ProPublica

Journalism in the Public Interest

Cancel

A Reading List for Following the Debt Ceiling Drama

We’ve compiled helpful stories, charts and live blogs about the debt ceiling debate to help you keep up.

.

Speaker of the House John Boehner, President Barack Obama and Senate Majority Leader Harry Reid sit down with other administration officials and members of Congress for a meeting at the White House on July 14, 2011. (Chip Somodevilla/Getty Images)

July 30, 2011: This article has been corrected.

We’re updating this reading list continuously as new stories and resources on the debt ceiling debate come out. The most recent updates are starred (*).

Congress has until August 2nd to raise the debt ceiling, the cap on the amount of money the Treasury can borrow to pay the government's bills. As the clock keeps ticking, you may still have unanswered questions. How dire could the consequences of not raising the debt ceiling be? What are the possible solutions? Here's a reading list to help you keep up.

Following the debt ceiling debate in real time:

Slate has an updating infographic that lets you see how much money the Treasury has in its bank account right now. For the latest news and analysis, the Wall Street Journal has a frequently updated live blog. The Economist is also doing daily debt ceiling updates. Some good people to follow for updates on Twitter include CNBC's @JimPethokoukis, TIME Magazine's @MarkHalperin, CBS's @NorahODonnell, NBC's @LukeRussert and @KellyO, Slate's @daveweigel, Talking Points Memo's @brianbeutler and the Bipartisan Policy Center (@BPC_Bipartisan). Today we’re curating tweets with debt ceiling news and analysis on our homepage—check out the module in the top right. For breaking updates, Topsy can be a useful tool for finding the latest articles and tweets on the debt ceiling.

The basics on the debt ceiling (including where it comes from):

An earlier guide of ours answers basic questions about the debt ceiling, like "What is the debt ceiling, really?" and "Is the debt ceiling necessary?" The New York Times also has a useful FAQ that gets into some of the finer points of the history of the debt ceiling system. Poynter has a guide to common misconceptions about the debt ceiling that can help you cut through misleading coverage. It's important to note, as Poynter does, that raising the debt ceiling doesn't mean that we're increasing spending, but that we're letting the Treasury borrow money to pay for things we've already agreed to spend on. Here's how NPR Correspondent Robert Smith explained the situation to Poynter:

"The way I put it is that Congress has already ordered the pizza. They approved the pepperoni. They called up and had someone deliver it," Smith said via email. "Now the pizza guy is knocking at the door, and asking to get paid. If you don't raise the debt ceiling, it's like saying we didn't want that pizza in the first place. Maybe he'll go away if we don't answer."

The New York Times has a helpful chart that breaks down which policies have contributed to the national debt over the Bush and Obama administrations. This chart, tweeted James Fallows at the Atlantic, "should accompany every story about the debt ceiling debate." The White House released a more detailed chart breaking down the sources of the national debt on Tuesday. Talking Points Memo explains that most of the U.S. national debt is actually owed to the United States—it's money that some government agencies have borrowed from each other. The Guardian's data blog has a rundown of which foreign countries the United States owes, and how much we owe them. If you want to go in-depth into the topic, there’s a compilation of academic research on the debt ceiling up at Ezra Klein’s Washington Post blog.  

What might happen if the debt limit isn't raised:

Basically, anyone and anything that relies on federal government funds may not get paid, including members of the U.S. military and military contractors and people receiving Social Security checks. The New York Times has a story detailing what may happen to state governments if the debt ceiling doesn't get extended. Bloomberg has an interactive that lets you take on the role of the Treasury trying to decide which of its bills to pay.

The U.S. credit rating might get downgraded, which could raise the cost of borrowing and cause panic in financial markets and dumping of U.S. bonds. The IMF said today that a downgrade could be "extremely damaging" to the world economy. Forbes has a piece weighing the potential consequences of a credit rating downgrade and whether or not it's inevitable.

