeting federal obligations provided that it does not involve the issue of new debt. These measures are taken to avoid, as far as resources permit, a partial government shutdown or a default on the debt. These methods have been used on several previous occasions in which federal debt neared its statutory limit.Extraordinary measures can include suspending investments in the G Fund of the Thrift Savings Plan of individual retirement funds of federal employees. In 2011, extraordinary measures included suspending investments in the Civil Service Retirement and Disability Fund (CSRDF), the Postal Service Retiree Health Benefits Fund (Postal Benefits Fund), and the Exchange Stabilization Fund (ESF). In addition, certain CSRDF investments were also redeemed early. In 1985, the Treasury had also exchanged Treasury securities for non-Treasury securities held by the Federal Financing Bank.However, these amounts are not sufficient to cover government operations for extended periods. Treasury first implemented these measures on December 16, 2009, to avoid a government shutdown. These measures were implemented again on May 16, 2011, when Treasury Secretary Geithner declared a \"debt issuance suspension period\". According to his letter to Congress, this period could \"last until August 2, 2011, when the Department of the Treasury projects that the borrowing authority of the United States will be exhausted\".The measures were again implemented on December 31, 2012, the start of the debt ceiling crisis of 2013 with the default trigger date ticking to February 2013. The crisis was deferred with the suspension of the limit on February 4, and the cancellation of the extraordinary measures. The measures were again invoked at the end of the ceiling's suspension on May 19, 2013, with the date of exhaustion of the resources and the default trigger date being estimated by the Treasury as October 17. The ceiling was again suspended by legislation on that date until February 4, 2014.\n\n\n== Default on financial obligations ==\nAccording to the text of the debt ceiling law, if the debt ceiling is not raised and extraordinary measures are exhausted, the U.S. government is legally unable to borrow money to pay its financial obligations. At that point, the law indicates that the government must cease making payments unless the treasury has cash on hand to cover them. In addition, the law indicates that the government would not have the resources to pay the interest on (and some time redeem) government securities when due, which would be characterized as a default. A default may affect the United States' sovereign risk rating and the interest rate that it will be required to pay on future debt. As of 2012, the U.S. defaulted on its financial obligations once in 1979, due to a computer backlog, but the periodic crises relating to the debt ceiling have led several rating agencies to United States federal government credit-rating downgrades. As of 2012, the GAO estimated that the delay in raising the debt ceiling during the debt ceiling crisis of 2011 raised borrowing costs for the government by $1.3 billion in the fiscal year 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.As of 2012, some writers expressed the view that if extraordinary measures are exhausted, the executive branch has the authority to determine which obligations are paid and which are not, though the Treasury has argued that all obligations are on equal footing under the law. The writers have argued that the executive branch can choose to prioritize interest payments on bonds, which would avoid an immediate, direct default on sovereign debt. During the debt ceiling crisis of 2011, Treasury Secretary Timothy Geitner argued that prioritization of interest payments would not help since government expenditures would have needed to be cut by an unrealistic 40% if the debt ceiling is not raised. Also, a default on non-debt obligations would still undermine American creditworthiness according to at least one rating agency. In 2011, the Treasury suggested that it could not prioritize certain types of expenditures because all expenditures are on equal footing under the law. In this view, when extraordinary measures are exhausted, no payments could be made except when money (such as tax receipts) is in the treasury, at all and the U.S. would be in default on all of its obligations. The CBO notes, that prioritization would not avoid the technical definition found in Black's Law Dictionary where default is defined as \u201cthe failure to make a payment when due.\u201dMany scholars argue that debt ceiling law is unconstitutional and there is no legal basis by which the U.S. government may default on any of its debt. They point to Section Four of the 14th Amendment of the United States Constitution, which states that \"the validity of the public debt of the United States...shall not be questioned.\" They argue that it was unconstitutional for the U.S. Congress to pass the debt ceiling law in the first place, since the law does not provide a clear way for the U.S. to pay its debts and implicitly requires a default. Harvard University legal scholar Laurence Tribe argues that \"using the ceiling to make us default on our debts clearly would be unconstitutional.\" This argument has also been endorsed by various politicians, including President Bill Clinton, former labor secretary Robert Reich, Representative Jerry Nadler, and Representative James Clyburn. In 2023, a group of lawmakers from the Senate and House of Representatives sent a letter to President Biden encouraging him to consider invoking the 14th Amendment to pay government debts. However, there are scholars who argue that even if the law itself is unconstitutional, that determination must be made by the courts and the President does not have the authority to unilaterally ignore the debt ceiling law. In practice, the administrations of Presidents Barack Obama and Joe Biden have rejected relying on legal arguments against the constitutionality of the debt ceiling. Obama said in 2011 that his lawyers \"were not persuaded that that is a winning argument.\" In 2023, Biden's Treasury Secretary Janet Yellen called this strategy \"legally questionable.\" Biden himself said \"I think we have the authority\" to invoke the 14th Amendment to pay government debts, suggesting that he would explore this question in the future, but he questioned the practicality of relying on this approach to defuse a debt ceiling standoff. In May 2023, the National Association of Government Employees filed a lawsuit in federal court alleging that the debt ceiling law is unconstitutional.\n\n\n== Debate on debt ceiling ==\nReports to Congress from the OMB and other sources in the 1990s have repeatedly stated that the debt limit is an ineffective means to restrain the growth of debt.In 2011, James Surowiecki argued that the debt ceiling originally served a useful purpose. When introduced, presidents had stronger authority to borrow and spend as they pleased. However, after 1974 the Congress began passing comprehensive budget resolutions which specified exactly how much money the government could spend.The apparent redundancy of the debt ceiling has led to suggestions that it should be abolished altogether. Several Democratic House members, including Peter Welch, proposed abolishing the debt ceiling. The proposal found support from some economists such as Jacob Funk Kirkegaard, a senior fellow at the Peterson Institute for International Economics.\nIn January 2013, a survey of 38 highly regarded economists found that 84 percent agreed that, since Congress already approves spending and taxation, \"a separate debt ceiling that has to be increased periodically creates unneeded uncertainty and can potentially lead to worse fiscal outcomes.\" Only one member of the panel, Luigi Zingales, disagreed with the statement. Rating agency Moody's has stated that \"the debt limit creates a high level of uncertainty\" and that the government should change \"its framework for managing government debt to lessen or eliminate that uncertainty\".In 2021, the U.S. debt ceiling has been described as \"anachronistic\", with the two major parties criticized for utilizing the debt ceiling to play a dangerous game of chicken for purely partisan political purposes.\n\n\n=== Modern Monetary Theory ===\nProponents of Modern Monetary Theory (MMT), a heterodox, post-Keynesian economic theory which arose in the late 20th century, have critiqued the concept of the debt ceiling and its theoretical and practical uses. A core tenet of MMT is that currency arose from and is wholly controlled as fiat money by governments, the latter claim is dependent on the government as the sovereign issuer of the given currency. As of 2019, MMT theorists believed that governments have the power to create and spend money within a limit of reason without creating hyperinflation, as well as the ability to forgive its debt or repay itself; in contrast, as of 2020, orthodox economic theorists tended to focus on national deficit as a debt that needs to be repaid eventually. As a result, MMT theorists argue the debt ceiling is largely a symbolic limit on government spending; in 2020 Stephanie Kelton, a prominent supporter of MMT, wrote that \"there are no constraints on the federal budget.\"After the turn of the 20th century, and particularly during and since the Great Recession (2007-2009) political landscape, MMT has been the subject of political debate between post-Keynsian, mainstream, and free-market economic theorists and politicians alike. As of 2019, MMT debates on the debt ceiling have pervaded Congress, with progressive representatives, prominently Alexandria Ocasio-Cortez, boosting the theory to the mainstream, while conservative representatives have been critiquing MMT's potential impacts on government spending and inflation.As of January 2023 Treasury Secretary Janet Yellen supported legislation to abolish the debt limit, which President Biden has ruled out.\n\n\n== References ==\n\n\n== Sources ==\n\"Amerikanere kan l\u00e6re af dansk g\u00e6ldsloft\" (in Danish). DR Nyheder. August 3, 2011. Retrieved May 6, 2013.\n\"Analysis of 2011-2012 Actions Taken and Effect of Delayed Increase on Borrowing Costs\" (PDF). GAO. July 2012. Retrieved January 13, 2013.\nAustin, D. Andrew (August 9, 2017). The Debt Limit Since 2011 (PDF). Washington, DC: Congressional Research Service. Retrieved November 22, 2017.\nMurray, Justin (November 6, 2017). Votes on Measures to Adjust the Statutory Debt Limit, 1978 to Present (PDF). Washington, DC: Congressional Research Service. Retrieved November 22, 2017.\n\"Federal Debt and the Statutory Limit, November 2012\" (PDF). Congressional Budget Office. November 2012.\n\"Delays Create Debt Management Challenges and Increase Uncertainty in the Treasury Market\" (PDF). GAO-11-203. GAO. February 2011. Retrieved January 13, 2013.\nGreen, Joshua (May 9, 2011). \"How Dick Gephardt Fixed the Debt-Ceiling Problem\". The Atlantic.\nKowalcky, Linda W.; LeLoup, Lance T. (1993). \"Congress and the Politics of Statutory Debt Limitation\". Public Administration Review. 53 (1): 14. CiteSeerX 10.1.1.397.5755. doi:10.2307/977272. JSTOR 977272.\nLawder, David (June 29, 2011). \"Prioritizing debt payments won't work: Geithner\". Reuters.\nLevit, Mandy R.; Brass, Clinton T.; Nicola, Timothy J.; Nuschler, Dawn (January 4, 2013). \"Reaching the Debt Limit: Background and Potential Effects on Government Operations\" (PDF). Archived from the original (PDF) on January 23, 2013.\nMasters, Jonathan. \"U.S. Debt Ceiling: Costs and Consequences\". Renewing America. Council on Foreign Relations.\nSahadi, Jeanne (January 7, 2013). \"Debt Ceiling: 'Chaotic' choices on 100 million payments\". CNNMoney. Retrieved January 13, 2013.\nSahadi, Jeanne (May 17, 2013). \"Debt ceiling: Treasury starts juggling act\". CNNMoney. Archived from the original on June 7, 2013.\nSurowiecki, James (August 1, 2011). \"Smash the Ceiling\". The New Yorker.\nSweet, Ken (August 8, 2011). \"Dow plunges after S&amp;P downgrade\". CNNMoney.\nYglesias, Matthew (January 16, 2013). \"What if Congress Doesn't Raise the Debt Ceiling?\". Slate.\n\n\n== Further reading ==\nEisner, Robert (1993). \"Federal Debt\". In David R. Henderson (ed.). Concise Encyclopedia of Economics (1st ed.). Library of Economics and Liberty. OCLC 317650570, 50016270, 163149563\nGeorge J. Hall and Thomas J. Sargent. 2018. \"Brief history of US debt limits before 1939.\" PNAS March 20, 2018. 115 (12) 2942-2945\n----------------\n\nBased on the previous excerpt, can you answer the stated question?\nReply with \"Answer not found in excerpt\" if the question cannot be answered based on the excerpt! Else, reply with a single verbatim answer.\n\nQUESTION:\nWhen was the last time the US debt ceiling was raised?\n\nANSWER:"
