The debt ceiling. Yeah, it's back. Again. (Please don't blame the messenger.)
This fall, Congress must decide about raising the ceiling on how much debt the federal government may carry.
If lawmakers whiff, the U.S. Treasury Department won't be able to pay all the country's bills in full and on time.
When exactly? "On or about" November 5, Treasury Secretary Jack Lew says.
So here you go, one more time...
What's the debt ceiling again?
It's a cap set by Congress on how much the federal government may have in outstanding debt.
That limit applies to debt owed to public investors (i.e., anyone who buys U.S. bonds), plus debt owed to federal government trust funds such as those for Social Security and Medicare.
Congress has always set some kind of limit on national debt, but the first modern version of it was set in 1917.
Today the ceiling is set at $18.113 trillion.
Is it true that raising the debt ceiling gives Congress a "license to spend more"?
No.
Raising the debt ceiling simply lets Treasury borrow the money it needs to pay all U.S. bills and other legal obligations in full and on time.
Those bills are for services already performed and entitlement benefits already approved by Congress.
So raising the debt ceiling is more like a license to continue paying what the country owes. And the obligations are incurred because of countless decisions made by lawmakers from both parties over the years.
So, how often has Congress raised the debt ceiling?
Often. On average, more than once a year.
Since 1940, there have been 95 measures enacted to adjust the debt limit in one way or another.
Sometimes lawmakers have raised it by small amounts, other times by large amounts. Sometimes they've raised it "temporarily" with provisions for it to "snap back" to a lower level. And sometimes they've "suspended" it when they can't agree on raising it outright.
A suspension is a wink & nod maneuver that basically lets Treasury borrow as needed to pay bills without regard to the limit. Then, when the suspension ends, the debt limit instant-presto resets to the old cap plus whatever Treasury borrowed during the suspension period.
The latest suspension ended in March. Ever since, Treasury has used accounting maneuvers -- perfectly legal ones -- to keep paying all the country's bills without breaching the ceiling.
Why does Congress even bother with a limit?
In theory, setting the debt ceiling is supposed to help Congress control spending.
In reality, it doesn't. Not meaningfully anyway, although there have been times when the debate over raising it has yielded some fiscal restraint.
The problem is that the decision to raise the borrowing limit is usually divorced from lawmakers' legislative decisions that necessitate more spending in the future.
It would be much better, budget experts say, to authorize debt limit increases whenever Congress passes bills to raise spending or cut taxes, both of which can add to deficits.
Does the debt limit fight threaten to shut the government down?
No. But it could get lumped in with that other fight Congress will be having this month over spending -- and the spending fight could result in a government shutdown.
By October 1, the start of Uncle Sam's fiscal year, Congress must pass bills that authorize federal spending in order to keep the government open.
Some Republicans are threatening to make that difficult unless lawmakers defund Planned Parenthood because of a controversy over how the group handles fetal tissue after an abortion. That's on top of disagreements lawmakers will have over adhering to spending caps.
Related from CNN: September scramble looms for Congress
Lawmakers may decide to propose measures that both authorize spending for the next fiscal year and raise or suspend the debt ceiling.
Or the two issues may collide near the end of the year if Congress passes a very short-term spending bill minutes before midnight on September 30, thereby keeping the government open while lawmakers continue to fight over the budget.
In any case, while a shutdown is aggravating and wasteful -- and could harm growth if it goes on a long while -- it's nothing compared to the risks if Congress fails to address the debt ceiling in time.
So what happens if Congress doesn't raise the ceiling?
No one knows for sure. But at the very least, it would be an unnecessary disruption and make Washington look bad in the eyes of investors, including those around the world who lend the country money.
To pay bills and benefits in full and on time, Treasury must borrow money to make up the difference between what it spends and what it takes in. And if Congress doesn't act in time, Treasury will not be able to borrow to fulfill all its payment obligations.
What then?
That's a good question with no clear answer.
Treasury may try to pay some bills and delay others, or delay all bills due on a given day until it has enough revenue in hand to pay all of them.
Most experts think Treasury would do all it could to prioritize interest payments on the debt, lest the United States default on its bonds, since that would likely send markets plunging and interest rates soaring.
But it's not clear how investors would respond if Treasury makes interest payments but delays payments to government contractors, federal workers, taxpayers due refunds, veterans, seniors and anyone else to whom the federal government has a legal obligation.
Economically it could be disastrous if the standoff lasts for more than a couple of days.
"Federal employees, contractors, program beneficiaries, businesses and state and local governments would find themselves suddenly short of expected cash, causing a ripple effect through the economy," Donald Marron, a former Congressional Budget Office director, told lawmakers during one of the last knock-down-drag-out fights.
To say nothing of the fact that the United States' reputation as "money-good" would be damaged.
CNNMoney (New York) October 1, 2015: 5:13 PM ET
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