What is the point in having a debt ceiling when it can be relatively easily raised?

Question

It makes some sense from a Machiavellian perspective; one can use the threat of a government shutdown to get concessions, but that's like playing chicken, and seems really irresponsible even if your side comes out on top. Are there any reasons other than gamesmanship for a malleable debt ceiling?

Answer 1

As described here, the debt ceiling originally gave flexibility to the day-to-day fiscal administration because it no longer required congressional approval for every individual issue of debt. Within the ceiling, the government could juggle their different accounts.

Then the tacit understanding broke down that the debt limit would be raised to cover already-approved expenditures. Basically there is now a double key to government expenditure, first the budget and then the debt limit. And Congress can make inconsistent decisions on the two keys.

Answer 2

According to one paper between 1917 and 1996 the federal debt limit had been raised 80 times (64 times between 1960 and 1996). I'm a little skeptical on this accounting since it seemingly comes down to more than one raise per year. (It might have included votes on limit suspensions followed by votes to raise, which together could have happened more than once per year.)

Anyway, it goes on to discuss some models that try to explain why something like that seems to have happened so many times:

One of the works along this line is [...] Guido Tabellini and Alberto Alesina 1990 article "Voting on the Budget Deficit" in The American Economic Review. [...] All voters agree that a balanced budget is ex ante optimal. However, if there is disagreement between current and future majorities, a balanced budget is not a political equilibrium under majority rule. Under specific conditions a majority of the voters favors a budget deficit, which tends to increase with the likelihood of disagreement between current and future voters. They predicted that on cross-countries data, more polarized and politically unstable countries should have a larger stock of debt outstanding than more homogeneous and stable societies.

Some other commentators (cited thereafter) however reject this polarization-based explanation equating it with Marxism positing class warfare/conflict. However it doesn't seem that other plausible general models have been offered(†), as opposed to conjunctural explanations every time a raise happens. († Actually, James Buchanan has proposed that it's due to a consistent failure of rationality, but other/younger economists don't buy this kind of explanation much, particularly since higher fragmentation within a government coalition--which happens in PR systems in Europe--seems to lead to a similar effect of increased deficits.)

If the polarization-based explanation is correct, then it's basically a way/transaction to impose one's priorities over what gets funded at a given time etc.

Answer 3

The question makes an assumption that raising the debt ceiling is easy. In a political sense, that's not always true.

Right now, for example, there is a substantial battle going on in the U.S. Senate, where the majority party leader is trying to demand the minority party's participation in raising (or suspending) the debt ceiling. Its really a big deal.

See this question: What danger(s) does Chuck Schumer see in using reconciliation to increase debt limit?