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"content": "The history of the United States debt ceiling deals with movements in the United States debt ceiling since it was created in 1917. Management of the United States public debt is an important part of the macroeconomics of the United States economy and finance system, and the debt ceiling is a limitation on the federal government's ability to manage the economy and finance system. The debt ceiling is also a limitation on the federal government's ability to finance government operations, and the failure of Congress to authorize an increase in the debt ceiling has resulted in crises, especially in recent years. \n\n\n== Overview ==\nA statutorily imposed debt ceiling has been in effect since 1917 when the US Congress passed the Second Liberty Bond Act. Before 1917 there was no debt ceiling in force, but there were parliamentary procedural limitations on the amount of debt that could be issued by the government.\nExcept for about a year during 1835\u20131836, the United States has continuously had a fluctuating public debt since the US Constitution legally went into effect on March 4, 1789. Debts incurred during the American Revolutionary War and under the Articles of Confederation led to the first yearly report on the amount of the debt ($75,463,476.52 on January 1, 1791). The national debt, as expressed in absolute dollars, has increased under every presidential administration since Herbert Hoover.\n\n\n== Early history ==\nPrior to 1917, the United States did not have a debt ceiling, with Congress either authorizing specific loans or allowing the Treasury to issue certain debt instruments and individual debt issues for specific purposes. Sometimes Congress gave the Treasury discretion over what type of debt instrument would be issued.Between 1788 and 1917, Congress would authorize each bond issue by the United States Treasury by passing a legislative act that approved the issue and the amount.\nIn 1917, during World War I, Congress created the debt ceiling with the Second Liberty Bond Act of 1917, which allowed the Treasury to issue bonds and take on other debt without specific Congressional approval, as long as the total debt fell under the statutory debt ceiling. The 1917 legislation set limits on the aggregate amount of debt that could be accumulated through individual categories of debt (such as bonds and bills).\n\n\n=== Public Debt Acts ===\nIn 1939, Congress instituted the first limit on total accumulated debt over all kinds of instruments. The debt ceiling, in which an aggregate limit is applied to nearly all federal debt, was substantially established by Public Debt Acts passed in 1939 and 1941 and subsequently amended. The United States Public Debt Act of 1939 eliminated separate limits on different types of debt. The Public Debt Act of 1941 raised the aggregate debt limit on all obligations to $65 billion, and consolidated nearly all federal borrowing under the U.S. Treasury and eliminated the tax-exemption of interest and profit on government debt.Subsequent Public Debt Acts amended the aggregate debt limit: the 1942, 1943, 1944, and 1945 acts raised the limit to $125 billion, $210 billion, $260 billion, and $300 billion respectively. In 1946, the Public Debt Act was amended to reduce the debt limit to $275 billion. The limit stayed unchanged until 1954, the Korean War being financed through taxation. The U.S. Treasury nearly hit the debt ceiling in fall 1953, plus the Senate refused to raise it until summer 1954, but the federal government managed to avoid reaching it through using various measures, such as monetizing leftover gold.A feature of the Public Debt Acts, unlike the 1919 Victory Liberty Bond Act which financed American costs in the First World War, was that the new ceiling was set about 10% above the actual federal debt at the time.\n\n\n== 1970s ==\nPrior 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. James Surowiecki argued that the debt ceiling lost its usefulness after these reforms to the budget process.In 1979, noting the potential problems of hitting a default, Dick Gephardt (Rep, D-MO) 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 Congress in 1995.\n\n\n== Number of requests for increase ==\nDepending on who is doing the research, it is said that the US has raised its debt ceiling (in some form or other) at least 90 times in the 20th century.The debt ceiling was raised 74 times from March 1962 to May 2011, including 18 times under Ronald Reagan, eight times under Bill Clinton, and seven times under George W. Bush.\nCongress has raised the debt ceiling 14 times from 2001 to 2016. The debt ceiling was raised a total of 7 times (total increase of $5365bil) during Pres. Bush's eight-year term and it was raised 11 times (as of 03/2015 a total increase of $6498bil) during Pres. Obama's eight years in office.\n\n\n== 1995 debt ceiling crisis ==\n\nThe 1995 request for a debt ceiling increase led to debate in Congress on reduction of the size of the federal government, which led to the non-passage of the federal budget, and the United States federal government shutdown of 1995\u201396. The ceiling was eventually increased and the government shutdown resolved.\n\n\n== 2011 debt ceiling crisis ==\n\nIn 2011, Republicans in Congress used the debt ceiling as leverage for deficit reduction because of the lack of Congressional normal order for fiscal year budget votes on the chamber floors and subsequent conference reconciliations between the House and the Senate for final budgets. 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. The GAO estimated that the delay in raising the debt ceiling raised borrowing costs for the government by $1.3 billion (~$1.57 billion in 2021) 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.\n\n\n== 2013 debt ceiling crisis ==\n\nFollowing the increase in the debt ceiling to $16.394 trillion in 2011, 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. With the ATRA tax cuts, the government indicated that the debt ceiling needed to raise by $700 billion (~$814 billion in 2021) for it to continue financing operations for the rest of the 2013 fiscal year and that extraordinary measures were expected to be exhausted by February 15. 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, 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.The No Budget, No Pay Act of 2013 suspended the debt ceiling from February 4, 2013 until May 19, 2013. On May 19, the debt ceiling was formally raised to approximately $16.699 trillion to accommodate the borrowing done during the suspension period. However, after the end of the suspension, the ceiling was raised only to the actual debt at that time, and Treasury needed to activate extraordinary measures to avoid a default. With the impacts of the American Taxpayer Relief Act of 2012 tax increases on those who make $400,000 per year, the 2013 sequester, and a $60 billion payment from Fannie Mae and Freddie Mac that reached the Treasury on June 28, 2013, the extraordinary measures were predicted to last until October 17 by the Treasury, but financial firms suggested funds might have lasted a little longer. Jefferies Group said extraordinary measures might have lasted until the end of October while Credit Suisse estimated mid-November.The US Treasury began taking extraordinary measures to enable payments, and stated that it would delay payments if funds could not be raised through extraordinary measures, and the debt ceiling was not raised. During the crisis, approval ratings for the Republican Party declined.\n\n\n== 2021 debt ceiling crisis ==\nFollowing the July 2021 expiration of the debt ceiling suspension, the U.S. Treasury began taking \"extraordinary measures\" which were set to expire around October 18. Senate Republicans blocked attempts to raise the ceiling using the filibuster, insisting that Democrats should act on their own and use reconciliation to raise the limit. The Senate voted to raise it on October 7, 2021, but only to grant the U.S. Treasury authority to borrow money until that December. That month, Congress voted to increase it by $2.5 (~$2.5 trillion in 2021) trillion, which President Biden signed into effect on December 16, 2021. At that point, it was set at about $31.4 trillion.\n\n\n== 2023 debt ceiling crisis ==\n\nOn January 19, 2023, the United States again reached the debt ceiling.\nPresident Biden at first refused to negotiate, instead insisting on a clean debt ceiling raise. Many news outlets and pundits have talked about this leading to a significant risk that the US defaults on its obligations, though default is not the only possible outcome of the debt ceiling not being raised, the alternative being shutting down portions of government operations. The Treasury has, however, explicitly stated that this would be technically impossible. Many news outlets have also claimed that the federal government has not defaulted on financial obligations before, including President Biden calling such a situation \"unprecedented\", however a more accurate statement is that the US has defaulted on obgliations several times in history, but never because of the debt ceiling. These included late interest payments in 1814 due to the financial strain of the War of 1812 (the last time the US experienced a \u201cmajor default on its financial obligations\"), and briefly in 1979, due to technical glitches.\n\n\n== Historical debt ceiling levels ==\nNote that this table does not go back to 1917 when the debt ceiling started.\n\nReference for values between 1993 and 2015:Note that:\n\nThe figures are unadjusted for the time value of money, such as interest and inflation and the size of the economy that generated a debt.\nThe debt ceiling is an aggregate of gross debt, which includes debt in hands of public and in intragovernment accounts.\nThe debt ceiling does not necessarily reflect the level of actual debt.\nFrom March 15 to October 30, 2015 there was a de facto debt limit of $18.153 trillion, due to use of extraordinary measures.\n\n\n== Notes ==\n\n\n== References ==\n\n\n== Sources ==\n\"Amerikanere kan l\u00e6re af dansk g\u00e6ldsloft\". DR Nyheder. 3 August 2011. Retrieved 6 May 2013.\n\"Analysis of 2011-2012 Actions Taken and Effect of Delayed Increase on Borrowing Costs\" (PDF). GAO. July 2012. Retrieved 13 January 2013.\nAustin, D. Andrew (29 April 2008). \"The Debt Limit: History and Recent Increases\" (PDF). Congressional Research Service.\nAustin, D. Andrew; Levit, Mindy R. (27 December 2012). \"The Debt Limit: History and Recent Increases\" (PDF). Congressional Research Service.\nAustin, D. Andrew (5 June 2017). \"The Debt Limit Since 2011\" Congressional Research Service.\n\"Debt ceiling\". IGM Forum. Chicago Booth. 15 January 2013. Retrieved 19 January 2013.\n\"Federal Debt and the Statutory Limit, November 2012\" (PDF). Congressional Budget Office. November 2012.\n\"Debt Limit Analysis\" (PDF). Bipartisan Policy Center. 27 November 2012. Retrieved 13 January 2013.\n\"Delays Create Debt Management Challenges and Increase Uncertainty in the Treasury Market\" (PDF). GAO-11-203. GAO. February 2011. Retrieved 13 January 2013.\nGreen, Joshua (9 May 2011). \"How Dick Gephardt Fixed the Debt-Ceiling Problem\". The Atlantic.\nKowalcky, Linda W.; LeLoup, Lance T. (1993). \"Congress and the Politics of Statutory Debt Limitation\". Public Administration Review. 53 (1): 14. CiteSeerX 10.1.1.397.5755. doi:10.2307/977272. JSTOR 977272.\nLawder, David (29 June 2011). \"Prioritizing debt payments won't work: Geithner\". Reuters.\nLevit, Mandy R.; Brass, Clinton T.; Nicola, Timothy J.; Nuschler, Dawn. \"Reaching the Debt Limit: Background and Potential Effects on Government Operations\" (PDF).\nMasters, Jonathan. \"U.S. Debt Ceiling: Costs and Consequences\". Renewing America. Council on Foreign Relations. Archived from the original on 2013-09-08. Retrieved 2013-10-09.\nSahadi, Jeanne (7 January 2013). \"Debt Ceiling: 'Chaotic' choices on 100 million payments\". CNNMoney. Retrieved 13 January 2013.\nSurowiecki, James (1 August 2011). \"Smash the Ceiling\". The New Yorker.\nSweet, Ken (8 August 2011). \"Dow plunges after S&amp;P downgrade\". CNNMoney.\nYglesias, Matthew (16 January 2013). \"What if Congress Doesn't Raise the Debt Ceiling?\". Slate.\n\n\n== External links ==\nHistory and Recent Increases (2008)\nHistory and Recent Increases (2010)\nUS Treasury Debt to the Penny (Daily)\nEstimated Debt to the Penny (Real Time)",
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"title": "History of the United States debt ceiling",
