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Since 1995, Democrats and Republicans have been in constant disagreement over the debt ceiling, with Democrats wanting to raise it and Republicans resisting their efforts. During this time, Democrats have had control of Congress multiple times, and had the opportunity to get rid of the debt ceiling altogether.

Why didn't they do this? Or perhaps they've tried to pass legislation on the subject and it got voted down?

Rick Smith
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JonathanReez
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3 Answers3

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Because they had 50 senators, not 52.

Senators Manchin and Sinema opposed large parts of the Democrats’ agenda, despite being members of the party (at the time, in the case of Sinema). That starkly limited how much Democrats could get done on any topic, including the debt ceiling. They did vote to allow a 2021 increase to the debt ceiling without the filibuster, but that was a one-time, “bipartisan” (50 Democratic and independent senators + 10 Republican senators) deal. Manchin has repeatedly stated he would not have voted for it if it weren’t a one-time thing, nor if it were insufficiently bipartisan. (Sinema, for the most part, has avoided staking any particular public position on much of anything.)

It was well known that Republicans were raring to play chicken with the debt ceiling with their new control of the House; there was 0 Republican support for eliminating the debt ceiling at the end of 2022 or beginning of 2023. That meant any addressing of the debt ceiling would not be “bipartisan” enough for Manchin, and that meant the Democrats wouldn’t have his vote (and probably wouldn’t have Sinema’s).

gparyani
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KRyan
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    This is certainly accurate for the most recent time Democrats had full control, but doesn't address why they didn't do it in the first two years of Obama's term (the only other time they've had complete control since 1995). – Bobson Jan 23 '23 at 15:53
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    @Bobson: In 2009, the debt ceiling was a weird technicality that hadn't been politically relevant since the shutdown of 1995 (and even then, the real problem was the budget, not the debt ceiling). It didn't get to its modern, politicized state until 2011. – Kevin Jan 23 '23 at 16:58
  • And it should be noted that the Democrats only had 48 senators, not 50 as two of the senators included in that number are actually independents. Not to mention there is nothing saying that there wouldn't have been more objecting to it if there was more Democrat senators in office. – Joe W Jan 23 '23 at 17:09
  • It also should be pointed out that all bills dealing with money must originate in the House, which no matter who controls the House, the party in power does have a lot more seats that might swing to the other side of current seat holder votes with the party in power. – hszmv Jan 23 '23 at 17:39
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    @JoeW, three as of December. That said King and even (surprisingly?) Sinema have voted extremely in line with Democrats on record. And even Sanders is clearly in the Democrat side of the graph. So that's more terminology than practicality in terms of voting. – JeopardyTempest Jan 24 '23 at 05:28
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    @JeopardyTempest Part of that is, when you have only exactly as many votes as you need, a lot of things that people would vote against, don’t come up for vote. – KRyan Jan 24 '23 at 06:26
  • @JeopardyTempest Yes, King and Sanders do tend to vote with Democrats but they are registered independents and don't count towards the number of Democrats in the senate which was my point. Sinema was actually a registered Democrat at the time in question and only recently became an independent. Just because someone tends to vote with you doesn't mean they count towards your party when looking at numbers of each party in the Senate. – Joe W Jan 24 '23 at 13:15
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    @hszmv - It also should be pointed out that all bills dealing with money must originate in the House, ... is not entirely correct. Article I, Section 7, Clause 1: "All Bills for raising Revenue shall originate in the House of Representatives; but the Senate may propose or concur with Amendments as on other Bills." The Senate can and does propose spending in some of its bills, for example, S.2938 – Rick Smith Jan 24 '23 at 15:50
  • That "+10" number was significant. There's a 60 vote hurdle for most legislation to move forward in the Senate, so having 50 (or even 52) Senators down for your bill actually isn't enough. – T.E.D. Jan 24 '23 at 22:03
  • Effectively, the Senate had 46 Democrats, 2 DINOs and 2 Independents. Because of such a slim majority, those two DINOS often got to hold major pieces of legislation hostage. – moonman239 Jan 25 '23 at 03:11
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Q: Why didn't Democrats get rid of the debt ceiling while they were in power?

In the latest round (2022), some House Democrats floated the idea, but it didn't get much traction. More to the point, President Biden, when asked, "about proposals to eliminate the debt ceiling" —

"You mean, just say we don't have a debt limit?" Biden said. "No. That would be irresponsible."

There appears to be no broad support and some resistance to taking such an action.

