United States

The debt ceiling debate

In the spring and summer of 2011, the national government faced the possibility of default on the public debt and a downgrading of its credit rating unless Democrats and Republicans could agree on whether and how to increase the congressionally mandated national debt ceiling. That ceiling of $14.29 trillion was reached in mid-May, but, by shifting funds, the Treasury Department was able to push out the anticipated deadline for default until August 2. Although the debt ceiling had been raised more than three dozen times since 1980, House Republicans, responding in large measure to Tea Party initiatives, insisted that the ceiling not be raised unless there were commensurate cuts in government spending. Republican proposals called for from $4 trillion to $6.2 trillion in spending cuts, especially to entitlement programs, including radical overhauls of Medicare and Medicaid. While Democrats also advocated spending cuts, they insisted that Medicare and Medicaid be protected, and they proposed tax increases for the wealthiest Americans as well as an end to tax breaks for some corporations, especially oil companies.