"content": "The history of the United States debt ceiling deals with movements in the United States debt ceiling since it was created in 1917. Management of the United States public debt is an important part of the macroeconomics of the United States economy and finance system, and the debt ceiling is a limitation on the federal government's ability to manage the economy and finance system. The debt ceiling is also a limitation on the federal government's ability to finance government operations, and the failure of Congress to authorize an increase in the debt ceiling has resulted in crises, especially in recent years. \n\n\n== Overview ==\nA statutorily imposed debt ceiling has been in effect since 1917 when the US Congress passed the Second Liberty Bond Act. Before 1917 there was no debt ceiling in force, but there were parliamentary procedural limitations on the amount of debt that could be issued by the government.\nExcept for about a year during 1835\u20131836, the United States has continuously had a fluctuating public debt since the US Constitution legally went into effect on March 4, 1789. Debts incurred during the American Revolutionary War and under the Articles of Confederation led to the first yearly report on the amount of the debt ($75,463,476.52 on January 1, 1791). The national debt, as expressed in absolute dollars, has increased under every presidential administration since Herbert Hoover.\n\n\n== Early history ==\nPrior to 1917, the United States did not have a debt ceiling, with Congress either authorizing specific loans or allowing the Treasury to issue certain debt instruments and individual debt issues for specific purposes. Sometimes Congress gave the Treasury discretion over what type of debt instrument would be issued.Between 1788 and 1917, Congress would authorize each bond issue by the United States Treasury by passing a legislative act that approved the issue and the amount.\nIn 1917, during World War I, Congress created the debt ceiling with the Second Liberty Bond Act of 1917, which allowed the Treasury to issue bonds and take on other debt without specific Congressional approval, as long as the total debt fell under the statutory debt ceiling. The 1917 legislation set limits on the aggregate amount of debt that could be accumulated through individual categories of debt (such as bonds and bills).\n\n\n=== Public Debt Acts ===\nIn 1939, Congress instituted the first limit on total accumulated debt over all kinds of instruments. The debt ceiling, in which an aggregate limit is applied to nearly all federal debt, was substantially established by Public Debt Acts passed in 1939 and 1941 and subsequently amended. The United States Public Debt Act of 1939 eliminated separate limits on different types of debt. The Public Debt Act of 1941 raised the aggregate debt limit on all obligations to $65 billion, and consolidated nearly all federal borrowing under the U.S. Treasury and eliminated the tax-exemption of interest and profit on government debt.Subsequent Public Debt Acts amended the aggregate debt limit: the 1942, 1943, 1944, and 1945 acts raised the limit to $125 billion, $210 billion, $260 billion, and $300 billion respectively. In 1946, the Public Debt Act was amended to reduce the debt limit to $275 billion. The limit stayed unchanged until 1954, the Korean War being financed through taxation. The U.S. Treasury nearly hit the debt ceiling in fall 1953, plus the Senate refused to raise it until summer 1954, but the federal government managed to avoid reaching it through using various measures, such as monetizing leftover gold.A feature of the Public Debt Acts, unlike the 1919 Victory Liberty Bond Act which financed American costs in the First World War, was that the new ceiling was set about 10% above the actual federal debt at the time.\n\n\n== 1970s ==\nPrior 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. James Surowiecki argued that the debt ceiling lost its usefulness after these reforms to the budget process.In 1979, noting the potential problems of hitting a default, Dick Gephardt (Rep, D-MO) 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 Congress in 1995.\n\n\n== Number of requests for increase ==\nDepending on who is doing the research, it is said that the US has raised its debt ceiling (in some form or other) at least 90 times in the 20th century.The debt ceiling was raised 74 times from March 1962 to May 2011, including 18 times under Ronald Reagan, eight times under Bill Clinton, and seven times under George W. Bush.\nCongress has raised the debt ceiling 14 times from 2001 to 2016. The debt ceiling was raised a total of 7 times (total increase of $5365bil) during Pres. Bush's eight-year term and it was raised 11 times (as of 03/2015 a total increase of $6498bil) during Pres. Obama's eight years in office.\n\n\n== 1995 debt ceiling crisis ==\n\nThe 1995 request for a debt ceiling increase led to debate in Congress on reduction of the size of the federal government, which led to the non-passage of the federal budget, and the United States federal government shutdown of 1995\u201396. The ceiling was eventually increased and the government shutdown resolved.\n\n\n== 2011 debt ceiling crisis ==\n\nIn 2011, Republicans in Congress used the debt ceiling as leverage for deficit reduction because of the lack of Congressional normal order for fiscal year budget votes on the chamber floors and subsequent conference reconciliations between the House and the Senate for final budgets. 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. The GAO estimated that the delay in raising the debt ceiling raised borrowing costs for the government by $1.3 billion (~$1.57 billion in 2021) 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.\n\n\n== 2013 debt ceiling crisis ==\n\nFollowing the increase in the debt ceiling to $16.394 trillion in 2011, 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. With the ATRA tax cuts, the government indicated that the debt ceiling needed to raise by $700 billion (~$814 billion in 2021) for it to continue financing operations for the rest of the 2013 fiscal year and that extraordinary measures were expected to be exhausted by February 15. 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, 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.The No Budget, No Pay Act of 2013 suspended the debt ceiling from February 4, 2013 until May 19, 2013. On May 19, the debt ceiling was formally raised to approximately $16.699 trillion to accommodate the borrowing done during the suspension period. However, after the end of the suspension, the ceiling was raised only to the actual debt at that time, and Treasury needed to activate extraordinary measures to avoid a default. With the impacts of the American Taxpayer Relief Act of 2012 tax increases on those who make $400,000 per year, the 2013 sequester, and a $60 billion payment from Fannie Mae and Freddie Mac that reached the Treasury on June 28, 2013, the extraordinary measures were predicted to last until October 17 by the Treasury, but financial firms suggested funds might have lasted a little longer. Jefferies Group said extraordinary measures might have lasted until the end of October while Credit Suisse estimated mid-November.The US Treasury began taking extraordinary measures to enable payments, and stated that it would delay payments if funds could not be raised through extraordinary measures, and the debt ceiling was not raised. During the crisis, approval ratings for the Republican Party declined.\n\n\n== 2021 debt ceiling crisis ==\nFollowing the July 2021 expiration of the debt ceiling suspension, the U.S. Treasury began taking \"extraordinary measures\" which were set to expire around October 18. Senate Republicans blocked attempts to raise the ceiling using the filibuster, insisting that Democrats should act on their own and use reconciliation to raise the limit. The Senate voted to raise it on October 7, 2021, but only to grant the U.S. Treasury authority to borrow money until that December. That month, Congress voted to increase it by $2.5 (~$2.5 trillion in 2021) trillion, which President Biden signed into effect on December 16, 2021. At that point, it was set at about $31.4 trillion.\n\n\n== 2023 debt ceiling crisis ==\n\nOn January 19, 2023, the United States again reached the debt ceiling.\nPresident Biden at first refused to negotiate, instead insisting on a clean debt ceiling raise. Many news outlets and pundits have talked about this leading to a significant risk that the US defaults on its obligations, though default is not the only possible outcome of the debt ceiling not being raised, the alternative being shutting down portions of government operations. The Treasury has, however, explicitly stated that this would be technically impossible. Many news outlets have also claimed that the federal government has not defaulted on financial obligations before, including President Biden calling such a situation \"unprecedented\", however a more accurate statement is that the US has defaulted on obgliations several times in history, but never because of the debt ceiling. These included late interest payments in 1814 due to the financial strain of the War of 1812 (the last time the US experienced a \u201cmajor default on its financial obligations\"), and briefly in 1979, due to technical glitches.\n\n\n== Historical debt ceiling levels ==\nNote that this table does not go back to 1917 when the debt ceiling started.\n\nReference for values between 1993 and 2015:Note that:\n\nThe figures are unadjusted for the time value of money, such as interest and inflation and the size of the economy that generated a debt.\nThe debt ceiling is an aggregate of gross debt, which includes debt in hands of public and in intragovernment accounts.\nThe debt ceiling does not necessarily reflect the level of actual debt.\nFrom March 15 to October 30, 2015 there was a de facto debt limit of $18.153 trillion, due to use of extraordinary measures.\n\n\n== Notes ==\n\n\n== References ==\n\n\n== Sources ==\n\"Amerikanere kan l\u00e6re af dansk g\u00e6ldsloft\". DR Nyheder. 3 August 2011. Retrieved 6 May 2013.\n\"Analysis of 2011-2012 Actions Taken and Effect of Delayed Increase on Borrowing Costs\" (PDF). GAO. July 2012. Retrieved 13 January 2013.\nAustin, D. Andrew (29 April 2008). \"The Debt Limit: History and Recent Increases\" (PDF). Congressional Research Service.\nAustin, D. Andrew; Levit, Mindy R. (27 December 2012). \"The Debt Limit: History and Recent Increases\" (PDF). Congressional Research Service.\nAustin, D. Andrew (5 June 2017). \"The Debt Limit Since 2011\" Congressional Research Service.\n\"Debt ceiling\". IGM Forum. Chicago Booth. 15 January 2013. Retrieved 19 January 2013.\n\"Federal Debt and the Statutory Limit, November 2012\" (PDF). Congressional Budget Office. November 2012.\n\"Debt Limit Analysis\" (PDF). Bipartisan Policy Center. 27 November 2012. Retrieved 13 January 2013.\n\"Delays Create Debt Management Challenges and Increase Uncertainty in the Treasury Market\" (PDF). GAO-11-203. GAO. February 2011. Retrieved 13 January 2013.\nGreen, Joshua (9 May 2011). \"How Dick Gephardt Fixed the Debt-Ceiling Problem\". The Atlantic.\nKowalcky, Linda W.; LeLoup, Lance T. (1993). \"Congress and the Politics of Statutory Debt Limitation\". Public Administration Review. 53 (1): 14. CiteSeerX 10.1.1.397.5755. doi:10.2307/977272. JSTOR 977272.\nLawder, David (29 June 2011). \"Prioritizing debt payments won't work: Geithner\". Reuters.\nLevit, Mandy R.; Brass, Clinton T.; Nicola, Timothy J.; Nuschler, Dawn. \"Reaching the Debt Limit: Background and Potential Effects on Government Operations\" (PDF).\nMasters, Jonathan. \"U.S. Debt Ceiling: Costs and Consequences\". Renewing America. Council on Foreign Relations. Archived from the original on 2013-09-08. Retrieved 2013-10-09.\nSahadi, Jeanne (7 January 2013). \"Debt Ceiling: 'Chaotic' choices on 100 million payments\". CNNMoney. Retrieved 13 January 2013.\nSurowiecki, James (1 August 2011). \"Smash the Ceiling\". The New Yorker.\nSweet, Ken (8 August 2011). \"Dow plunges after S&amp;P downgrade\". CNNMoney.\nYglesias, Matthew (16 January 2013). \"What if Congress Doesn't Raise the Debt Ceiling?\". Slate.\n\n\n== External links ==\nHistory and Recent Increases (2008)\nHistory and Recent Increases (2010)\nUS Treasury Debt to the Penny (Daily)\nEstimated Debt to the Penny (Real Time)",