Fears that the U.S. could lose its top credit rating deepened Monday evening after Republicans and Democrats failed to strike a deal. According to The Wall Street Journal, Moody’s, S&P and Fitch have all said they may downgrade the U.S. rating, though they all cite different criteria for the kind of deal that could avoid a downgrade. There is some debate about whether the ratings agencies would really do this, and how much it would matter if they did. Yahoo News’s Daniel Gross and RealClearMarkets.com’s John Tammy argue that a downgrade is far less likely than politicians and the media are making it out to be. USA Today reports that, while Wall Street money managers are preparing contingency plans, many don’t see a downgrade as the end of the world because “the rating agencies lost a lot of credibility during the financial crisis when they failed to alert investors of the coming mortgage crisis.” The AP now reports that experts believe the U.S. could lose its top credit rating, whether Congress raises the debt ceiling or not.

WNYC’s Brian Lehrer show brought on finance journalist Beth Kobliner to discuss the effects a default might have on the average person. Meanwhile, CNN reports that veterans were called to the White House to discuss how they might be affected if the debt limit isn’t raised.

The New York Times has a more descriptive piece laying out how Treasury will prioritize paying its bills in case the debt ceiling isn’t raised.

The implication is that the government will need to pay bills in the order that they come due. President Obama has warned as a result that the government “cannot guarantee” payments of Social Security benefits or other popular programs. Officials also have disputed the assertion of some Republicans that the government could prioritize interest payments.

USA Today has an overview of the actions that states are taking to brace themselves for the possibility of a U.S. credit rating downgrade. The Wall Street Journal asks defense contractors how they would cope if they stop receiving federal funds. 

Slate’s Annie Lowry has a good explanation of what’s likely to happen if Congress doesn’t work out a debt ceiling deal by August 2—the government won’t default, she argues, but the economy will certainly suffer. 

What, and who, is holding up the deal:

Much of the debate has centered on other things that should go along with raising the debt ceiling, like repeal of health care law (here's an earlier post we did on that). This New York Times chart lays out the major obstacles to working out a debt ceiling deal. At the New York Review of Books, Elizabeth Drew has an insightful summary of the failures of the negotiations so far. There was a fun op-ed in Tuesday's New York Times that explains why Democrats and Republicans haven't made a deal with the help of game theory and elephant mating patterns.

After President Obama and Republican House Leader John Boehner addressed the nation Monday night, there was still no sign of a deal on the horizon. Politico has a good recap of the speeches with discussion of strategy. Some Republicans denounced Boehner’s plan; CBS news sums up their concerns.

The question of how long a debt limit extension should last us was a big sticking point this week – the AP explains why timing is so contentious, and runs through how long past debt ceiling extensions have lasted. Politico draws attention to the lack of transparency in the debt ceiling negotiations, despite the open government rhetoric that’s become popular in Washington. 

Possible solutions:

*It’s worth noting that it is an option for Congress to just raise the debt ceiling without tying it to other measures, like budget cuts. Congress has raised the debt ceiling 68 times since 1954 without this level of drama. The House, however, voted to reject this option in May

As of last week, there were eight possible deals on the table, all of which the New York Times' Caucus blog detailed in a cheat sheet. After debt ceiling negotiations temporarily broke off on Friday, congressional party leaders began drafting two new plans. Bloomberg has the details of those plans here.

Republican House Leader John Boehner had to rewrite his debt ceiling plan Wednesday, after the Congressional Budget Office found that it would not cut spending by as much as it originally claimed. The CBO estimated that Senate Majority Leader Harry Reid’s plan would save $2.2 trillion over 10 years. Talking Points Memo makes a few points about why this wasn’t exactly a victory for Reid.

After a great deal of discord among the GOP Wednesday evening, the CBO announced that Republican House Leader John Boehner’s new bill will save $915 billion over 10 years. Boehner’s bill was expected to come up for a vote in the House on Thursday, but the vote was again delayed.

Senate Majority Leader Harry Reid has said that it won’t get any Democratic support in the Senate. At Ezra Klein’s blog, Suzy Khimm explains where the CBO came from, and why it has so much authority that its analysis make or break a bill.

The New York Times has a useful interactive for comparing the deficit reduction plans that are now on the table.

*Boehner’s new plan stipulates that the debt ceiling can only be raised if an amendment is added to the Constitution saying the nation's spending can’t exceed its income. In other words, his plan makes raising the debt ceiling contingent on something that is very unlikely to happen. Boehner is struggling to get 216 votes for his plan in the House—actually passing a new constitutional amendment would require a two-thirds vote in both houses of Congress (currently 289 votes in the House and 67 votes in the Senate), as well as ratification by three-fourths of states.

