8

This article states that the debt ceiling was not raised in the deal enacted 2013-10-17, but rather that it was suspended allowing effectively unlimited borrowing until 2013-02-7.

Is this accurate? Can someone cite the part of the bill that shows this, or anything to the contrary?

  • Forbes says the same thing ... – C. Ross Oct 17 '13 at 23:14
5

Partially correct

The official Public Law isn't available on THOMAS yet, but CNN, the Washington Post, other news outlets all link to what appears to be the 35 page Senate Amendment to the House appropriations bill. You will be interested in pages 24-25. It essentially suspends the debt ceiling until February 8, but only to pay obligations incurred before that date.

SEC. 1002. (a) SHORT TITLE.—This section may be cited as the ‘‘Default Prevention Act of 2013’’. [...]

(1) IN GENERAL.—Section 3101(b) of title 31, United States Code, shall not apply for the period beginning on the date on which the President submits to Congress a certification under subsection (b) and ending on February 7, 2014. [...] An obligation shall not be taken into account under subparagraph (A) unless the issuance of such obligation was necessary to fund a commitment incurred by the Federal Government that required payment before February 8, 2014.

3

You need to keep in mind what a debt ceiling is and isn't.

A debt ceiling means the treasury can't borrow more money by way of issuing new bonds (see below for some history). This in turn (combined with the restriction of Article IV of the Constitution regarding "Full Faith and Credit") results in the treasury having not enough cash flow to pay all creditors whose bills come due. For our (and treasury's) purpose, government appropriations for social welfare and other services qualify as a creditor of the treasury.

The treasury can't not pick and choose between which creditors it pays (paid as and when due); as this would require the electorate to decide on what creditors are more important and Article IV has never been tested under fire (a scenario of an essentially insolvent government).

So when people say a debt ceiling doesn't exist this side of February 7th 2014, they are referring to the fact the treasury can issue more bonds to remain cash-flow solvent. So yes, there is no currently enforced borrowing limit/debt ceiling. I think both parties are too exhausted to cap the ceiling before they've had some time for private consensus on how to move forward.


Some history:

  • The Liberty Bond Acts set a limit of $5 Billion then $8 billion for World War I war bonds. These are considered the first categorical debt ceiling example as war debt was the primary source of debt prior to 20th century social reforms. Wars are no slouch at creating debt today either.
  • The Public Debt Acts (1939 - 1946) aggregated debt classification and progressively raised the treasury's borrowing limit to $300 billion by the end of WWII. The 1946 Act reduced the limit (ceiling) to $275 billion and can be seen as the first legislative example of raising and lowering limits in the manner of a ceiling.
  • By the time of the Korean War this precedent of raising or lowering borrowing limits was well established. This was usually automatic as the legislature that controlled the appropriation bills (i.e. whatever the budget was) would pass the obviously co-related bill for the borrowing limit.
  • However, the debt ceiling was politicised in either '80s or '90s depending on who you speak to and whether intent or effect is more important a milestone. We've had to put up with this ever since due to no concrete way of dealing swiftly with deadlocks between chambers of Congress (i.e. No dissolution trigger for the bicameral legislature).
  • "results in the treasury having not enough cash flow to pay all creditors whose bills come due" - debatable. See the quote in my question here: politics.stackexchange.com/questions/2250/…. I am not sure some of those expenditures can be considered "credit". – user4012 Oct 20 '13 at 22:54
  • @DVK Terms 'credit' and 'debit' are irritatingly interchangeable in popular culture. Let us presume in those cases where Treasury has not been given a creditor priority list by the Legislature, that bills are paid as they come due. While the Executive (or Judiciary) could extrapolate an implicit priority order from what best-practices are used in corporate insolvency; I tend to find that unless you truly believe the fountain of law and authority in a country is not your Legislature - then you are inverting responsibility by asking the Executive/Judiciary to resolve Legislative ambiguity. – LateralFractal Oct 21 '13 at 0:19
  • I'm using "credit" in a sens of a bancruptcy proceedings "credit", and "debt" as in "capital structure". – user4012 Oct 21 '13 at 4:44
  • @DVK Urg. Got any better terms than 'credit' and 'debit' then? Those definitions for 'credit' and 'debit' make one's head hurt. – LateralFractal Oct 21 '13 at 4:59

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