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"The history of the United States debt ceiling deals with movements in the United States debt ceiling since it was created in 1917. Management of the United States public debt is an important part of the macroeconomics of the United States economy and finance system, and the debt ceiling is a limitation on the federal government's ability to manage the economy and finance system. The debt ceiling is also a limitation on the federal government's ability to finance government operations, and the failure of Congress to authorize an increase in the debt ceiling has resulted in crises, especially in recent years. \n\n\n== Overview ==\nA statutorily imposed debt ceiling has been in effect since 1917 when the US Congress passed the Second Liberty Bond Act. Before 1917 there was no debt ceiling in force, but there were parliamentary procedural limitations on the amount of debt that could be issued by the government.\nExcept for about a year during 1835\u20131836, the United States has continuously had a fluctuating public debt since the US Constitution legally went into effect on March 4, 1789. Debts incurred during the American Revolutionary War and under the Articles of Confederation led to the first yearly report on the amount of the debt ($75,463,476.52 on January 1, 1791). The national debt, as expressed in absolute dollars, has increased under every presidential administration since Herbert Hoover.\n\n\n== Early history ==\nPrior to 1917, the United States did not have a debt ceiling, with Congress either authorizing specific loans or allowing the Treasury to issue certain debt instruments and individual debt issues for specific purposes. Sometimes Congress gave the Treasury discretion over what type of debt instrument would be issued.Between 1788 and 1917, Congress would authorize each bond issue by the United States Treasury by passing a legislative act that approved the issue and the amount.\nIn 1917, during World War I, Congress created the debt ceiling with the Second Liberty Bond Act of 1917, which allowed the Treasury to issue bonds and take on other debt without specific Congressional approval, as long as the total debt fell under the statutory debt ceiling. The 1917 legislation set limits on the aggregate amount of debt that could be accumulated through individual categories of debt (such as bonds and bills).\n\n\n=== Public Debt Acts ===\nIn 1939, Congress instituted the first limit on total accumulated debt over all kinds of instruments. The debt ceiling, in which an aggregate limit is applied to nearly all federal debt, was substantially established by Public Debt Acts passed in 1939 and 1941 and subsequently amended. The United States Public Debt Act of 1939 eliminated separate limits on different types of debt. The Public Debt Act of 1941 raised the aggregate debt limit on all obligations to $65 billion, and consolidated nearly all federal borrowing under the U.S. Treasury and eliminated the tax-exemption of interest and profit on government debt.Subsequent Public Debt Acts amended the aggregate debt limit: the 1942, 1943, 1944, and 1945 acts raised the limit to $125 billion, $210 billion, $260 billion, and $300 billion respectively. In 1946, the Public Debt Act was amended to reduce the debt limit to $275 billion. The limit stayed unchanged until 1954, the Korean War being financed through taxation. The U.S. Treasury nearly hit the debt ceiling in fall 1953, plus the Senate refused to raise it until summer 1954, but the federal government managed to avoid reaching it through using various measures, such as monetizing leftover gold.A feature of the Public Debt Acts, unlike the 1919 Victory Liberty Bond Act which financed American costs in the First World War, was that the new ceiling was set about 10% above the actual federal debt at the time.\n\n\n== 1970s ==\nPrior 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. James Surowiecki argued that the debt ceiling lost its usefulness after these reforms to the budget process.In 1979, noting the potential problems of hitting a default, Dick Gephardt (Rep, D-MO) 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 Congress in 1995.\n\n\n== Number of requests for increase ==\nDepending on who is doing the research, it is said that the US has raised its debt ceiling (in some form or other) at least 90 times in the 20th century.The debt ceiling was raised 74 times from March 1962 to May 2011, including 18 times under Ronald Reagan, eight times under Bill Clinton, and seven times under George W. Bush.\nCongress has raised the debt ceiling 14 times from 2001 to 2016. The debt ceiling was raised a total of 7 times (total increase of $5365bil) during Pres. Bush's eight-year term and it was raised 11 times (as of 03/2015 a total increase of $6498bil) during Pres. Obama's eight years in office.\n\n\n== 1995 debt ceiling crisis ==\n\nThe 1995 request for a debt ceiling increase led to debate in Congress on reduction of the size of the federal government, which led to the non-passage of the federal budget, and the United States federal government shutdown of 1995\u201396. The ceiling was eventually increased and the government shutdown resolved.\n\n\n== 2011 debt ceiling crisis ==\n\nIn 2011, Republicans in Congress used the debt ceiling as leverage for deficit reduction because of the lack of Congressional normal order for fiscal year budget votes on the chamber floors and subsequent conference reconciliations between the House and the Senate for final budgets. 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. The GAO estimated that the delay in raising the debt ceiling raised borrowing costs for the government by $1.3 billion (~$1.57 billion in 2021) 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.\n\n\n== 2013 debt ceiling crisis ==\n\nFollowing the increase in the debt ceiling to $16.394 trillion in 2011, 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. With the ATRA tax cuts, the government indicated that the debt ceiling needed to raise by $700 billion (~$814 billion in 2021) for it to continue financing operations for the rest of the 2013 fiscal year and that extraordinary measures were expected to be exhausted by February 15. 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, 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.The No Budget, No Pay Act of 2013 suspended the debt ceiling from February 4, 2013 until May 19, 2013. On May 19, the debt ceiling was formally raised to approximately $16.699 trillion to accommodate the borrowing done during the suspension period. However, after the end of the suspension, the ceiling was raised only to the actual debt at that time, and Treasury needed to activate extraordinary measures to avoid a default. With the impacts of the American Taxpayer Relief Act of 2012 tax increases on those who make $400,000 per year, the 2013 sequester, and a $60 billion payment from Fannie Mae and Freddie Mac that reached the Treasury on June 28, 2013, the extraordinary measures were predicted to last until October 17 by the Treasury, but financial firms suggested funds might have lasted a little longer. Jefferies Group said extraordinary measures might have lasted until the end of October while Credit Suisse estimated mid-November.The US Treasury began taking extraordinary measures to enable payments, and stated that it would delay payments if funds could not be raised through extraordinary measures, and the debt ceiling was not raised. During the crisis, approval ratings for the Republican Party declined.\n\n\n== 2021 debt ceiling crisis ==\nFollowing the July 2021 expiration of the debt ceiling suspension, the U.S. Treasury began taking \"extraordinary measures\" which were set to expire around October 18. Senate Republicans blocked attempts to raise the ceiling using the filibuster, insisting that Democrats should act on their own and use reconciliation to raise the limit. The Senate voted to raise it on October 7, 2021, but only to grant the U.S. Treasury authority to borrow money until that December. That month, Congress voted to increase it by $2.5 (~$2.5 trillion in 2021) trillion, which President Biden signed into effect on December 16, 2021. At that point, it was set at about $31.4 trillion.\n\n\n== 2023 debt ceiling crisis ==\n\nOn January 19, 2023, the United States again reached the debt ceiling.\nPresident Biden at first refused to negotiate, instead insisting on a clean debt ceiling raise. Many news outlets and pundits have talked about this leading to a significant risk that the US defaults on its obligations, though default is not the only possible outcome of the debt ceiling not being raised, the alternative being shutting down portions of government operations. The Treasury has, however, explicitly stated that this would be technically impossible. Many news outlets have also claimed that the federal government has not defaulted on financial obligations before, including President Biden calling such a situation \"unprecedented\", however a more accurate statement is that the US has defaulted on obgliations several times in history, but never because of the debt ceiling. These included late interest payments in 1814 due to the financial strain of the War of 1812 (the last time the US experienced a \u201cmajor default on its financial obligations\"), and briefly in 1979, due to technical glitches.\n\n\n== Historical debt ceiling levels ==\nNote that this table does not go back to 1917 when the debt ceiling started.\n\nReference for values between 1993 and 2015:Note that:\n\nThe figures are unadjusted for the time value of money, such as interest and inflation and the size of the economy that generated a debt.\nThe debt ceiling is an aggregate of gross debt, which includes debt in hands of public and in intragovernment accounts.\nThe debt ceiling does not necessarily reflect the level of actual debt.\nFrom March 15 to October 30, 2015 there was a de facto debt limit of $18.153 trillion, due to use of extraordinary measures.\n\n\n== Notes ==\n\n\n== References ==\n\n\n== Sources ==\n\"Amerikanere kan l\u00e6re af dansk g\u00e6ldsloft\". DR Nyheder. 3 August 2011. Retrieved 6 May 2013.\n\"Analysis of 2011-2012 Actions Taken and Effect of Delayed Increase on Borrowing Costs\" (PDF). GAO. July 2012. Retrieved 13 January 2013.\nAustin, D. Andrew (29 April 2008). \"The Debt Limit: History and Recent Increases\" (PDF). Congressional Research Service.\nAustin, D. Andrew; Levit, Mindy R. (27 December 2012). \"The Debt Limit: History and Recent Increases\" (PDF). Congressional Research Service.\nAustin, D. Andrew (5 June 2017). \"The Debt Limit Since 2011\" Congressional Research Service.\n\"Debt ceiling\". IGM Forum. Chicago Booth. 15 January 2013. Retrieved 19 January 2013.\n\"Federal Debt and the Statutory Limit, November 2012\" (PDF). Congressional Budget Office. November 2012.\n\"Debt Limit Analysis\" (PDF). Bipartisan Policy Center. 27 November 2012. Retrieved 13 January 2013.\n\"Delays Create Debt Management Challenges and Increase Uncertainty in the Treasury Market\" (PDF). GAO-11-203. GAO. February 2011. Retrieved 13 January 2013.\nGreen, Joshua (9 May 2011). \"How Dick Gephardt Fixed the Debt-Ceiling Problem\". The Atlantic.\nKowalcky, Linda W.; LeLoup, Lance T. (1993). \"Congress and the Politics of Statutory Debt Limitation\". Public Administration Review. 53 (1): 14. CiteSeerX 10.1.1.397.5755. doi:10.2307/977272. JSTOR 977272.\nLawder, David (29 June 2011). \"Prioritizing debt payments won't work: Geithner\". Reuters.\nLevit, Mandy R.; Brass, Clinton T.; Nicola, Timothy J.; Nuschler, Dawn. \"Reaching the Debt Limit: Background and Potential Effects on Government Operations\" (PDF).\nMasters, Jonathan. \"U.S. Debt Ceiling: Costs and Consequences\". Renewing America. Council on Foreign Relations. Archived from the original on 2013-09-08. Retrieved 2013-10-09.\nSahadi, Jeanne (7 January 2013). \"Debt Ceiling: 'Chaotic' choices on 100 million payments\". CNNMoney. Retrieved 13 January 2013.\nSurowiecki, James (1 August 2011). \"Smash the Ceiling\". The New Yorker.\nSweet, Ken (8 August 2011). \"Dow plunges after S&amp;P downgrade\". CNNMoney.\nYglesias, Matthew (16 January 2013). \"What if Congress Doesn't Raise the Debt Ceiling?\". Slate.\n\n\n== External links ==\nHistory and Recent Increases (2008)\nHistory and Recent Increases (2010)\nUS Treasury Debt to the Penny (Daily)\nEstimated Debt to the Penny (Real Time)"
