Entries in Dick Gephardt (1)
Talking with Myself – A Debt Ceiling Primer
Keith Doughty On Monday, June 6, 2011 at 2:00PM 
What is the debt ceiling?
The debt ceiling is the legal limit on how much the US government is allowed to borrow.
Why does it exist?
The debt ceiling was originally created to make life easier for congress, not harder. Up until WWI, when the US government needed to borrow money, congress would debate and approve the terms of sale for treasury bonds themselves. During WWI, this proved to be too time-consuming so congress delegated these activities to the Treasury Department.
Not wanting to cede too much power, congress also voted to set a limit on how much the Treasury Department could borrow.
What doesn’t the debt ceiling do?
The debt ceiling itself does not set spending or revenue levels. That is done through the budget process.
But doesn’t spending and revenue levels dictate how much the US government has to borrow?
Therein lies the problem with the debt ceiling. Congress knows how much debt will be incurred when they pass the annual budget. If they didn’t want the Treasury Department to borrow more funds, they would pass a budget that didn’t require the Treasury Department to do so.