Bill Clinton also raised the possibility that Obama could raise the debt ceiling without congressional approval, using a provision in the 14th Amendment. The New York Times explains how Clinton's recommendation would work. In the event that a deal isn't reached, CNBC's John Carney suggests that the Federal Reserve might be able to keep the Treasury afloat by selling its Treasury securities. CNN Money reports that the Fed probably can’t help us out if the debt ceiling doesn’t get extended. At The New Yorker, James Surowiecki argues that it would be best to just get rid of the debt ceiling altogether.

Correction: Because of an editing error, this post originally said that new constitutional amendments require the ratification of two-thirds of states. In fact, they require the ratification of three-fourths of states.

Joseph REynolds

July 25, 2011, 10:51 p.m.

Wow. Good stuff. I feel 100percent smarter than everyone else. Though I’m sure my GOP buddies will deny the NYTimes chart.

Steven Streets

July 26, 2011, 1:33 p.m.

Add US Constitution Article One sections 8 and 10 to the reading list just so people are accurately informed of Where the Legal Tender Authority comes from and what that edifice of Justice of says is the only Legal Tender. Nothing will begin to make sense without that primary understanding.
The Democrat Party through President General Andrew Jackson is the only Party to eliminate Federal Debt but it took a herculean effort from General Jackson to get the corruption of the debt industry out of the Federal Treasury first.
Fiat Specie is incompatible with Liberty and prohibited as Legal Tender by US Constitution Article One section 10. A clause worth fighting for.
History has lessons to apply. Fiat Specie did the Confederacy no good end result. The first American Fiat Specie was the notorious worthless “Continental Dollar” of the Revolution. Honest Mathematics promises the same end result of the Fiat Specie proffered today.

Poyner writes: “The way I put it is that Congress has already ordered the pizza. They approved the pepperoni. They called up and had someone deliver it,” Smith said via email. “Now the pizza guy is knocking at the door, and asking to get paid. If you don’t raise the debt ceiling, it’s like saying we didn’t want that pizza in the first place. Maybe he’ll go away if we don’t answer.”

It’s really more like ordering the pizza, accepting the pizza, eating the pizza and then refusing to pay for it.

The dire,  dire consequences of DEFAULT is bs.default does not occur until debts are not paid.The chances of this are nil with 200 billion coming into the treasury every month.DON’T. RAISE THE DEBT CEILING YOU IMMEDIATELY SAVE 2+ TRILLION DOLLARS, FORCE PRIORITIZING OUR BUDGET, SAVE THE FUTURE OF OUR CHILDREN &UNBORN;, & RESTORE solvency…..a real balancing of the ship of state.

Scott Collingwood

July 26, 2011, 5:49 p.m.

I’m surprised how laid back everyone is. No Federal money? How many guns are there in the USA? The Eurozone would collapse immediately.  We’re talking real poverty ...

I am always shocked by the glib mythologies of the alternate reality crowd. They can’t possibly be as unintelligent as they appear. I speculate they’ve been culturally conditioned to think such castles in the air are real. Comes from listening to too much talk radio I guess, never performing any due diligence on your sources of information. Ah, the sad authoritarian followers… The facts that govern the real world seem insubstantial to them because they’ve never had to come face to face with them. It will be painful to watch their fantasy world go up in purple smoke when the cat’s cradle that is the modern world falls apart around them.

The world’s destinies are in the hands of irresponsible people out there to create immense havoc…Boehner is carrying things too far to satisfy his own inflated ego.
Add to it that Norwegian nutter, with his ravings of being a “history maker”, and you’ve “animal spirits” unleashed.
Unfortunately, the World has seen such madness before…and you had nazism and fascism.
Let the rationales take the bull by the horns, for goodness’ sake!

How many of you believe that the light at the end of the tunnel is the on coming freight train and our government is about to let us get run over.

What gets me is that Grover Norquist, an UNELECTED individual has the audacity to have our politicians sign a pledge against raising taxes….the ONLY pledge they need to sign is the one that says they will pledge to do the work of their constituents, not just ONE individual.  All politicians who signed this particular pledge by Norquist need to be sued for misrepresenting themselves to their constituents and not allowing themselves to do the work that WE have paid them to do!!  This particular pledge is what is holding up many of our Republican politicians, along with the Tea Party group!!  We can thank them profusely when the world falls apart around us if the debt ceiling isn’t raised!  As a note, raising the debt ceiling does NOT allow more spending….it just allows us to pay the bills that are already coming in regularly.