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"The history of the United States debt ceiling deals with movements in the United States debt ceiling since it was created in 1917. Management of the United States public debt is an important part of the macroeconomics of the United States economy and finance system, and the debt ceiling is a limitation on the federal government's ability to manage the economy and finance system. The debt ceiling is also a limitation on the federal government's ability to finance government operations, and the failure of Congress to authorize an increase in the debt ceiling has resulted in crises, especially in recent years. \n\n\n== Overview ==\nA statutorily imposed debt ceiling has been in effect since 1917 when the US Congress passed the Second Liberty Bond Act. Before 1917 there was no debt ceiling in force, but there were parliamentary procedural limitations on the amount of debt that could be issued by the government.\nExcept for about a year during 1835\u20131836, the United States has continuously had a fluctuating public debt since the US Constitution legally went into effect on March 4, 1789. Debts incurred during the American Revolutionary War and under the Articles of Confederation led to the first yearly report on the amount of the debt ($75,463,476.52 on January 1, 1791). The national debt, as expressed in absolute dollars, has increased under every presidential administration since Herbert Hoover.\n\n\n== Early history ==\nPrior to 1917, the United States did not have a debt ceiling, with Congress either authorizing specific loans or allowing the Treasury to issue certain debt instruments and individual debt issues for specific purposes. Sometimes Congress gave the Treasury discretion over what type of debt instrument would be issued.Between 1788 and 1917, Congress would authorize each bond issue by the United States Treasury by passing a legislative act that approved the issue and the amount.\nIn 1917, during World War I, Congress created the debt ceiling with the Second Liberty Bond Act of 1917, which allowed the Treasury to issue bonds and take on other debt without specific Congressional approval, as long as the total debt fell under the statutory debt ceiling. The 1917 legislation set limits on the aggregate amount of debt that could be accumulated through individual categories of debt (such as bonds and bills).\n\n\n=== Public Debt Acts ===\nIn 1939, Congress instituted the first limit on total accumulated debt over all kinds of instruments. The debt ceiling, in which an aggregate limit is applied to nearly all federal debt, was substantially established by Public Debt Acts passed in 1939 and 1941 and subsequently amended. The United States Public Debt Act of 1939 eliminated separate limits on different types of debt. The Public Debt Act of 1941 raised the aggregate debt limit on all obligations to $65 billion, and consolidated nearly all federal borrowing under the U.S. Treasury and eliminated the tax-exemption of interest and profit on government debt.Subsequent Public Debt Acts amended the aggregate debt limit: the 1942, 1943, 1944, and 1945 acts raised the limit to $125 billion, $210 billion, $260 billion, and $300 billion respectively. In 1946, the Public Debt Act was amended to reduce the debt limit to $275 billion. The limit stayed unchanged until 1954, the Korean War being financed through taxation. The U.S. Treasury nearly hit the debt ceiling in fall 1953, plus the Senate refused to raise it until summer 1954, but the federal government managed to avoid reaching it through using various measures, such as monetizing leftover gold.A feature of the Public Debt Acts, unlike the 1919 Victory Liberty Bond Act which financed American costs in the First World War, was that the new ceiling was set about 10% above the actual federal debt at the time.\n\n\n== 1970s ==\nPrior 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. James Surowiecki argued that the debt ceiling lost its usefulness after these reforms to the budget process.In 1979, noting the potential problems of hitting a default, Dick Gephardt (Rep, D-MO) 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 Congress in 1995.\n\n\n== Number of requests for increase ==\nDepending on who is doing the research, it is said that the US has raised its debt ceiling (in some form or other) at least 90 times in the 20th century.The debt ceiling was raised 74 times from March 1962 to May 2011, including 18 times under Ronald Reagan, eight times under Bill Clinton, and seven times under George W. Bush.\nCongress has raised the debt ceiling 14 times from 2001 to 2016. The debt ceiling was raised a total of 7 times (total increase of $5365bil) during Pres. Bush's eight-year term and it was raised 11 times (as of 03/2015 a total increase of $6498bil) during Pres. Obama's eight years in office.\n\n\n== 1995 debt ceiling crisis ==\n\nThe 1995 request for a debt ceiling increase led to debate in Congress on reduction of the size of the federal government, which led to the non-passage of the federal budget, and the United States federal government shutdown of 1995\u201396. The ceiling was eventually increased and the government shutdown resolved.\n\n\n== 2011 debt ceiling crisis ==\n\nIn 2011, Republicans in Congress used the debt ceiling as leverage for deficit reduction because of the lack of Congressional normal order for fiscal year budget votes on the chamber floors and subsequent conference reconciliations between the House and the Senate for final budgets. 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. The GAO estimated that the delay in raising the debt ceiling raised borrowing costs for the government by $1.3 billion (~$1.57 billion in 2021) 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.\n\n\n== 2013 debt ceiling crisis ==\n\nFollowing the increase in the debt ceiling to $16.394 trillion in 2011, 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. With the ATRA tax cuts, the government indicated that the debt ceiling needed to raise by $700 billion (~$814 billion in 2021) for it to continue financing operations for the rest of the 2013 fiscal year and that extraordinary measures were expected to be exhausted by February 15. 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, 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.The No Budget, No Pay Act of 2013 suspended the debt ceiling from February 4, 2013 until May 19, 2013. On May 19, the debt ceiling was formally raised to approximately $16.699 trillion to accommodate the borrowing done during the suspension period. However, after the end of the suspension, the ceiling was raised only to the actual debt at that time, and Treasury needed to activate extraordinary measures to avoid a default. With the impacts of the American Taxpayer Relief Act of 2012 tax increases on those who make $400,000 per year, the 2013 sequester, and a $60 billion payment from Fannie Mae and Freddie Mac that reached the Treasury on June 28, 2013, the extraordinary measures were predicted to last until October 17 by the Treasury, but financial firms suggested funds might have lasted a little longer. Jefferies Group said extraordinary measures might have lasted until the end of October while Credit Suisse estimated mid-November.The US Treasury began taking extraordinary measures to enable payments, and stated that it would delay payments if funds could not be raised through extraordinary measures, and the debt ceiling was not raised. During the crisis, approval ratings for the Republican Party declined.\n\n\n== 2021 debt ceiling crisis ==\nFollowing the July 2021 expiration of the debt ceiling suspension, the U.S. Treasury began taking \"extraordinary measures\" which were set to expire around October 18. Senate Republicans blocked attempts to raise the ceiling using the filibuster, insisting that Democrats should act on their own and use reconciliation to raise the limit. The Senate voted to raise it on October 7, 2021, but only to grant the U.S. Treasury authority to borrow money until that December. That month, Congress voted to increase it by $2.5 (~$2.5 trillion in 2021) trillion, which President Biden signed into effect on December 16, 2021. At that point, it was set at about $31.4 trillion.\n\n\n== 2023 debt ceiling crisis ==\n\nOn January 19, 2023, the United States again reached the debt ceiling.\nPresident Biden at first refused to negotiate, instead insisting on a clean debt ceiling raise. Many news outlets and pundits have talked about this leading to a significant risk that the US defaults on its obligations, though default is not the only possible outcome of the debt ceiling not being raised, the alternative being shutting down portions of government operations. The Treasury has, however, explicitly stated that this would be technically impossible. Many news outlets have also claimed that the federal government has not defaulted on financial obligations before, including President Biden calling such a situation \"unprecedented\", however a more accurate statement is that the US has defaulted on obgliations several times in history, but never because of the debt ceiling. These included late interest payments in 1814 due to the financial strain of the War of 1812 (the last time the US experienced a \u201cmajor default on its financial obligations\"), and briefly in 1979, due to technical glitches.\n\n\n== Historical debt ceiling levels ==\nNote that this table does not go back to 1917 when the debt ceiling started.\n\nReference for values between 1993 and 2015:Note that:\n\nThe figures are unadjusted for the time value of money, such as interest and inflation and the size of the economy that generated a debt.\nThe debt ceiling is an aggregate of gross debt, which includes debt in hands of public and in intragovernment accounts.\nThe debt ceiling does not necessarily reflect the level of actual debt.\nFrom March 15 to October 30, 2015 there was a de facto debt limit of $18.153 trillion, due to use of extraordinary measures.\n\n\n== Notes ==\n\n\n== References ==\n\n\n== Sources ==\n\"Amerikanere kan l\u00e6re af dansk g\u00e6ldsloft\". DR Nyheder. 3 August 2011. Retrieved 6 May 2013.\n\"Analysis of 2011-2012 Actions Taken and Effect of Delayed Increase on Borrowing Costs\" (PDF). GAO. July 2012. Retrieved 13 January 2013.\nAustin, D. Andrew (29 April 2008). \"The Debt Limit: History and Recent Increases\" (PDF). Congressional Research Service.\nAustin, D. Andrew; Levit, Mindy R. (27 December 2012). \"The Debt Limit: History and Recent Increases\" (PDF). Congressional Research Service.\nAustin, D. Andrew (5 June 2017). \"The Debt Limit Since 2011\" Congressional Research Service.\n\"Debt ceiling\". IGM Forum. Chicago Booth. 15 January 2013. Retrieved 19 January 2013.\n\"Federal Debt and the Statutory Limit, November 2012\" (PDF). Congressional Budget Office. November 2012.\n\"Debt Limit Analysis\" (PDF). Bipartisan Policy Center. 27 November 2012. Retrieved 13 January 2013.\n\"Delays Create Debt Management Challenges and Increase Uncertainty in the Treasury Market\" (PDF). GAO-11-203. GAO. February 2011. Retrieved 13 January 2013.\nGreen, Joshua (9 May 2011). \"How Dick Gephardt Fixed the Debt-Ceiling Problem\". The Atlantic.\nKowalcky, Linda W.; LeLoup, Lance T. (1993). \"Congress and the Politics of Statutory Debt Limitation\". Public Administration Review. 53 (1): 14. CiteSeerX 10.1.1.397.5755. doi:10.2307/977272. JSTOR 977272.\nLawder, David (29 June 2011). \"Prioritizing debt payments won't work: Geithner\". Reuters.\nLevit, Mandy R.; Brass, Clinton T.; Nicola, Timothy J.; Nuschler, Dawn. \"Reaching the Debt Limit: Background and Potential Effects on Government Operations\" (PDF).\nMasters, Jonathan. \"U.S. Debt Ceiling: Costs and Consequences\". Renewing America. Council on Foreign Relations. Archived from the original on 2013-09-08. Retrieved 2013-10-09.\nSahadi, Jeanne (7 January 2013). \"Debt Ceiling: 'Chaotic' choices on 100 million payments\". CNNMoney. Retrieved 13 January 2013.\nSurowiecki, James (1 August 2011). \"Smash the Ceiling\". The New Yorker.\nSweet, Ken (8 August 2011). \"Dow plunges after S&amp;P downgrade\". CNNMoney.\nYglesias, Matthew (16 January 2013). \"What if Congress Doesn't Raise the Debt Ceiling?\". Slate.\n\n\n== External links ==\nHistory and Recent Increases (2008)\nHistory and Recent Increases (2010)\nUS Treasury Debt to the Penny (Daily)\nEstimated Debt to the Penny (Real Time)"
