While they're certainly colorful, the MAGA Caucus in the House of Representatives are not trail-blazers, at least not in the area of debt ceiling negotiations. Let's start with the basics.
Our federal government can pay what it owes only if Congress has previously approved those expenditure in an appropriation bill. If the proposed expenditure exceeds revenues that have been collected through taxes and tariffs, the resulting deficit can only be financed through the Department of the Treasury, by borrowing the shortfall amount. Further, the amount the government can borrow is limited by the debt ceiling, which can only be increased with a separate vote by Congress.
Prior to 1917, Congress directly authorized the amount of any borrowing. In 1917, in order to provide more flexibility to finance the US involvement in World War I, Congress introduced the concept of a debt ceiling. That allowed the Treasury to borrow any amount needed, as long as it kept the amount borrowed at or below the authorized ceiling.
We need to understand that raising the debt ceiling does not have any direct, immediate impact on budget deficits, largely because our government's yearly federal budget is required to include details like:
projected tax collections
projected expenditures
as a result, the amount of borrowing the government might have to do
Public debt, that is, debt which it is the responsibility of the national government to resolve, has been with the United States since before there was a United States. We incurred such debts during the Revolutionary War and under the Articles of Confederation . Those debts led to the first yearly report on the amount of national debt - $ 75,463,476.52 on January 1, 1791. In today's dollars, that works out to about ($23.56 * 75, 463, 476), or roughly $1,777,919,494.56. That's 1 billion +, with a b. And note the date; this debt was reported almost as soon as the new Constitution was ratified.
The trend to indebtedness, and a debt ceiling, continued throughout our history; in recent years, every president since Harry Truman has added to the national debt. The debt ceiling has been raised 74 times since March 1962:
18 times under Ronald Reagan
8 times under Bill Clinton
7 times under George W. Bush
3 times (as of August 2011) under Barack Obama
Ancestors of the MAGA Caucus
In 2009, the Tea Party movement in the House of Representatives emerged, with the goal of reducing government spending and regulation. The Tea Party produced a wave of new Republican office-holders in the 2010 mid-term elections ; the major campaign promises of such folks were – wait for it - cutting federal spending and stopping tax increases. These new Republicans and the new Republican House majority greatly affected the 2011 debt ceiling debate.
Throughout 2011, Standard & Poor's and Moody's credit rating services issued warnings that US debt could be downgraded because of the continued large deficits and increasing debt. According to the CBO's 2011 long-term budget outlook, without major policy changes the large budget deficits and growing debt would continue, which would reduce national saving, leading to higher interest rates, more borrowing from abroad, and less domestic investment – which in turn would lower income growth in the United States. The European sovereign debt crisis was occurring throughout 2010–2011, and there were concerns that the US was on the same trajectory.
The debt ceiling had been raised on February 12, 2010 to $14.294 trillion. Soon after the 2011 budget was passed, the debt ceiling set in February 2010 was reached. The Treasury Department stated on numerous occasions that the US government would exhaust its borrowing authority around August 2, 2011. That date appeared to serve as an effective deadline for Congress to vote to increase the debt ceiling.
Courting Catastrophe
During the debt ceiling increase negotiations between President Obama and (Republican) Speaker of the House John Boehner, Boehner presented the Republican position on raising the debt ceiling as:
a dollar-for-dollar deal; that is, raising the debt ceiling to match corresponding spending cuts
make the majority of the budget cuts in the first two years
introduce and enforce spending caps on entitlements
no tax increases
In 2011, the Democratic positions on raising the debt ceiling included:
a clean (unconditional) increase in the – e.g., debt ceiling, with no spending cuts attached
spending cuts combined with tax increases on some categories of taxpayers, to reduce deficits
a large debt-ceiling increase, to support borrowing into 2013
opposition to any major cuts to Social Security, Medicare, or Medicaid
Some Tea Party Caucus and other Republicans, however, (including, but not limited to, Senators Jim DeMint, Rand Paul, and Mike Lee, and Representatives Michele Bachmann, Ron Paul, and Allen West) expressed skepticism about raising the debt ceiling, even suggesting the consequences of default had been exaggerated. (An easy excuse, to placate the burgeoning MAGA base.)
Bodhi asks readers to note that, in the outline above, the debt ceiling was raised almost three times as often by Republican administrations as by Democrats. In spite of Tea Party Republicans voicing opposition to what they felt to be frivolities – e.g., Social Security and Medicare – their thinly-veiled approval of raising the debt ceiling recognizes the clear need to meet the country's already-established debts.
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