Rick Smith
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  • Kind of hypocritical of Biden to say this, but accepting the answer as an official answer to my question. – JonathanReez Jan 24 '23 at 23:28
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    @JonathanReez - During the 2011 debt-ceiling crisis then-VP Biden was one of the negotiators for the Democrats. He has been in elected US office since 1973 (excepting the four years of Trump). He's been there, done that, for every debt-ceiling crisis for the past 50 years, including previous calls for getting rid of the debt limit. – Rick Smith Jan 25 '23 at 00:03
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    What I meant was - Biden is essentially saying that having no debt limit is reckless, but naturally having a debt limit just high enough to support spending allocated by a Democratic Congress is always OK. – JonathanReez Jan 25 '23 at 00:05
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One more aspect to this: there is NOT a direct link between authority to spend and authority to borrow.

Consider: I purchase a $100,000 home.

  1. At the time of purchase, I can get a loan for the entire amount at 1% interest.
  2. Two years later, interest rates are up. I need to refinance... and now due to the cost of money, I can't actually afford to borrow the whole amount.
  3. Over time, if interest rates rise, the cost of interest for paying back that loan may be much higher than the original cost of what I purchased.

Ultimately, it IS irresponsible to say we can borrow any amount we want to cover what we've authorized as expenses.

Go look at the current US Treasury big picture, at US Debt Clock dot Org. The "Unfunded liability" is literally...

  • the Present Value of
  • all legally authorized future expenditures
  • for which there is no known source of income

Right now, the guaranteed future benefits authorized by congress are so large, that to pay them off over time, every person in the USA needs a bank account, TODAY, with over $500,000 -- extra, ready to give to the US government. [UPDATE: I didn't say we SHOULD give it. But you need that much already saved. Because the growth of those savings would be needed to pay for it. Your current income pays for other stuff!]

It's so big, it almost exceeds the entire value of all investment, property, etc in the USA. Totally irresponsible. [UPDATE in April 2023: now it DOES exceed! And that's just Federal.]

UPDATE: Another aspect to consider: apart from government, the rest of the economy shrinks and grows over time. When times get tough, people reduce spending, when times are good, we save. (Look it up, it's true ;) ).

We talk as if borrowing is an economic good that's easily reversible by paying it off. YES for normal people... but is that true for governments?

QUESTION: Do you have ANY idea how long it's been since the federal government (apart from one-time big "push" expenses) shrank its per-capita spending or shrank its debt? ANSWER: 1957! (1965, taking inflation into account.)

Ever since I was born, we just spend more, no matter what.

(UPDATE: The Obama admin led the way to a guaranteed future meltdown, BTW. Look at the August 2016 CBO budget estimates for the future. Rapidly increasing deficits, going well beyond a trillion a year. In fact, growing so much they switched from dollars to GDP percent. And it just grows forever even as a fraction of GDP.)

More debt makes zero sense. Yet it's now baked into the budget.

MrPete
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    I agree that the government is wasting too much money but we’re actually paying out less money in interest right now than we did prior to 2002, when measured as a percentage of GDP: https://politics.stackexchange.com/questions/2211/how-much-in-interest-payments-since-2002-has-the-increase-in-the-debt-past-the-o/77852#77852 – JonathanReez Jan 23 '23 at 21:11
  • Why would you pay "TODAY" for a "future" benefit? It's more efficient for that money to remain circulating as long as possible up until it actually needs spending. Just because there isn't currently a source doesn't mean that there aren't a number of known options that Congress could authorize. At the individual level you're basically saying people should pay now the, i.e. 2 million that they will need to retire i.e. 50 years from now because it's expensive. Unfunded future liability isn't current debt. – ttbek Jan 24 '23 at 11:50
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    The government is not a person. A national economy does not work the same way as your personal budget savings. – Shadur-don't-feed-the-AI Jan 26 '23 at 07:30
  • @ttbek, you don't understand. "Present Value" means that's how much money is needed today, to cover a future guaranteed payment. Of course laws can be changed. But the whole point of looking at PV is to recognize that even if we invested $500k each today, to generate a bunch of future cash to cover those guaranteed payments... that's NOT ENOUGH.

    $500k is the PRESENT value of the future stuff.

    And this is just the UNfunded liabilities. In other words, it already accounts for ALL known / anticipated future money sources (like your ongoing social security tax pmts).

     – MrPete Feb 22 '23 at 15:36
  • @JonathanReez, so what? That's just the interest payments. And, BTW, interest rates were held artificially low for a number of years "to help the economy", which makes the cost of borrowing so much appear to be cheap. ;) – MrPete Feb 22 '23 at 15:44
  • @Shadur, you're right. But the government IS an entity subject to economic principles. Can't just ignore the fact that guaranteeing a variety of benefits has a cost. Things like PV have meaning even with government. What the above exercise leads to is a simple conclusion: the only solution is to reduce benefits. We're borrowing our children's/grandkid's futures today.