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"chunk": "The history of the United States debt ceiling deals with movements in the United States debt ceiling since it was created in 1917. Management of the United States public debt is an important part of the macroeconomics of the United States economy and finance system, and the debt ceiling is a limitation on the federal government's ability to manage the economy and finance system. The debt ceiling is also a limitation on the federal government's ability to finance government operations, and the failure of Congress to authorize an increase in the debt ceiling has resulted in crises, especially in recent years. \n\n\n== Overview ==\nA statutorily imposed debt ceiling has been in effect since 1917 when the US Congress passed the Second Liberty Bond Act. Before 1917 there was no debt ceiling in force, but there were parliamentary procedural limitations on the amount of debt that could be issued by the government.\nExcept for about a year during 1835\u20131836, the United States has continuously had a fluctuating public debt since the US Constitution legally went into effect on March 4, 1789. Debts incurred during the American Revolutionary War and under the Articles of Confederation led to the first yearly report on the amount of the debt ($75,463,476.52 on January 1, 1791). The national debt, as expressed in absolute dollars, has increased under every presidential administration since Herbert Hoover.\n\n\n== Early history ==\nPrior to 1917, the United States did not have a debt ceiling, with Congress either authorizing specific loans or allowing the Treasury to issue certain debt instruments and individual debt issues for specific purposes. Sometimes Congress gave the Treasury discretion over what type of debt instrument would be issued.Between 1788 and 1917, Congress would authorize each bond issue by the United States Treasury by passing a legislative act that approved the issue and the amount.\nIn 1917, during World War I, Congress created the debt ceiling with the Second Liberty Bond Act of 1917, which allowed the Treasury to issue bonds and take on other debt without specific Congressional approval, as long as the total debt fell under the statutory debt ceiling. The 1917 legislation set limits on the aggregate amount of debt that could be accumulated through individual categories of debt (such as bonds and bills).\n\n\n=== Public Debt Acts ===\nIn 1939, Congress instituted the first limit on total accumulated debt over all kinds of instruments. The debt ceiling, in which an aggregate limit is applied to nearly all federal debt, was substantially established by Public Debt Acts passed in 1939 and 1941 and subsequently amended. The United States Public Debt Act of 1939 eliminated separate limits on different types of debt. The Public Debt Act of 1941 raised the aggregate debt limit on all obligations to $65 billion, and consolidated nearly all federal borrowing under the U.S. Treasury and eliminated the tax-exemption of interest and profit on government debt.Subsequent Public Debt Acts amended the aggregate debt limit: the 1942, 1943, 1944, and 1945 acts raised the limit to $125 billion, $210 billion, $260 billion, and $300 billion respectively. In 1946, the Public Debt Act was amended to reduce the debt limit to $275 billion. The limit stayed unchanged until 1954, the Korean War being financed through taxation. The U.S. Treasury nearly hit the debt ceiling in fall 1953, plus the Senate refused to raise it until summer 1954, but the federal government managed to avoid reaching it through using various measures, such as monetizing leftover gold.A feature of the Public Debt Acts, unlike the 1919 Victory Liberty Bond Act which financed American costs in the First World War, was that the new ceiling was set about 10% above the actual federal debt at the time.\n\n\n== 1970s ==\nPrior 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. James Surowiecki argued that the debt ceiling lost its usefulness after these reforms to the budget process.In 1979, noting the potential problems of hitting a default, Dick Gephardt (Rep, D-MO) 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 Congress in 1995.\n\n\n== Number of requests for increase ==\nDepending on who is doing the research, it is said that the US has raised its debt ceiling (in some form or other) at least 90 times in the 20th century.The debt ceiling was raised 74 times from March 1962 to May 2011, including 18 times under Ronald Reagan, eight times under Bill Clinton, and seven times under George W. Bush.\nCongress has raised the debt ceiling 14 times from 2001 to 2016. The debt ceiling was raised a total of 7 times (total increase of $5365bil) during Pres. Bush's eight-year term and it was raised 11 times (as of 03/2015 a total increase of $6498bil) during Pres. Obama's eight years in office.\n\n\n== 1995 debt ceiling crisis ==\n\nThe 1995 request for a debt ceiling increase led to debate in Congress on reduction of the size of the federal government, which led to the non-passage of the federal budget, and the United States federal government shutdown of 1995\u201396. The ceiling was eventually increased and the government shutdown resolved.\n\n\n== 2011 debt ceiling crisis ==\n\nIn 2011, Republicans in Congress used the debt ceiling as leverage for deficit reduction because of the lack of Congressional normal order for fiscal year budget votes on the chamber floors and subsequent conference reconciliations between the House and the Senate for final budgets. 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. The GAO estimated that the delay in raising the debt ceiling raised borrowing costs for the government by $1.3 billion (~$1.57 billion in 2021) 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.\n\n\n== 2013 debt ceiling crisis ==\n\nFollowing the increase in the debt ceiling to $16.394 trillion in 2011, 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. With the ATRA tax cuts, the government indicated that the debt ceiling needed to raise by $700 billion (~$814 billion in 2021) for it to continue financing operations for the rest of the 2013 fiscal year and that extraordinary measures were expected to be exhausted by February 15. 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, 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.The No Budget, No Pay Act of 2013 suspended the debt ceiling from February 4, 2013 until May 19, 2013. On May 19, the debt ceiling was formally raised to approximately $16.699 trillion to accommodate the borrowing done during the suspension period. However, after the end of the suspension, the ceiling was raised only to the actual debt at that time, and Treasury needed to activate extraordinary measures to avoid a default. With the impacts of the American Taxpayer Relief Act of 2012 tax increases on those who make $400,000 per year, the 2013 sequester, and a $60 billion payment from Fannie Mae and Freddie Mac that reached the Treasury on June 28, 2013, the extraordinary measures were predicted to last until October 17 by the Treasury, but financial firms suggested funds might have lasted a little longer. Jefferies Group said extraordinary measures might have lasted until the end of October while Credit Suisse estimated mid-November.The US Treasury began taking extraordinary measures to enable payments, and stated that it would delay payments if funds could not be raised through extraordinary measures, and the debt ceiling was not raised. During the crisis, approval ratings for the Republican Party declined.\n\n\n== 2021 debt ceiling crisis ==\nFollowing the July 2021 expiration of the debt ceiling suspension, the U.S. Treasury began taking \"extraordinary measures\" which were set to expire around October 18. Senate Republicans blocked attempts to raise the ceiling using the filibuster, insisting that Democrats should act on their own and use reconciliation to raise the limit. The Senate voted to raise it on October 7, 2021, but only to grant the U.S. Treasury authority to borrow money until that December. That month, Congress voted to increase it by $2.5 (~$2.5 trillion in 2021) trillion, which President Biden signed into effect on December 16, 2021. At that point, it was set at about $31.4 trillion.\n\n\n== 2023 debt ceiling crisis ==\n\nOn January 19, 2023, the United States again reached the debt ceiling.\nPresident Biden at first refused to negotiate, instead insisting on a clean debt ceiling raise. Many news outlets and pundits have talked about this leading to a significant risk that the US defaults on its obligations, though default is not the only possible outcome of the debt ceiling not being raised, the alternative being shutting down portions of government operations. The Treasury has, however, explicitly stated that this would be technically impossible. Many news outlets have also claimed that the federal government has not defaulted on financial obligations before, including President Biden calling such a situation \"unprecedented\", however a more accurate statement is that the US has defaulted on obgliations several times in history, but never because of the debt ceiling. These included late interest payments in 1814 due to the financial strain of the War of 1812 (the last time the US experienced a \u201cmajor default on its financial obligations\"), and briefly in 1979, due to technical glitches.\n\n\n== Historical debt ceiling levels ==\nNote that this table does not go back to 1917 when the debt ceiling started.\n\nReference for values between 1993 and 2015:Note that:\n\nThe figures are unadjusted for the time value of money, such as interest and inflation and the size of the economy that generated a debt.\nThe debt ceiling is an aggregate of gross debt, which includes debt in hands of public and in intragovernment accounts.\nThe debt ceiling does not necessarily reflect the level of actual debt.\nFrom March 15 to October 30, 2015 there was a de facto debt limit of $18.153 trillion, due to use of extraordinary measures.\n\n\n== Notes ==\n\n\n== References ==\n\n\n== Sources ==\n\"Amerikanere kan l\u00e6re af dansk g\u00e6ldsloft\". DR Nyheder. 3 August 2011. Retrieved 6 May 2013.\n\"Analysis of 2011-2012 Actions Taken and Effect of Delayed Increase on Borrowing Costs\" (PDF). GAO. July 2012. Retrieved 13 January 2013.\nAustin, D. Andrew (29 April 2008). \"The Debt Limit: History and Recent Increases\" (PDF). Congressional Research Service.\nAustin, D. Andrew; Levit, Mindy R. (27 December 2012). \"The Debt Limit: History and Recent Increases\" (PDF). Congressional Research Service.\nAustin, D. Andrew (5 June 2017). \"The Debt Limit Since 2011\" Congressional Research Service.\n\"Debt ceiling\". IGM Forum. Chicago Booth. 15 January 2013. Retrieved 19 January 2013.\n\"Federal Debt and the Statutory Limit, November 2012\" (PDF). Congressional Budget Office. November 2012.\n\"Debt Limit Analysis\" (PDF). Bipartisan Policy Center. 27 November 2012. Retrieved 13 January 2013.\n\"Delays Create Debt Management Challenges and Increase Uncertainty in the Treasury Market\" (PDF). GAO-11-203. GAO. February 2011. Retrieved 13 January 2013.\nGreen, Joshua (9 May 2011). \"How Dick Gephardt Fixed the Debt-Ceiling Problem\". The Atlantic.\nKowalcky, Linda W.; LeLoup, Lance T. (1993). \"Congress and the Politics of Statutory Debt Limitation\". Public Administration Review. 53 (1): 14. CiteSeerX 10.1.1.397.5755. doi:10.2307/977272. JSTOR 977272.\nLawder, David (29 June 2011). \"Prioritizing debt payments won't work: Geithner\". Reuters.\nLevit, Mandy R.; Brass, Clinton T.; Nicola, Timothy J.; Nuschler, Dawn. \"Reaching the Debt Limit: Background and Potential Effects on Government Operations\" (PDF).\nMasters, Jonathan. \"U.S. Debt Ceiling: Costs and Consequences\". Renewing America. Council on Foreign Relations. Archived from the original on 2013-09-08. Retrieved 2013-10-09.\nSahadi, Jeanne (7 January 2013). \"Debt Ceiling: 'Chaotic' choices on 100 million payments\". CNNMoney. Retrieved 13 January 2013.\nSurowiecki, James (1 August 2011). \"Smash the Ceiling\". The New Yorker.\nSweet, Ken (8 August 2011). \"Dow plunges after S&amp;P downgrade\". CNNMoney.\nYglesias, Matthew (16 January 2013). \"What if Congress Doesn't Raise the Debt Ceiling?\". Slate.\n\n\n== External links ==\nHistory and Recent Increases (2008)\nHistory and Recent Increases (2010)\nUS Treasury Debt to the Penny (Daily)\nEstimated Debt to the Penny (Real Time)"
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"prompt": "Answer the following quoted question: \"When was the last time the US debt ceiling was raised?\" based on the following excerpt from the \"History of the United States debt ceiling\" Wikipedia page.\n\nExcerpt:\n----------------\nThe history of the United States debt ceiling deals with movements in the United States debt ceiling since it was created in 1917. Management of the United States public debt is an important part of the macroeconomics of the United States economy and finance system, and the debt ceiling is a limitation on the federal government's ability to manage the economy and finance system. The debt ceiling is also a limitation on the federal government's ability to finance government operations, and the failure of Congress to authorize an increase in the debt ceiling has resulted in crises, especially in recent years. \n\n\n== Overview ==\nA statutorily imposed debt ceiling has been in effect since 1917 when the US Congress passed the Second Liberty Bond Act. Before 1917 there was no debt ceiling in force, but there were parliamentary procedural limitations on the amount of debt that could be issued by the government.\nExcept for about a year during 1835\u20131836, the United States has continuously had a fluctuating public debt since the US Constitution legally went into effect on March 4, 1789. Debts incurred during the American Revolutionary War and under the Articles of Confederation led to the first yearly report on the amount of the debt ($75,463,476.52 on January 1, 1791). The national debt, as expressed in absolute dollars, has increased under every presidential administration since Herbert Hoover.\n\n\n== Early history ==\nPrior to 1917, the United States did not have a debt ceiling, with Congress either authorizing specific loans or allowing the Treasury to issue certain debt instruments and individual debt issues for specific purposes. Sometimes Congress gave the Treasury discretion over what type of debt instrument would be issued.Between 1788 and 1917, Congress would authorize each bond issue by the United States Treasury by passing a legislative act that approved the issue and the amount.