Advertisement

April 24, 2014

Dewonkify – Debt Ceiling

Word:  Debt Ceiling

Definition:  The statutory authority given by the Congress to the U.S. Treasury to borrow a certain amount of money and/or issue securities to fund the operations of the federal government.

Used in a sentence:After the Debt-Ceiling Breach: What Day 1 in Default America Might Look Like

History

According to the Congressional Budget Office, Congress long has restricted the Department of Treasury’s ability to issue debt and has exercised control over the total amount of borrowing.  However, until the summer of 2011, raising the debt ceiling traditionally had been a pro forma occurrence without much policy debate or partisanship in the Congress.  The “debt ceiling crisis” that occurred in the summer of 2011 was a political debate and battle between Congressional Republicans and President Obama.  The Republicans generally were refusing to increase the federal government’s authority to borrow money without taking steps contemporaneously to decrease federal spending.  The debate resulted in enactment of the Budget Control Act of 2011, which raised the debt ceiling but also called for reductions in federal spending.  This policy debate brought the “debt ceiling” issue into the public forum and introduced the phrase into the vernacular.  Click here for more information about the Budget Control Act. (For more history on the debt ceiling, click here.)

What it Means

The U.S. government, through the Department of the Treasury, regularly borrows money to cover the cost of running the government’s operations, as well as to pay for maturing securities, such as treasury notes, bonds, and bills.  Treasury notes, bonds, and bills are issued to raise funds to support the federal government’s activities.  This borrowing of money is referred to as public debt.  The amount of money the U.S. Department of the Treasury is allowed to borrow typically has been controlled – and limited – by the Congress.  This restriction on the federal government’s borrowing authority is known as the “debt ceiling” or “debt limit.”  When borrowing approaches the authorized amount it is referred to as “hitting the debt ceiling;” the Congress then must act to increase the debt limit or else the government cannot borrow additional funds.  Without authority to borrow additional money and pay for maturing securities, the federal government could default, causing it to default on its debts and resulting in significant domestic and international economic disruption.

©2014 Drinker Biddle & Reath LLP. All Rights Reserved

About the Author

Managing Government Relations Director

Ilisa Halpern Paul has more than 20 years of experience in health care, advocacy, and policymaking in non-profit, academic, federally funded, and government settings. Ilisa's practice focuses on advocacy, public policy, and federal support for national patient advocate health professional organizations as well as hospitals and health systems. Prior to joining the firm, Ilisa served as senior government relations director at Arent Fox where she represented and advanced the legislative and regulatory interests of numerous non-profit and advocacy organizations, trade associations,...

(202) 230-5145

Boost: AJAX core statistics

Legal Disclaimer

You are responsible for reading, understanding and agreeing to the National Law Review's (NLR’s) and the National Law Forum LLC's  Terms of Use and Privacy Policy before using the National Law Review website. The National Law Review is a free to use, no-log in database of legal and business articles. The content and links on www.NatLawReview.com are intended for general information purposes only. Any legal analysis, legislative updates or other content and links should not be construed as legal or professional advice or a substitute for such advice. No attorney-client or confidential relationship is formed by the transmission of information between you and the National Law Review website or any of the law firms, attorneys or other professionals or organizations who include content on the National Law Review website. If you require legal or professional advice, kindly contact an attorney or other suitable professional advisor.  

Some states have laws and ethical rules regarding solicitation and advertisement practices by attorneys and/or other professionals. The National Law Review is not a law firm nor is www.NatLawReview.com  intended to be  a referral service for attorneys and/or other professionals. The NLR does not wish, nor does it intend, to solicit the business of anyone or to refer anyone to an attorney or other professional.  NLR does not answer legal questions nor will we refer you to an attorney or other professional if you request such information from us. 

Under certain state laws the following statements may be required on this website and we have included them in order to be in full compliance with these rules. The choice of a lawyer or other professional is an important decision and should not be based solely upon advertisements. Attorney Advertising Notice: Prior results do not guarantee a similar outcome. Statement in compliance with Texas Rules of Professional Conduct. Unless otherwise noted, attorneys are not certified by the Texas Board of Legal Specialization, nor can NLR attest to the accuracy of any notation of Legal Specialization or other Professional Credentials.

The National Law Review - National Law Forum LLC 4700 Gilbert Ave. Suite 47 #230 Western Springs, IL 60558  Telephone  (708) 357-3317 If you would ike to contact us via email please click here.