    (And the specious thought some propose, about paying the debt by minting a trillion dollar coin is also ridiculous. Take that to the extreme: why not give each of us a trillion dollars? Think about it. ;) )

     – MrPete Feb 22 '23 at 15:46
  • @ttbek, let's use your example to make it clear. I want to retire 50 years from now with 2 million bucks. At 6% interest, the PV of that is $108k. But I know I can save along the way... let's say $2k a year earning 6%. That will become $581k of the 2 million. The PV of what I put in is $32k. So, my Unfunded amount has a PV of 108-32 = $76k. In other words, I need an extra $76k today, or MORE than that over time, to cover the rest of the 2 million. – MrPete Feb 22 '23 at 15:53
  • I did an exercise a few years ago. Don't know today's numbers... but I looked at it this way: forget the 1%. Let's go after the top 20% of earners. That's approximately ALL households earning $100k or more. And let's just take everything. 100% tax rate. Take everything. AND take all their assets. (Yes, a ridiculous idea, but it's just a thought experiment ;) ). Even doing that is NOT ENOUGH to cover the unfunded guaranteed benefits. – MrPete Feb 22 '23 at 15:57
  • @MrPete Sorry, didn't quite follow on my first read through. Yes, you would need 76k more today or MORE over time, but the MORE over time is far more achievable. Contributions would need to increase from 2 to like 6.5k. I think your 2k math is wrong by the way. So the annual tax increase per se in this scenario is just 4.5k, that's very different than trying to summon up 76k in a year. And yes, that means paying 325k over time rather than 76k now. – ttbek Feb 23 '23 at 18:02
  • @ttbek (sorry, lots of RL ;) )... Here's the more detailed point:
    1. Economically speaking, everything is a stream of income, outflows, wealth generated, wealth destroyed, etc, all over time.
    2. If you look at the various flows, both personal debt and 'state' (national and states and local) debt are increasing. AND there's inflation.
    3. The PV of the legally guaranteed benefits is larger than 100% of ALL assets and ALL income steams combined.
    4. SO, where does anyone get the wealth to pay this? Now or ever?
     – MrPete Apr 19 '23 at 14:01
  • @ttbek, WHY you'd pay today: because that $$ can be invested to pay for it. It's called saving for retirement. There's not enough assets OR income to cover it. Another way to think about it: I did another calculation. Forget whining about the top 1%. Let's take ALL assets and ALL income from ALL households earning $100k+ (might include you?!). That's about the top 20% of earners. Even if we did that crazy thing... it's not enough to cover this. It's a simple PV calculation. PV(top 20% assets and income) < PV(unfunded legally guaranteed bennies) – MrPete Apr 19 '23 at 14:05
  • @MrPete Did you account for the amount of US debt that is held by US persons? When you talk about paying off the debt you seem to consider it as only emptying pockets but it will be filling some of those same pockets. The money doesn't poof out of existence when the debt is payed. Another chunk of that is clawed back by federal income and capital gains taxes. High inflation generally lessens the burden of existing debt, though they will make future new debt more costly. Are you using the debt clock for assets vs. benefits, if so it swapped back. – ttbek May 09 '23 at 10:02
  • @ttbek -- Good questions.
    • First, recognize that the debt clock uses US Treasury data, based on GAAP (Generally Accepted Accounting Principles). Sadly, our own gov't doesn't apply GAAP to itself... only to others.
    • Next, inflation doesn't fix unfunded liabilities, because they are all future benefit guarantees, which generally increase with inflation.
    • Then, these are not debts owed today and needing to be paid. They are guaranteed benefits. How much tax is paid on welfare, on social security, on medicare, etc?
     – MrPete Jun 28 '23 at 17:03
  • @ttbek bottom line, what we're talking about is a massive wealth transfer to accomplish wonderful benefits for all... except there is not and will never be enough wealth to cover the cost of what is guaranteed. That's why the CBO projections are so scary. I like to refer to the August 2016 CBO projections, because they predate Trump, so progressives have little to complain about ;)...
    • Rapidly increasing deficits, climbing to $1T plus...then SO huge, it is calculated as percent of GDP. And still grows forever.
    • At that point, we ignore the interest cost. Too painful to show :-D
     – MrPete Jun 28 '23 at 17:13
  • @ttbek in essence, we are now borrowing our grandchildren's future, and continuing beyond that. The ONLY solution is to spend less...and it may be too late for that. I don't know. – MrPete Jun 28 '23 at 17:14
  • @ttbek, returning to your disagreement with my 2k figures, and your 6.5k. I've created a Google Sheet showing how this works, both with my simple assumption (6% net interest earned, not worrying about inflation), and your version tweaked to fit your assumption (savings will grow to $6.5k in the last year. That's a 2.4% infl rate. Mine is as stated: savings is $581k of $2m, 29% of total. Yours: everything grows. Savings is $1.8m of $6.5m, 27.7% of total. PV of mine: $31.5k. Yours: $32.1k Inflation doesn't help :)

    BTW, to hit $2m? $6,890 a year.

    see bit.ly/pv-retirement-sample

     – MrPete Jun 28 '23 at 18:42