The Debt Ceiling and Fiscal Reforms
With federal debt subject to the limit currently at $31.38 trillion, the federal government has officially run up against its debt ceiling. In January, Treasury Secretary Janet Yellen informed Congress that the Treasury Department had begun employing “extraordinary measures” in order to continue making scheduled payments without breaching the debt ceiling. While these accounting maneuvers are expected to last until late summer or early fall, Congress should act sooner rather than later to raise or suspend the debt ceiling and avoid default.
As Committee for a Responsible Federal Budget president Maya MacGuineas recently remarked, "Without qualification, the debt limit must be increased or suspended, and it should be done so as quickly as possible." A debt ceiling increase or suspension could be accompanied by responsible fiscal reforms, as it often has in the past.
The table below – which we've shown before – lists numerous occasions over the past four decades in which significant fiscal reforms were enacted alongside a raise or suspension of the debt ceiling, oftentimes with the effect of reducing deficits. Most of the legislation in the table was passed on a bipartisan basis. Unfortunately, on three occasions between 2015 and 2019, Congress paired suspensions of the debt ceiling with deficit-increasing policies. Lawmakers must avoid making the same mistake again.
Reforms Have Often Advanced With the Debt Ceiling
|Year||Title of Bill/Package||Debt Ceiling Change||Notable Attachments||Bipartisan|
|1985||Gramm-Rudman-Hollings Act||Increased $175 billion||Set targets for balanced budget by 1991, enforced by sequestration||Yes|
|1987||Gramm-Rudman-Hollings Act Part II||Increased to $2.8 trillion||Built on GRH with additional deficit reduction enforced by sequestration||Yes|
|1990||Omnibus Budget Reconciliation Act of 1990||Increased $915 billion||Nearly $500 billion in deficit reduction over five years, statutory PAYGO, and spending caps||Yes|
|1993||Omnibus Budget Reconciliation Act of 1993||Increased $600 billion||Reduced deficits nearly $500 billion in five years, extended 1990 spending caps, raised taxes on high earners||No|
|1996||Contract with America Advancement Act of 1996||Increased $600 billion||Passed in tandem with giving the President line-item veto power to strike programs and tax benefits that affect fewer than 100 people||Yes|
|1997||Balanced Budget Act of 1997||Increased $450 billion||Called for ~$125 billion of net deficit reduction over five years and $425 billion over ten years||Yes|
|2010||Statutory PAYGO Act of 2010||Increased $1.9 trillion||Reinstated statutory PAYGO, informally led to Simpson-Bowles||No|
|2011||Budget Control Act of 2011||Let the President increase by $2.1 trillion in tranches, subject to Congressional disapproval resolutions||$917 billion in deficit reduction over ten years - mostly with discretionary spending caps, established the “Super Committee” to save at least $1.2 trillion||Yes|
|2013||No Budget, No Pay Act of 2013||Effectively suspended through 5/19/13||Required each chamber to pass a budget, or else the compensation of Members of Congress would be withheld||Yes|
|2013||Default Prevention Act of 2013||Suspended through 2/7/14||Set up a bicameral budget conference to reconcile budgets for FY 2014 and ended a 16-day government shutdown||Yes|
|2015||Bipartisan Budget Act of 2015||Suspended through 3/15/17||Cost ~$76 billion, increased BCA caps for FY 2016 and 2017||Yes|
|2018||Bipartisan Budget Act of 2018||Suspended through 3/1/19||Cost $420 billion, increased BCA caps for FY 2018 and 2019||Yes|
|2019||Bipartisan Budget Act of 2019||Suspended through 7/31/21||Cost $1.7 trillion ($320 billion directly), increased caps for FY 2020 and 2021, with increases then built into the baseline||Yes|
|2021||S.J.Res.38||Increased $2.5 trillion||No attachments||No|