Question: What is the debt ceiling?
Answer: The debt ceiling is a statutory limit on the amount of U.S federal debt held by the public and the government's own accounts. The debt ceiling became law with the Second Liberty Bond Act of 1917, which helped finance the United States' entry into World War I.
Question: Does the debt ceiling ever change?
Question: Who has the authority to change the debt ceiling?
Answer: Only Congress has the ability to raise the debt ceiling, and it has done so numerous times through the years. In fact, the nation's debt ceiling more than doubled from 2000 through 2010 under each modern presidential administration.
The debt ceiling as of November 2010 was $14.294 trillion.
Question: Why does Congress increase the debt ceiling?
Answer: Simply put, Congress must increase the debt ceiling because the federal government's level of spending continues to grow or it risks defaulting on its obligations. According to the federal Bureau of the Public Debt, "Whereas Congress once approved legislation for every debt issuance, the growth of government fiscal operations in the 20th century made this impractical."
Question: What happens if the total national debt grows to the size of the debt ceiling and Congress doesn't increase the limit?
Answer: This happened in 1995 and 1996, in what is now known as the original "debt ceiling crisis." The refusal to increase the debt ceiling then, led by conservatives in Congress, hurt the financial markets and forced two government shutdowns.
The Center for American Progress warns of more significant consequences should the nation be plunged into a similar showdown amid two wars and a weak economy.
"The budgetary consequences of this conservative pledge would be catastrophic and far-reaching, forcing the immediate cessation of more than 40 percent of all federal government activities (excluding only interest payments on the national debt), including Social Security, military operations in Iraq and Afghanistan, homeland security, Medicare, and unemployment insurance," the Center for American Progress warned in October 2010.
"This would not only threaten the safety and economic security of all Americans, but also have dire impacts for the economy and job growth," it continued. "In short, the economic consequences of such a large and precipitous drop in spending would be crushing, and almost certainly result in a severe drop in economic growth and employment at a time when we can least afford it."
Question: When has Congress raised the debt ceiling in recent years?
Answer: The most recent increase in the debt ceiling occurred in February 2010, when Congress set the debt ceiling at $14.294 trillion. The debt ceiling had been $12.394 trillion.
Question: How much has the debt ceiling increased over the past decade?
Answer: Here's a history of the debt ceiling for each fiscal year over the past decade, based on data from the Congressional Research Service and published reports:
- 2011: $14.294 trillion
- 2010: $14.294 trillion
- 2009: $12.394 trillion
- 2008: $11.315 trillion
- 2007: $9.815 trillion
- 2006: $8.965 trillion
- 2005: $8.184 trillion
- 2004: $7.384 trillion
- 2003: $7.384 trillion
- 2002: $6.400 trillion
- 2001: $5.950 trillion
- 2000: $5.950 trillion
And here is a History of the U.S. Debt Ceiling from 1919 to 2010