What is the debt ceiling?

It is a restriction that Congress puts on the federal government that relates to how much money it can borrow to pay its bills.

Why does Congress need to raise the debt ceiling?

Because they gave themselves this authority. The debt ceiling is a human-made problem. There’s a law that says that every time the Treasury Department runs up against the debt ceiling, it must come to Congress and ask them to raise it. The federal government spends more than it takes in, so the government has to borrow money to cover the shortfall, and that means it hits its preset limit fairly often. Lawmakers instituted the notion of a debt ceiling in 1917 as a way to rein in federal agencies that were basically ignoring Congress’s constitutional power to designate how much money the government can spend, said David Super, a law professor and budgetary analyst at Georgetown University. Since then, it has become a routine chore for Congress to raise it. In the past decade, it has become a political tool for lawmakers to extract concessions as they bring the nation up to the brink of default. Rather than raise the debt ceiling by a specific amount, lawmakers often vote to suspend the debt ceiling for a period of time to allow the Treasury Department to borrow what it needs. As the debt ceiling fight has become more politicized, they’ve suspended it for longer and longer periods. There’s some talk among Democrats about voting to get rid of the debt ceiling altogether. Treasury Secretary Janet L. Yellen told Congress it should just get rid of it, and House Speaker Nancy Pelosi (D-Calif.) endorsed giving debt limit authority over to the Treasury Department and letting Congress chime in only if it wants to stop it. It seems like the minority party — Republicans today — likes the leverage the debt ceiling provides. It’s one of Congress’s must-pass pieces of legislation, so the minority lawmakers can use it to force the majority into uncomfortable political positions. Like, having to raise the debt ceiling by a specific dollar amount using only Democratic votes. That’s the agreement Republican and Democratic leaders came to this week. Today, the government needs to borrow money to continue to pay for spending under the Trump administration, including Republicans’ 2017 tax cuts. The national debt grew exponentially during Donald Trump’s presidency, approaching World War II levels at 128 percent of the gross domestic product. The national debt stands at about $28 trillion at this point, and it rose by about $7.8 trillion under Trump, The Post’s Jeff Stein reports .

Why are we talking about this now?

Let’s back up to October, when Congress was in an epic game of chicken. The government was originally running out of any ability to pay its bills in mid-October, and Republicans were blocking any bipartisan effort to raise the debt ceiling, trying to force Democrats to do it on their own. But Senate Republicans relented at the last minute and helped Democrats temporarily raise the debt ceiling through the winter. That brings us to mid-December. Yellen says the government could run dangerously close to being unable to pay its bills by about Dec. 15, or shortly after. If Congress doesn’t raise the debt ceiling by Christmas, a bill could come due that the United States can’t pay, and that could mean the country would default for the first time ever. In the fall, Senate Minority Leader Mitch McConnell (R-Ky.) took a lot of heat from Trump for providing a handful of Republican votes at the last minute to raise it — and Trump is again hammering McConnell not to “fold." McConnell decided this time to force Democrats to raise the debt ceiling through next year with a complicated budget process that requires attaching the debt ceiling to a totally unrelated bill about Medicare. It was more time-consuming, and it opens Democrats up to other votes that could be politically problematic. (“Democrats vote to raise the debt by $2.5 trillion dollars!” is what Republican attack ads will no doubt say.) Democrats are also working to pass President Biden’s agenda and a military policy bill, all before the end of the year. But in exchange, McConnell found at least 10 Senate Republicans to vote to overcome a Republican filibuster in the Senate. These senators are technically voting to block the filibuster for a Medicare bill, but practically, they’re voting to allow Senate Democrats to raise the debt ceiling in a later vote. (It’s very complicated.) In all, 14 Republicans joined Democrats to advance the debt ceiling vote, but all Senate Republicans voted against actually raising the debt ceiling. The end result is that both the House and the Senate had to take several votes to raise the debt ceiling, running right up to the deadline. (Again.) The House approved the final lift around midnight Wednesday, right on the potential deadline.

What happens if the government defaults on its debt?

It wouldn’t be pretty. The United States may not be able to pay more than 60 percent of its bills the first week of a default, forcing the government to decide whether it pays for Social Security, continues issuing tax refunds, and/or salary for federal workers and members of the military, The Post’s Alyssa Fowers reported . Such a scenario could immediately plunge the United States into a recession, Stein reports : The United States has gotten so close to a default in the recent past that its credit rating got downgraded. During the Obama presidency, Republicans reframed this typically must-pass legislation as something they weren’t willing to approve unless they got what they wanted. In 2011, House Republicans voted down a bill to raise the debt limit unless the government slashed its annual spending, which President Barack Obama agreed to. Since then, there have been pretty regular fights over the debt limit that often take the Treasury Department to the very end of its means. Nonpartisan fiscal experts at the Congressional Research Service warn that even the threat of a default is counterproductive to the nation’s fiscal health, lowering the nation’s financial standing and making borrowing even more expensive once a deal on the debt ceiling is reached.

Congress raised the debt ceiling just in time, mostly with Democratic votes, averting economic disaster. But both sides had to take politically tough votes to do it: McConnell and 14 Senate Republicans will be blasted by Trump for being seen as helping Democrats govern. And a number of vulnerable Senate Democrats up for reelection could be criticized by their Republican opponents for voting to allow the nation to go further into debt. (Even though the bulk of this is to pay for bills incurred under the Trump administration.) Republicans seem to have decided that the debt ceiling is a game of brinkmanship worth playing. They can try to weaponize Democrats increasing the national debt in next year’s midterm elections, where inflation is expected to be a big issue. “It’s possible that Republicans can raise the salience of this issue in a few swing states and districts in what is likely to be a very close midterm election,” Super said. So while you may hear about the debt ceiling in a political campaign, Congress shouldn’t have to fight about this again for another year — perhaps when Republicans are in control of Congress, if they have a good midterm election. This post has been updated with the latest news.

The Fix

The debt ceiling fight, explained

By Amber Phillips

Updated December 15, 2021 at 11:14 a.m. EST|Published October 7, 2021 at 12:16 p.m. EDT

The U.S. Capitol on Tuesday. (Sarah Silbiger/Bloomberg News)

With just minutes to spare, lawmakers averted the risk of financial calamity that would come with failing to raise the federal debt ceiling. But it required some very complicated legislative maneuvering and could put both sides at political risk in next year’s midterm elections.

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But Congress had to act before the government defaults on its loans as early as Dec. 15. It’s the second time this year there has been such a close call, and this isn’t expected to come up again until 2023.

Here’s a look at what the debt ceiling is and why we’re talking about it so much lately.