A HISTORY OF THE DEBT CEILING

Americans of both parties seem to have failed to understand exactly what “the debt ceiling” is. Given that the world’s dumbest Okiefornian, Qevin McQarthy, is dumb enough to tell the world what he will do if - god forbid! - he should finally get his chance to become the worst Speaker of the House in history, it seems time to bring readers up to speed on what tis is.

First and foremost, the debt ceiling has nothing to do with spending. It’s about paying for what we’ve already spent. Catherine Rampell compares the refusal to raise the debt ceiling to “going to a restaurant, ordering the lobster and a $500 bottle of wine, and then declaring yourself financially responsible because you skipped out on the check.”

If the Trumpublicans were to do a dine-and-dash on behalf of Uncle Sam, they would tarnish - if not explode - the creditworthiness of the United States and make it more expensive for the federal government to borrow in the future because investors don’t trust us. Worse, they might accidentally blow up every other financial market on Earth, too.

That’s because U.S. debt is now viewed around the world as the safest of safe assets. Virtually all other assets around the world are benchmarked against U.S. Treasury securities. If the United States were to default on our debt obligations - or even come close to default - the event would raise the question of the riskiness of everything else investors buy and would send shockwaves of panic through every other market. This happened in 2011 when the Tea Party Republicans came so close to defaulting that U.S. Debt was downgraded from AAA to AA. It cost we the taxpayers many millions of dollars in increased interest payments on U.S. Treasury notes as a result.

The Trumpublicans would also be in violation of the Fourteenth Amendment, which says in 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.”

Demonstrating that he has no clue about the facts regarding this, as he has no clue about the facts regarding any issue facing the government, McQarthy said the following in an interview yesterday:

“You can’t just continue down the path to keep spending and adding to the debt. And if people want to make a debt ceiling [for a longer period of time], just like anything else, there comes a point in time where, okay, we’ll provide you more money, but you got to change your current behavior. We’re not just going to keep lifting your credit card limit, right? And we should seriously sit together and [figure out] where can we eliminate some waste? Where can we make the economy grow stronger?”

When the interviewers reminded McCarthy that he didn’t carry out any debt limit battles during the Trump era, during which the GOP ran up $7 trillion in new debt in only four years, including pandemic relief funding, and that Congress raised the debt ceiling three times during Trump’s presidency, and that Republicans only hold the borrowing cap hostage when Democrats are in the White House, McCarthy lamely countered that President Biden and congressional Democrats have spent too much money. (Hint: total spending in the bills passed by Democrats since Biden became president are nowhere close to adding $7 trillion to the national debt.)

McQarthy, who would probably be willing to give every Republican in the House a public blowjob if he thought it would get him elected Speaker, the job he has wanted for ten years and for which he is spectacularly unqualified, is merely echoing the four Republican lawmakers clamoring to become House Budget Committee chairman in the next Congress, who have all said they’d refuse to raise the debt ceiling next year unless Democrats agree to entitlement cuts to Social Security and Medicare and work requirements on the food stamp program; measures Dems would find abhorrent. This would set the stage for another high-stakes showdown.

Simple logic says that forcing a debt limit crisis while the world teeters on the verge of recession, is the opposite of what responsible lawmakers would pursue if they cared about strengthening the economy. However, the Trumpublicans do not recognize the existence of logic.

Just look at the context-free polls!

Do you support or oppose defaulting on the national debt?

Support, 4%

Oppose, 90%

Unsure, 6%

Do you support or oppose cutting Social Security and Medicare?

Support, 32%

Oppose, 64%

Unsure, 4%

What political party would you prefer control Congress?

Republican, 49%

Democrat, 47%

Unsure, 4%

According to voters, under GOP stewardship, the economy will be in good hands.

“Nobody ever went broke underestimating the intelligence of the American public.”

Herewith a little history about why the Congress put Section Four in the Fourteenth Amendment:

The Lincoln administration had borrowed freely to finance the civil war. As Reconstruction dawned, white Southerners complained bitterly that they would now be taxed to repay the funds that had been borrowed to defeat their cause. "What, ruin us, and then make us help pay the cost of our own whipping?" one asked a Northern journalist in 1865. "I reckon not."

Southerners were used to having their way in Congress; they had after all dominated the institution from 1787 until secession in 1861. They believed that when their representatives arrived in House and Senate, they would be able to tear up the nation's debt.

Section Four was the response; its language is extraordinary. First, it does not simply say that the national debt must be paid; it says that its "validity ... shall not be questioned." Only one other section of the Constitution--the Thirteenth Amendment's proclamation that "neither slavery nor involuntary servitude ... shall exist within the United States, or any place subject to their jurisdiction"--is as unqualified and sweeping.

From this language, it's not hard to argue that the Constitution places both payments on the debt and payments owed to groups like Social Security recipients--pensioners, that is--above the vagaries of Congressional politics. These debts have to be paid, the argument would be, in full, on time, without question.

Today’s Republicans, who are the descendants of the Southern traitors, appear to have never learned the lesson of the Fourteenth Amendment.

As to “the debt limit,” some history on that is informative:

Except for eleven months during 1835–1836, the United States has continuously had a fluctuating public debt since the U.S. Constitution legally went into effect on March 4, 1789. Debts incurred during the Revolutionary War and under the Articles of Confederation inj fact were primary reasons for calling the convention where the Constitution was written, due to the problem that the thirteen states were not making their contributions to paying down the Revolutionary War or their voluntary contributions to paying the operating expenses of the national government called for in the Articles of Confederation.

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. (It was the controversy over doing this in 1866 that led to the writing and passage of the Fourteenth Amendment.)