Does anyone In congress actually know what they are doing?

Does the republican “tea party” realize this is already spent money?

Does any congress member understand what they are doing to the People of the United States and to the other countries around the world?

Is it so important to all concerned To continus to hold the political posturing and perhaps remove Our present president At the expense of the people of this country and in turn the whole world and our future bargaining position

I’m not a democrat but have come to belived that the republican party has done everything to destroy any recover and improvment of the econmy just to gain control of the Whitehouse, but have now gone just to darn far.

I really don’t follow the press as it seems to have become so politital sided,: But of late have listened to questions asked and I wonder to myself..( Why doesn’t someone Just ask the question,“if needed” over and over again, Do you realize what your doing to this country?

What really surprises me is how well our politicians can skirt or avoid direct questions.

I must admit I’m prejudise as I now depend totally on my social security check to survive until my death!
thanks for reading

I voted so that my representation would manage my interest starting in the beganning of the year,  when all the concurrences and objections would have time to hash it out.  Not so my tax money be wasted on the overtime, oversight and double talk.  Enough he said they said the pizza is getting cold.

A few points for consideration:

1)  The country is now over spending it’s funds by approximately 67% requiring it to borrow money by selling treasury bonds.  (This is the equivalent of an individual or business borrowing 40 cents of every dollar it spends and knowing that fact still insists on spending almost twice as much as their income would allow.) On top of this the administration is printing money devaluating our currency. This financial model for our country is unsustainable. No individual or business or government can or will survive with this overspending model. 

2)  Foreign countries, the primary buyers (lenders) of the borrowed funds can stop lending at any time.  They are not bound to lend even when there is room in the dept ceiling. 

3) The risk of a rating change to U.S. treasury bonds will not go away if the debt ceiling is raised.  Downgrading of our bonds is based on underlying fundamentals which were just as bad the last time the country raised the debt ceiling over the Christmas holiday in 2009.  The only chance of holding onto our current rating and associated interest rate is if the country made a serious attempt to address the out of control overspending.  Since it is obvious that no plan is being discussed of that magnitude a bond downgrade and an interest rate increase is inevitable. 

4) One possible benefit of any potential treasury interest rate increase is that maybe it will draw more attention to the need to address the fundamental overspending issue sooner rather than later.  Plus interest rates for CD’s will likely increase providing some help to American’s, especially seniors who depend on the earnings from their retirement savings.  The low interest rates manipulated by the federal reserve with the blessing of this administration are essentially a tax on the senior citizens of this country.  Their reasonable interest earnings potential has been stolen by the government in order for it to borrow more money and lessen the impact of the interest payment on the federal debt. 

5)  The argument that the debt ceiling relates to past spending (“the pizza has been ordered) is erroneous and incomplete.  First of all,  the country has the funds (cash flow)  to pay the interest on the debt that is coming due without raising the debt ceiling.  (i.e. we can pay credit card company the interest it will charge us to pay for the pizza that was purchased with our credit card).  What this administration is asking is that we get an additional credit card (i.e. increase cumulative credit limit) so we can use it to spend more money than we really have.  The solution is not “getting more credit cards” but to curtail the spending.  Our country must demonstrate that it can begin to “live within its means” (i.e not order out pizza when it can only afford store bought pizza) and to m.anage its current “credit card” (credit limit) better.

6)  Earlier this year this adminstation submitted a proposed budget that called for continuing to spend significantly more than we are taking in even though it knew it was running close to the debt limit and even though the administration has made speeches stating that the situation was unstainable.  This out of control budget is the only plan this administration has ever put in writing and it did nothing to address the underlying financial situation.  Only with the pushback from the Congress has this administation begun acknowlege the concerns the citizens of this country have for the administration’s spending habits.  Unfortunately, once woken up the only solution proposed is more taxes. 

7) We have a spending problem not a revenue problem.  This underlying spending problem must be addressed.  The country and our government must force itself to change course.  Using the need for a debt ceiling increase to begin making some course changes is necessary as the administration or the legislative branches have not been able to “push themselves away from the spending table”.