\nIn 1917, during World War I, Congress created the debt ceiling with the Second Liberty Bond Act of 1917, which allowed the Treasury to issue bonds and take on other debt without specific Congressional approval, as long as the total debt fell under the statutory debt ceiling. The 1917 legislation set limits on the aggregate amount of debt that could be accumulated through individual categories of debt (such as bonds and bills).\n\n\n=== Public Debt Acts ===\nIn 1939, Congress instituted the first limit on total accumulated debt over all kinds of instruments. The debt ceiling, in which an aggregate limit is applied to nearly all federal debt, was substantially established by Public Debt Acts passed in 1939 and 1941 and subsequently amended. The United States Public Debt Act of 1939 eliminated separate limits on different types of debt. The Public Debt Act of 1941 raised the aggregate debt limit on all obligations to $65 billion, and consolidated nearly all federal borrowing under the U.S. Treasury and eliminated the tax-exemption of interest and profit on government debt.Subsequent Public Debt Acts amended the aggregate debt limit: the 1942, 1943, 1944, and 1945 acts raised the limit to $125 billion, $210 billion, $260 billion, and $300 billion respectively. In 1946, the Public Debt Act was amended to reduce the debt limit to $275 billion. The limit stayed unchanged until 1954, the Korean War being financed through taxation. The U.S. Treasury nearly hit the debt ceiling in fall 1953, plus the Senate refused to raise it until summer 1954, but the federal government managed to avoid reaching it through using various measures, such as monetizing leftover gold.A feature of the Public Debt Acts, unlike the 1919 Victory Liberty Bond Act which financed American costs in the First World War, was that the new ceiling was set about 10% above the actual federal debt at the time.\n\n\n== 1970s ==\nPrior 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. James Surowiecki argued that the debt ceiling lost its usefulness after these reforms to the budget process.In 1979, noting the potential problems of hitting a default, Dick Gephardt (Rep, D-MO) 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 Congress in 1995.\n\n\n== Number of requests for increase ==\nDepending on who is doing the research, it is said that the US has raised its debt ceiling (in some form or other) at least 90 times in the 20th century.The debt ceiling was raised 74 times from March 1962 to May 2011, including 18 times under Ronald Reagan, eight times under Bill Clinton, and seven times under George W. Bush.\nCongress has raised the debt ceiling 14 times from 2001 to 2016. The debt ceiling was raised a total of 7 times (total increase of $5365bil) during Pres. Bush's eight-year term and it was raised 11 times (as of 03/2015 a total increase of $6498bil) during Pres. Obama's eight years in office.\n\n\n== 1995 debt ceiling crisis ==\n\nThe 1995 request for a debt ceiling increase led to debate in Congress on reduction of the size of the federal government, which led to the non-passage of the federal budget, and the United States federal government shutdown of 1995\u201396. The ceiling was eventually increased and the government shutdown resolved.\n\n\n== 2011 debt ceiling crisis ==\n\nIn 2011, Republicans in Congress used the debt ceiling as leverage for deficit reduction because of the lack of Congressional normal order for fiscal year budget votes on the chamber floors and subsequent conference reconciliations between the House and the Senate for final budgets. 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. The GAO estimated that the delay in raising the debt ceiling raised borrowing costs for the government by $1.3 billion (~$1.57 billion in 2021) 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.\n\n\n== 2013 debt ceiling crisis ==\n\nFollowing the increase in the debt ceiling to $16.394 trillion in 2011, 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. With the ATRA tax cuts, the government indicated that the debt ceiling needed to raise by $700 billion (~$814 billion in 2021) for it to continue financing operations for the rest of the 2013 fiscal year and that extraordinary measures were expected to be exhausted by February 15. 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, 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.The No Budget, No Pay Act of 2013 suspended the debt ceiling from February 4, 2013 until May 19, 2013. On May 19, the debt ceiling was formally raised to approximately $16.699 trillion to accommodate the borrowing done during the suspension period. However, after the end of the suspension, the ceiling was raised only to the actual debt at that time, and Treasury needed to activate extraordinary measures to avoid a default. With the impacts of the American Taxpayer Relief Act of 2012 tax increases on those who make $400,000 per year, the 2013 sequester, and a $60 billion payment from Fannie Mae and Freddie Mac that reached the Treasury on June 28, 2013, the extraordinary measures were predicted to last until October 17 by the Treasury, but financial firms suggested funds might have lasted a little longer. Jefferies Group said extraordinary measures might have lasted until the end of October while Credit Suisse estimated mid-November.The US Treasury began taking extraordinary measures to enable payments, and stated that it would delay payments if funds could not be raised through extraordinary measures, and the debt ceiling was not raised. During the crisis, approval ratings for the Republican Party declined.\n\n\n== 2021 debt ceiling crisis ==\nFollowing the July 2021 expiration of the debt ceiling suspension, the U.S. Treasury began taking \"extraordinary measures\" which were set to expire around October 18. Senate Republicans blocked attempts to raise the ceiling using the filibuster, insisting that Democrats should act on their own and use reconciliation to raise the limit. The Senate voted to raise it on October 7, 2021, but only to grant the U.S. Treasury authority to borrow money until that December. That month, Congress voted to increase it by $2.5 (~$2.5 trillion in 2021) trillion, which President Biden signed into effect on December 16, 2021. At that point, it was set at about $31.4 trillion.\n\n\n== 2023 debt ceiling crisis ==\n\nOn January 19, 2023, the United States again reached the debt ceiling.\nPresident Biden at first refused to negotiate, instead insisting on a clean debt ceiling raise. Many news outlets and pundits have talked about this leading to a significant risk that the US defaults on its obligations, though default is not the only possible outcome of the debt ceiling not being raised, the alternative being shutting down portions of government operations. The Treasury has, however, explicitly stated that this would be technically impossible. Many news outlets have also claimed that the federal government has not defaulted on financial obligations before, including President Biden calling such a situation \"unprecedented\", however a more accurate statement is that the US has defaulted on obgliations several times in history, but never because of the debt ceiling. These included late interest payments in 1814 due to the financial strain of the War of 1812 (the last time the US experienced a \u201cmajor default on its financial obligations\"), and briefly in 1979, due to technical glitches.\n\n\n== Historical debt ceiling levels ==\nNote that this table does not go back to 1917 when the debt ceiling started.\n\nReference for values between 1993 and 2015:Note that:\n\nThe figures are unadjusted for the time value of money, such as interest and inflation and the size of the economy that generated a debt.\nThe debt ceiling is an aggregate of gross debt, which includes debt in hands of public and in intragovernment accounts.\nThe debt ceiling does not necessarily reflect the level of actual debt.\nFrom March 15 to October 30, 2015 there was a de facto debt limit of $18.153 trillion, due to use of extraordinary measures.\n\n\n== Notes ==\n\n\n== References ==\n\n\n== Sources ==\n\"Amerikanere kan l\u00e6re af dansk g\u00e6ldsloft\". DR Nyheder. 3 August 2011. Retrieved 6 May 2013.\n\"Analysis of 2011-2012 Actions Taken and Effect of Delayed Increase on Borrowing Costs\" (PDF). GAO. July 2012. Retrieved 13 January 2013.\nAustin, D. Andrew (29 April 2008). \"The Debt Limit: History and Recent Increases\" (PDF). Congressional Research Service.\nAustin, D. Andrew; Levit, Mindy R. (27 December 2012). \"The Debt Limit: History and Recent Increases\" (PDF). Congressional Research Service.\nAustin, D. Andrew (5 June 2017). \"The Debt Limit Since 2011\" Congressional Research Service.\n\"Debt ceiling\". IGM Forum. Chicago Booth. 15 January 2013. Retrieved 19 January 2013.\n\"Federal Debt and the Statutory Limit, November 2012\" (PDF). Congressional Budget Office. November 2012.\n\"Debt Limit Analysis\" (PDF). Bipartisan Policy Center. 27 November 2012. Retrieved 13 January 2013.\n\"Delays Create Debt Management Challenges and Increase Uncertainty in the Treasury Market\" (PDF). GAO-11-203. GAO. February 2011. Retrieved 13 January 2013.\nGreen, Joshua (9 May 2011). \"How Dick Gephardt Fixed the Debt-Ceiling Problem\". The Atlantic.\nKowalcky, Linda W.; LeLoup, Lance T. (1993). \"Congress and the Politics of Statutory Debt Limitation\". Public Administration Review. 53 (1): 14. CiteSeerX 10.1.1.397.5755. doi:10.2307/977272. JSTOR 977272.\nLawder, David (29 June 2011). \"Prioritizing debt payments won't work: Geithner\". Reuters.\nLevit, Mandy R.; Brass, Clinton T.; Nicola, Timothy J.; Nuschler, Dawn. \"Reaching the Debt Limit: Background and Potential Effects on Government Operations\" (PDF).\nMasters, Jonathan. \"U.S. Debt Ceiling: Costs and Consequences\". Renewing America. Council on Foreign Relations. Archived from the original on 2013-09-08. Retrieved 2013-10-09.\nSahadi, Jeanne (7 January 2013). \"Debt Ceiling: 'Chaotic' choices on 100 million payments\". CNNMoney. Retrieved 13 January 2013.\nSurowiecki, James (1 August 2011). \"Smash the Ceiling\". The New Yorker.\nSweet, Ken (8 August 2011). \"Dow plunges after S&amp;P downgrade\". CNNMoney.\nYglesias, Matthew (16 January 2013). \"What if Congress Doesn't Raise the Debt Ceiling?\". Slate.\n\n\n== External links ==\nHistory and Recent Increases (2008)\nHistory and Recent Increases (2010)\nUS Treasury Debt to the Penny (Daily)\nEstimated Debt to the Penny (Real Time)\n----------------\n\nBased on the previous excerpt, can you answer the stated question?\nReply with \"Answer not found in excerpt\" if the question cannot be answered based on the excerpt! Else, reply with a single verbatim answer.\n\nQUESTION:\nWhen was the last time the US debt ceiling was raised?\n\nANSWER:",
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"content": "Answer the following quoted question: \"When was the last time the US debt ceiling was raised?\" based on the following excerpt from the \"History of the United States debt ceiling\" Wikipedia page.\n\nExcerpt:\n----------------\nThe history of the United States debt ceiling deals with movements in the United States debt ceiling since it was created in 1917. Management of the United States public debt is an important part of the macroeconomics of the United States economy and finance system, and the debt ceiling is a limitation on the federal government's ability to manage the economy and finance system. The debt ceiling is also a limitation on the federal government's ability to finance government operations, and the failure of Congress to authorize an increase in the debt ceiling has resulted in crises, especially in recent years. \n\n\n== Overview ==\nA statutorily imposed debt ceiling has been in effect since 1917 when the US Congress passed the Second Liberty Bond Act. Before 1917 there was no debt ceiling in force, but there were parliamentary procedural limitations on the amount of debt that could be issued by the government.\nExcept for about a year during 1835\u20131836, the United States has continuously had a fluctuating public debt since the US Constitution legally went into effect on March 4, 1789. Debts incurred during the American Revolutionary War and under the Articles of Confederation led to the first yearly report on the amount of the debt ($75,463,476.52 on January 1, 1791). The national debt, as expressed in absolute dollars, has increased under every presidential administration since Herbert Hoover.\n\n\n== Early history ==\nPrior to 1917, the United States did not have a debt ceiling, with Congress either authorizing specific loans or allowing the Treasury to issue certain debt instruments and individual debt issues for specific purposes. Sometimes Congress gave the Treasury discretion over what type of debt instrument would be issued.Between 1788 and 1917, Congress would authorize each bond issue by the United States Treasury by passing a legislative act that approved the issue and the amount.