Prior to 1917, Congress either authorized specific loans or allowed the Treasury to issue certain debt instruments and individual debt issues for specific purposes. On occasion, Congress gave the Treasury discretion over what type of debt instrument would be issued.

A “debt limit” for the United States was established by Congress in 1917, when they passed the Second Liberty Bond Act in preparation for financing United States involvement in the First World War. The debt ceiling 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.

In 1939, with a strong isolationist group within the Congress and the likelihood of American participation in World War II growing, 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 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.

The “debt limit” was purely political. It was designed to allow the isolationist congressmen to vote “against” increasing the limit, which they could use with their political base, while insuring that the debt was increased since a majority of the Congress would not allow the national debt to be “questioned” by failing to do so.

It was a political game played because FDR needed the domestic support of the midwestern isolationist Republican congressmen - who were otherwise quite progressive as regarded domestic policies - to overcome the conservatives of the “Solid South” in the Democratic Party and the fiscal conservatives of eastern Republicanism who were devoted to defending Wall Street and major industry - to pass the various New Deal laws. It was a “sop to the opposition” that allowed both domestic programs to pass and to finance the work of preparedness that Roosevelt was pushing at the time.

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, with the Korean War being financed through taxation due to President Truman’s reluctance to call the Korean War a “war.”

Prior to the Budget and Impoundment Control Act of 1974 - a law passed to stop President Nixon’s strategy of “impounding” funds passed by Congress to finance programs he didn’t agree with - the debt ceiling played an important role since Congress had few opportunities to hold hearings and debates on the budget.

In 1979, noting the potential problems of hitting a default, Budget Committee chairman Dick Gephardt imposed the "Gephardt Rule," a parliamentary rule that deemed the debt ceiling raised when a budget was passed. This resolved the contradiction in voting for appropriations but not voting to fund them. The rule stood until it was repealed by Congress in 1995.

Depending on who is doing the research, the US has raised its debt ceiling at least 90 times in the 20th century. Outside of speeches given by Republicans on the debt for inclusion in the Congressional Record so they could utilize the speeches in their campaigns, this was done without controversy.

Things changed in 1995, after the Republicans won their first House majority since 1952, and Newt Gingrich was elevated to Speaker of the House.

The federal government shutdowns of 1995 and 1995–96 were the result of conflicts between President Bill Clinton and the Gingrich-controlled Republican Congress over funding for education, the environment, and public health in the 1996 federal budget. The shutdowns lasted from November 14-19, 1995, and from December 16, 1995, to January 6, 1996, respectively.

The first shutdown occurred after Clinton vetoed the spending bill the Republican-controlled Congress sent him, with Clinton opposing the budget cuts favored by Gingrich and other Republicans. The first shutdown ended after Congress passed a temporary budget bill, but the government shut down again after Republicans and Democrats were unable to agree on a long-term budget bill. The second shutdown ended with congressional Republicans accepting Clinton's budget proposal. The first shutdown caused the furlough of about 800,000 federal workers, while the second saw 284,000 workers furloughed.

Public opinion polls saw the congressional Republicans blamed for the shutdowns; Clinton's handling of the shutdowns may have bolstered his ultimately successful campaign in the 1996 presidential election. The second shutdown was the longest government shutdown in U.S. history until the 2018–2019 government shutdown surpassed it in January 2019.

In 2013, the Tea Party congressional Republicans, led by Senator Ted Cruz who had somehow magically transformed himself into Speaker of the House when John Boehner refused to go along with the extremists, demanded that President Obama defund the Affordable Care Act. This was overreach by the Republicans after they had successfully convinced President Obama to attempt a “grand revision” of government funding in 2011, following the arrival of the Tea Party wave elected in the 2010 election arrived in Congress, which led to the “sequestration” of funding for social welfare programs in the 2012 and 2013 budgets. Obama, having learned his lesson in 2011, and Democratic senators, refused to agree to these measures, seeking instead for the Continuing Resolution bill to maintain government funding at then-current sequestration levels with no additional conditions. The shutdown lasted 16 days in October 2013.

Congress was at an impasse amid rising concerns that the U.S. would default on public debt. Senate Minority Leader Mitch McConnell and Senate Majority Leader Harry Reid negotiated a deal to end the deadlock which won a Senate vote, approved an amended Resolution bill that would keep funding at sequestration levels, temporarily suspend the debt limit until February 7, 2014, and include a concession to congressional Republicans on the ACA by applying stricter income verification rules. Boehner withdrew further objections and delaying attempts against the ACA, with the country being within hours of breaking its debt limit on October 16, when the bill was passed and signed the following day.

The shutdown had considerable impact: 800,000 federal employees were furloughed, while 1.3 million had to report to work without any known payment dates, costing millions in back pay; US economic growth was reduced. With Standard and Poor downgrading US bond ratings, additional millions were incurred in increased interest payments. A majority of held the Republicans accountable for the deadlock,

And yet this past Monday, one of the Tea Party Republicans who went through that fakakte, who is now senior enough to become Budget Committee Chairman, and is even more radical now than then, stated he would be willing to put the full faith and credit of the United States at risk again, “and this time, we’ll do it if we have to.”

The 2019 shutdown did not have to do with the debt limit, so I will not discuss it.

The threat of all of this can be averted by the lame duck Congress. As noted Congressional observer Jake Sherman notes, the Biden Administration and a Democratic-majority Congress - regardless of the election results - could avoid the debt crisis by extending the limit through 2024.

By putting the expiration in September 2024, even noted morons like Marjorie Traitor Greene would be unlikely to let the United States default on its debt just before the election when they expect their Dear Leader to return to the White House.

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