The History of the Debt Ceiling, Explained

House Speaker Kevin McCarthy at the Capitol Building April 17, 2023, in Washington, DC. (Photo by Anna Moneymaker/Getty Images)

There is perhaps no stranger American political tradition than the recurrent debt ceiling crisis, wherein Congress puts the country on the brink of financial disaster in the name of fiscal responsibility. As House Speaker Kevin McCarthy plans to introduce a bill to raise the debt ceiling and cut federal spending—setting up a potential showdown with President Biden—a look at the debt ceiling’s history can help us understand how we got here. 

What is the debt ceiling? 

Almost every year, the government spends more money than it collects in taxes. To make up the difference, the Treasury borrows money, which adds to the government’s debt. The debt ceiling is a congressionally imposed dollar limit on that debt. 

If the goal of the debt ceiling is to keep the country’s debt down, it has not been remarkably effective. Congress first imposed a debt limit of $13.5 billion in 1917. Since then, U.S. government debt, adjusted for inflation, has grown more than a hundredfold. The debt ceiling’s apparent ineffectiveness helps explain why no other major country, with the not-so-notable exception of Denmark (their debt ceiling is a mere legal formality), has adopted the measure. 

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