Understanding The High-Stakes Political Battle Over The Debt Ceiling

If you’ve been following politics for a while, you’ve probably heard the term “debt ceiling” at least a few times. It’s basically an arbitrary cap placed on the nation’s federal borrowing power that is meant to keep spending in check. Instead of setting a limit for future spending, the limit actually dictates the nation’s ability to pay its existing debt.

Now that we’re facing such a moment yet again, it might be helpful to dig a bit deeper into the issue.

A brief history of the debt ceiling

The federal borrowing limit has been in place for more than a century and has been increased 78 times since 1960. Even though it would only take a vote of Congress to eliminate the idea of a debt ceiling altogether, the political backlash makes this an untenable solution — so here we are again at a crossroads.

The limit hit $6 trillion under Bill Clinton, and by the end of Donald Trump’s term, it was at a staggering $22 trillion. The current ceiling, exacerbated by the COVID-19 pandemic is more than $31.4 trillion.

Why this time might be different

Whenever lawmakers have faced a debt ceiling crisis in the past, it was resolved before a default, which would devastate the economy and the status of the U.S. dollar as the preeminent global currency. With the threat of a major recession currently hanging over our heads, a debt default would only make things much worse.

Officials on both sides of the aisle agree that default is an unthinkable option, but many Republicans want to make some significant budget cuts before agreeing to a debt ceiling hike. If they can’t come to an agreement with Democrats, there is a real possibility that America could default for the first time in its history.

Chris Agee January 23rd, 2023

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