Legislative Process 101: The Debt Ceiling

The debt ceiling is a limit set by Congress on the total outstanding amount of money the United States Treasury (within the Executive Branch) is allowed to borrow on behalf of the federal government at any given time. This is a limited authority that has been delegated to the Treasury by Congress, since the Constitution states that only the legislative branch has the “power of the purse.” The debt ceiling is currently about $31.4 trillion after it was raised by $2.5 trillion last year, and the government hit that limit on  Thursday, January 20, 2023. That does not mean that we’ve defaulted on our financial obligations (yet), since Treasury Secretary Janet Yellen plans to take “extraordinary measures” to pay our bills, but that can only go on for so long. That means the real fight to avoid default will play out this spring, with the estimated deadline of late May or early June. 

The debt ceiling does not, however, constrain the amount the federal government actually spends or the amount it needs to borrow to honor financial commitments. Congress determines spending and taxation levels through government funding bills – Appropriations, Continuing Resolutions, and Reconciliation bills. Yet MAGA Republicans, led by Kevin McCarthy and the extremists in the House Freedom Caucus have made it no secret that they plan to drive the U.S. towards defaulting on our debts in an attempt to extract concessions on spending on critical programs like Social Security and Medicare. This gambit will do nothing but endanger the social safety net, all while putting our national economy at perilous risk.

What happens if the GOP forces the U.S. to default?

If the GOP  continues to recklessly refuse to raise the debt ceiling, the U.S. will default on its debt for the first time in history. This could mean slashing or eliminating Social Security, Medicare, & Medicaid, a stock market crash, increased taxes on the middle class, missed payments to veterans, job loss, and general economic instability here and across the globe.  Even the threat of default is harmful enough to impact global financial markets and increase government borrowing costs, like interest rates, which could make things like mortgages more expensive or even cause a recession.

Has the U.S. defaulted on its debt before? 

NO! The U.S. has never defaulted on its debt before (knock on wood). That’s because both Democrats and Republicans, and even powerful interests like Wall Street (gross, we know), understand the very real and harmful consequences that could result from the U.S. failing to meet its financial responsibilities. 

Historically, avoiding default has been accomplished mostly through “regular order,” meaning by passing legislation that clears 60 votes in the Senate. This pathway has allowed Republicans to time and time again hold the debt limit hostage, refusing to raise the debt ceiling unless Democratic leadership agreed to spending cuts to necessary programs like Social Security and Medicare. Here are a few examples:

• 1995: Republicans controlled the House, under then-Speaker Newt Gingrich, and forced two government shutdowns trying to obtain spending cuts in exchange for raising the debt ceiling.
• 2011: After then-House Speaker John Boehner demanded federal spending be cut by one dollar for every dollar increase in the debt limit, President Obama and congressional Democrats agreed to pass the Budget Control Act of 2011. The austerity measures within this bill contributed to a slower economic recovery from the Great Recession, resulting in a self-inflicted political wound for Democrats. A staple of divided government in this era was Democrats playing into Republican’s framing on supposed “excess government spending” and trying to come to a “Grand Bargain” with Republicans on spending cuts for programs like Social Security.
• 2013: Days before a U.S. default, congressional Republicans forced the government into a 16-day shutdown all because they demanded that the Affordable Care Act be repealed. Despite Republicans being at fault for the shutdown, the political blowback of a disastrous and long government shutdown was pinned on President Obama and congressional Democrats, resulting in historic victories for Republicans in the subsequent 2014 midterm elections.
• 2021: After Republicans blocked measures to suspend the debt limit, the only way Congress was able to raise the debt ceiling was an agreement between Senate Democratic and Republican leadership to make a one time exception to the filibuster to allow the debt limit to be raised with only Democratic votes.
• 2022-present: House Minority Leader Kevin McCarthy and many GOP caucus have made it clear they plan to try to take the debt ceiling hostage, repeating the same catastrophic playbook. 

This does not need to happen. 

So the GOP wants to cause a default - What can Democrats do?

Although Democrats no longer control the House, they still control the Senate and the White House, and they still have a role to play. Democrats do, in fact, have leverage in these debt ceiling negotiations, and we expect them to use it. Most importantly, under no circumstance should Democrats negotiate with these extremists over simply paying our bills, or give in to Republican attempts to make cuts to the social safety net. Republicans are not good faith negotiators, and they thrive on chaos. Handing them cuts as a concession will not actually solve that problem, it will only sell out our society’s most vulnerable members. If you have a Democratic Member of Congress, call them and let them know that you not only support raising the debt ceiling, but urge them to reject any attempts by Republicans to cut Social Security, Medicare, or any other critical program along the way. 

What can you do to stop the GOP from taking the economy hostage?

First, you should know why this is happening: in order to become Speaker of the House, Kevin McCarthy had to sell his soul to the worst people in the world – the House Freedom Caucus. These extreme members, which include Marjorie Taylor Greene, Matt Gaetz, Paul Gosar, Lauren Boebert, and the rest of the MAGA crew that haunts your nightmares, now have outsized power over the Republican agenda. Among the concessions that McCarthy offered to the Freedom Caucus to earn their support was to agree to a new rule that would allow just one Member of Congress to call for a vote to remove the Speaker. That means that if Kevin McCarthy angers just one Member of the Freedom Caucus, they have the power to call for his removal. In other words, whatever the Freedom Caucus wants, they get. And what they want is to gut Social Security and Medicare, and throw our economy into chaos.

Second, if you have a Republican Member of Congress, call them and let them know that playing games with our economy and our social safety net is unacceptable. Urge them to do the right thing and to vote to lift the debt ceiling with no delay.