What to Know About the History of the Debt Ceiling

TIME

The Biden Administration remains locked in a standoff with congressional Republicans over raising the federal debt ceiling, just two weeks before the nation is set to default on its obligations for the first time.  The U.S. government hit its congressionally imposed $31.4 trillion borrowing limit in January, and Treasury Secretary Janet Yellen has warned that the country could run out of cash as early as June 1 if Democratic President Joe Biden and Republican House Speaker Kevin McCarthy are unable to reach a deal to raise the debt ceiling.

Transcript

00:00 Economists are warning that the US is on the precipice of economic calamity if the government

00:04 can't come together and raise the federal debt limit.

00:06 Now, this isn't the first time the US has been in this situation.

00:10 We've been here before and the debt limit crisis has always been resolved by Congress.

00:14 But this year's fight is turning out to be a lot more messy than previous years.

00:18 And since this debt ceiling is one of the few must pass pieces of legislation, both

00:23 parties have tried to use this issue as an opportunity to take a political stand and

00:27 exact concessions to cut back on government spending.

00:30 It would cause the government to default on its legal obligations for the first time in

00:35 history, creating a financial crisis and threatening jobs for everyday Americans.

00:41 It could even potentially put the US at risk of a recession.

00:47 The only other country that has a debt ceiling is Denmark.

00:50 The debt limit or the debt ceiling is a cap on the total amount of money that the federal

00:55 government is authorized to borrow to fulfill its financial obligations.

00:59 Everything that the government spends money on from military to social security and veterans

01:04 benefits has to be funded either through tax revenue or debt.

01:08 And for the last two decades, the US has been running a budget deficit, adding $25 trillion

01:14 in debt.

01:15 So the Treasury Department now says that the government could be unable to issue new debt

01:19 and pay its bills as early as June 1st.

01:21 But Congress has always acted when called upon to raise the debt limit.

01:25 Since 1960, Congress has acted 78 separate times to permanently raise, temporarily extend,

01:31 or revise the debt limit.

01:33 The debt ceiling has become an increasingly political issue in recent years, especially

01:37 when power in Washington is divided as it is right now.

01:41 Republicans control the House and Democrats control the presidency and the Senate.

01:45 Democrats have been very united on this front.

01:47 They have insisted from the beginning that they won't accept any concessions attached

01:51 to a deal and continue to blame Republicans for taking the country's credit hostage.

01:56 Speaker McCarthy and I have had several productive conversations and our staffs continue to meet

02:01 as we speak as a matter of fact, and they're making progress.

02:05 I've made clear time and again that falling on our national debt is not an option.

02:09 But that no-negotiation strategy may be impractical with the June 1st deadline approaching in

02:14 less than two weeks.

02:15 There's a number of places that we are still far apart.

02:18 I mean, it didn't seem like it'd be this hard.

02:20 The economy plays a pivotal role in how Americans cast their ballots, so the outcome of these

02:25 debt limit discussions could shape what happens in 2024, particularly if Biden is unable to

02:31 raise the debt limit before defaulting or if he accepts concessions that undo his legislative

02:36 accomplishments.

02:37 For instance, progressives might see him as weak if he accepts the GOP's proposed work

02:41 requirements for federal aid.

02:43 This is a very big moment for Joe Biden, and as my colleague Phil Elliott wrote remarkably,

02:48 little of it is under his sole control.

02:50 [END]

02:52 [BLANK_AUDIO]

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