\nIn 1917, during World War I, Congress created the debt ceiling with the Second Liberty Bond Act of 1917, which allowed the Treasury to issue bonds and take on other debt without specific Congressional approval, as long as the total debt fell under the statutory debt ceiling. The 1917 legislation set limits on the aggregate amount of debt that could be accumulated through individual categories of debt (such as bonds and bills).\n\n\n=== Public Debt Acts ===\nIn 1939, Congress instituted the first limit on total accumulated debt over all kinds of instruments. The debt ceiling, in which an aggregate limit is applied to nearly all federal debt, was substantially established by Public Debt Acts passed in 1939 and 1941 and subsequently amended. The United States Public Debt Act of 1939 eliminated separate limits on different types of debt. The Public Debt Act of 1941 raised the aggregate debt limit on all obligations to $65 billion, and consolidated nearly all federal borrowing under the U.S. Treasury and eliminated the tax-exemption of interest and profit on government debt.Subsequent Public Debt Acts amended the aggregate debt limit: the 1942, 1943, 1944, and 1945 acts raised the limit to $125 billion, $210 billion, $260 billion, and $300 billion respectively. In 1946, the Public Debt Act was amended to reduce the debt limit to $275 billion. The limit stayed unchanged until 1954, the Korean War being financed through taxation. The U.S. Treasury nearly hit the debt ceiling in fall 1953, plus the Senate refused to raise it until summer 1954, but the federal government managed to avoid reaching it through using various measures, such as monetizing leftover gold.A feature of the Public Debt Acts, unlike the 1919 Victory Liberty Bond Act which financed American costs in the First World War, was that the new ceiling was set about 10% above the actual federal debt at the time.\n\n\n== 1970s ==\nPrior 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. James Surowiecki argued that the debt ceiling lost its usefulness after these reforms to the budget process.In 1979, noting the potential problems of hitting a default, Dick Gephardt (Rep, D-MO) 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 Congress in 1995.\n\n\n== Number of requests for increase ==\nDepending on who is doing the research, it is said that the US has raised its debt ceiling (in some form or other) at least 90 times in the 20th century.The debt ceiling was raised 74 times from March 1962 to May 2011, including 18 times under Ronald Reagan, eight times under Bill Clinton, and seven times under George W. Bush.\nCongress has raised the debt ceiling 14 times from 2001 to 2016. The debt ceiling was raised a total of 7 times (total increase of $5365bil) during Pres. Bush's eight-year term and it was raised 11 times (as of 03/2015 a total increase of $6498bil) during Pres. Obama's eight years in office.\n\n\n== 1995 debt ceiling crisis ==\n\nThe 1995 request for a debt ceiling increase led to debate in Congress on reduction of the size of the federal government, which led to the non-passage of the federal budget, and the United States federal government shutdown of 1995\u201396. The ceiling was eventually increased and the government shutdown resolved.\n\n\n== 2011 debt ceiling crisis ==\n\nIn 2011, Republicans in Congress used the debt ceiling as leverage for deficit reduction because of the lack of Congressional normal order for fiscal year budget votes on the chamber floors and subsequent conference reconciliations between the House and the Senate for final budgets. 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. The GAO estimated that the delay in raising the debt ceiling raised borrowing costs for the government by $1.3 billion (~$1.57 billion in 2021) 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.\n\n\n== 2013 debt ceiling crisis ==\n\nFollowing the increase in the debt ceiling to $16.394 trillion in 2011, 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. With the ATRA tax cuts, the government indicated that the debt ceiling needed to raise by $700 billion (~$814 billion in 2021) for it to continue financing operations for the rest of the 2013 fiscal year and that extraordinary measures were expected to be exhausted by February 15. 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, 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.The No Budget, No Pay Act of 2013 suspended the debt ceiling from February 4, 2013 until May 19, 2013. On May 19, the debt ceiling was formally raised to approximately $16.699 trillion to accommodate the borrowing done during the suspension period. However, after the end of the suspension, the ceiling was raised only to the actual debt at that time, and Treasury needed to activate extraordinary measures to avoid a default. With the impacts of the American Taxpayer Relief Act of 2012 tax increases on those who make $400,000 per year, the 2013 sequester, and a $60 billion payment from Fannie Mae and Freddie Mac that reached the Treasury on June 28, 2013, the extraordinary measures were predicted to last until October 17 by the Treasury, but financial firms suggested funds might have lasted a little longer. Jefferies Group said extraordinary measures might have lasted until the end of October while Credit Suisse estimated mid-November.The US Treasury began taking extraordinary measures to enable payments, and stated that it would delay payments if funds could not be raised through extraordinary measures, and the debt ceiling was not raised. During the crisis, approval ratings for the Republican Party declined.\n\n\n== 2021 debt ceiling crisis ==\nFollowing the July 2021 expiration of the debt ceiling suspension, the U.S. Treasury began taking \"extraordinary measures\" which were set to expire around October 18. Senate Republicans blocked attempts to raise the ceiling using the filibuster, insisting that Democrats should act on their own and use reconciliation to raise the limit. The Senate voted to raise it on October 7, 2021, but only to grant the U.S. Treasury authority to borrow money until that December. That month, Congress voted to increase it by $2.5 (~$2.5 trillion in 2021) trillion, which President Biden signed into effect on December 16, 2021. At that point, it was set at about $31.4 trillion.\n\n\n== 2023 debt ceiling crisis ==\n\nOn January 19, 2023, the United States again reached the debt ceiling.\nPresident Biden at first refused to negotiate, instead insisting on a clean debt ceiling raise. Many news outlets and pundits have talked about this leading to a significant risk that the US defaults on its obligations, though default is not the only possible outcome of the debt ceiling not being raised, the alternative being shutting down portions of government operations. The Treasury has, however, explicitly stated that this would be technically impossible. Many news outlets have also claimed that the federal government has not defaulted on financial obligations before, including President Biden calling such a situation \"unprecedented\", however a more accurate statement is that the US has defaulted on obgliations several times in history, but never because of the debt ceiling. These included late interest payments in 1814 due to the financial strain of the War of 1812 (the last time the US experienced a \u201cmajor default on its financial obligations\"), and briefly in 1979, due to technical glitches.\n\n\n== Historical debt ceiling levels ==\nNote that this table does not go back to 1917 when the debt ceiling started.\n\nReference for values between 1993 and 2015:Note that:\n\nThe figures are unadjusted for the time value of money, such as interest and inflation and the size of the economy that generated a debt.\nThe debt ceiling is an aggregate of gross debt, which includes debt in hands of public and in intragovernment accounts.\nThe debt ceiling does not necessarily reflect the level of actual debt.\nFrom March 15 to October 30, 2015 there was a de facto debt limit of $18.153 trillion, due to use of extraordinary measures.\n\n\n== Notes ==\n\n\n== References ==\n\n\n== Sources ==\n\"Amerikanere kan l\u00e6re af dansk g\u00e6ldsloft\". DR Nyheder. 3 August 2011. Retrieved 6 May 2013.\n\"Analysis of 2011-2012 Actions Taken and Effect of Delayed Increase on Borrowing Costs\" (PDF). GAO. July 2012. Retrieved 13 January 2013.\nAustin, D. Andrew (29 April 2008). \"The Debt Limit: History and Recent Increases\" (PDF). Congressional Research Service.\nAustin, D. Andrew; Levit, Mindy R. (27 December 2012). \"The Debt Limit: History and Recent Increases\" (PDF). Congressional Research Service.\nAustin, D. Andrew (5 June 2017). \"The Debt Limit Since 2011\" Congressional Research Service.\n\"Debt ceiling\". IGM Forum. Chicago Booth. 15 January 2013. Retrieved 19 January 2013.\n\"Federal Debt and the Statutory Limit, November 2012\" (PDF). Congressional Budget Office. November 2012.\n\"Debt Limit Analysis\" (PDF). Bipartisan Policy Center. 27 November 2012. Retrieved 13 January 2013.\n\"Delays Create Debt Management Challenges and Increase Uncertainty in the Treasury Market\" (PDF). GAO-11-203. GAO. February 2011. Retrieved 13 January 2013.\nGreen, Joshua (9 May 2011). \"How Dick Gephardt Fixed the Debt-Ceiling Problem\". The Atlantic.\nKowalcky, Linda W.; LeLoup, Lance T. (1993). \"Congress and the Politics of Statutory Debt Limitation\". Public Administration Review. 53 (1): 14. CiteSeerX 10.1.1.397.5755. doi:10.2307/977272. JSTOR 977272.\nLawder, David (29 June 2011). \"Prioritizing debt payments won't work: Geithner\". Reuters.\nLevit, Mandy R.; Brass, Clinton T.; Nicola, Timothy J.; Nuschler, Dawn. \"Reaching the Debt Limit: Background and Potential Effects on Government Operations\" (PDF).\nMasters, Jonathan. \"U.S. Debt Ceiling: Costs and Consequences\". Renewing America. Council on Foreign Relations. Archived from the original on 2013-09-08. Retrieved 2013-10-09.\nSahadi, Jeanne (7 January 2013). \"Debt Ceiling: 'Chaotic' choices on 100 million payments\". CNNMoney. Retrieved 13 January 2013.\nSurowiecki, James (1 August 2011). \"Smash the Ceiling\". The New Yorker.\nSweet, Ken (8 August 2011). \"Dow plunges after S&amp;P downgrade\". CNNMoney.\nYglesias, Matthew (16 January 2013). \"What if Congress Doesn't Raise the Debt Ceiling?\". Slate.\n\n\n== External links ==\nHistory and Recent Increases (2008)\nHistory and Recent Increases (2010)\nUS Treasury Debt to the Penny (Daily)\nEstimated Debt to the Penny (Real Time)\n----------------\n\nBased on the previous excerpt, can you answer the stated question?\nReply with \"Answer not found in excerpt\" if the question cannot be answered based on the excerpt! Else, reply with a single verbatim answer.\n\nQUESTION:\nWhen was the last time the US debt ceiling was raised?\n\nANSWER:"
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"content": "In 2011, ongoing political debate in the United States Congress about the appropriate level of government spending and its effect on the national debt and deficit reached a crisis centered on raising the debt ceiling, leading to the passage of the Budget Control Act of 2011.\nThe Republican Party, which gained control of the House of Representatives in January of 2011, demanded that President Obama negotiate over deficit reduction in exchange for an increase in the debt ceiling, the statutory maximum of money the Treasury is allowed to borrow. The debt ceiling had routinely been raised in the past without partisan debate or additional terms or conditions. This reflects the fact that the debt ceiling does not prescribe the amount of spending, but only ensures that the government can pay for the spending to which it has already committed itself. Some use the analogy of an individual \"paying their bills.\"\nIf the United States breached its debt ceiling and were unable to resort to other \"extraordinary measures\", the Treasury would have to either default on payments to bondholders or immediately curtail payment of funds owed to various companies and individuals that had been mandated but not fully funded by Congress. Both situations would likely have led to a significant international financial crisis.\nOn July 31, two days prior to when the Treasury estimated the borrowing authority of the United States would be exhausted, Republicans agreed to raise the debt ceiling in exchange for a complex deal of significant future spending cuts. The crisis did not permanently resolve the potential of future use of the debt ceiling in budgetary disputes, as shown by the subsequent crisis in 2013.\nThe crisis sparked the most volatile week for financial markets since the 2008 crisis, with the stock market trending significantly downward. Prices of government bonds (\"Treasuries\") rose as investors,
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