Error in the next to the last paragraph:

Boehner is struggling to get 216 votes for his plan in the House—actually passing a new constitutional amendment [57] would require a two-thirds vote in both houses of Congress (currently 289 votes in the House and 67 votes in the Senate), as well as ratification by two-thirds of states.

Actually, a constitutional amendment requires ratification of 3/4 of states.

Thanks Lisa, we’re correcting now.

I give-up..Just keep the blinders on and kill off the still remaining gooses that laid your golden egg…You can’t undo overnight what took years to develop. Elegant words won’t reserve a spot for you in the mountains cause they are already filled.

I worked my seven days a week, Pd. faithfully into my social security but due to health for myself and family have lost all my funds and retirement..now this “new” tea party movement wants to take that away…

Lets turn it over to the states, Great job, great doing..the only way a state knows how to balance a budget is thru cutting..no examples, just look around.

You know what really gets to me is this theory, so we don’t raise the debt ceiling, their really is money hidden to cover?..hee, hee I thought the whole Idea of the republican party was to “save money”. If all this hidden money does become available
thankyou again for at least reading and between the lines

Can somebody please recall these Tea Party nuts so that the rest of the government can get on with its business? Not that Congress worked so well before, but some politicians seem to understand that you can’t always get everything you want.
While you’re throwing that tea overboard, look out that you don’t jettison the good faith of lenders along with it.

Thank you. You are a treasure.

Diane Valencen

July 31, 2011, 10:49 a.m.

One of the biggest problems that American Progressives and American conservatives have is a lack of communication. Nowhere is that more apparent than in the past few years with the Heath care bill and now with the debt ceiling crisis. I don’t know what conservatives want and this is a big part of the problem. Over the course of the rest of the day, I will be posting this question on 100 conservative blogs as well as at media outlets in comments:

“It is 2013, you have a supermajority in both the House and the Senate and a true conservative GOP president. What are the top ten things that you would want to see come out of government in the two years you would have certainty that a conservative agenda will be carried out?”

Your options are open. You can respond at the post for this question at our blog or if you’re not comfortable going to a liberal blog you can post your answers inline here and they’ll be retrieved by a member of my crack staff.

Diane Valencen
Editorial Page Editor

[q c p n!]

I find it tragic to read comments (see duane) from folks that think that not raising the debt ceiling is a good thing? Obviously they know not what they say. The debt ceiling has been raised routinely throughout the years & yes, we are spending more than we take in, but the bill are coming due now. We cannot default on our obligations to the World or it’s citizens. The Tea Party is singlehandedly holding this country hostage & it’s a crying shame. They think they were given this “mandate” to cut budgets everywhere except big oil, corporate tax welfare, & loopholes & all the while mega-rich skate on their fair share of taxes as well. The “mandate” as it were, is more realistically a mandate for a “balanced” government & one that knows how to compromise in a divided Congress. Things should be very interesting come next election & I seriously doubt the “tea party” will be much of an influence, if at all. I loved the chart in the news piece that showed “Bush=5.? trillion to Obama=1.7 trillion” in debt increases, yet the Republicans refuse to acknowledge that 8yrs of Reagan, 4yrs Sr. Bush, & 8yrs of Baby Bush did nothing for this country as a whole. Manufacturing jobs went away, Corporations got a hold of the Supreme Court & in the meanwhile, Wall Street & the Bankers have ran away w/all the money…Somethings gotta give & I’m afraid it will be extreme poverty for millions of Americans & just plain poverty for millions more.

In 1974, Congress passed a baseline budgeting law (Congressional Budget Act of 1974) that mandated annual increases over the current-year federal budget, thus guaranteeing an annual increase in federal budget growth.  I believe that growth has been about 7% per year.  The “cuts” that both political parties howl about are reductions to the mandated annual increase.  Rather than pass a Balanced Budget amendment, why not repeal the 1974 law and replace it with a zero-based budgeting law.  That would require government to justify its entire budget and eliminate the “use it or lose it” spending sprees that ensure unwarranted growth.  A part of the current debt-ceiling negotiations are bogus pledges about cutting 1 trillion, or 2 trillion or whatever whimsical amount is proposed, over ten years.  We all know those gimmicks aren’t worth the paper they’re written on and will be eliminated by zero-base budgeting.

I’ve sent that message to my Senators and Representative.  Numbers speak - contact yours.