The United States has raised its Debt Ceiling many times before the United States debt-ceiling crisis

United States debt-ceiling crisis

The United States debt-ceiling crisis was a financial crisis in 2011 that started as a debate in the United States Congress about increasing the debt ceiling. The immediate crisis ended when a complex deal was reached that raised the debt ceiling and reduced future government spending...

 of 2011. These increases were not usually coupled with an ongoing global economic crisis. The Debt Ceiling and the impact of its management have been an important part of the macroeconomics of the US finance system for the past 223 years.

Overview

A statutorily imposed debt-ceiling limit has been in effect since 1917 when the US Congress passed the Second Liberty Bond Act. Before 1917 there was no legally binding debt ceiling in force, but there were parliamentary procedural limitations on the level of possible debt that could be held by government.

The legal practice before 1917 was this:

• The amount of each bond issue by the United States Treasury had to be separately authorized by Congress by passing a legislative act that approved the bond issue.
• The Congress limited the amount of debt the US government was authorized to use at any one time.

Historical precedence

• The parliamentary legal procedure for changing the debt ceiling worked for 129 years (1788-1917).
• The Debt Ceiling law -- on the other hand -- has only been in effect for 94 years (1917-2011).

Historical significance

US government indebtedness has been the norm in the financial history of the nation. The carriage of debt in Western Europe and North America by governments has been normal for the past 200 years, so the US situation is not unique.

• The US has only been "without a debt or deficit" for under 1% of its legal existence since the 1778 Treaty of Paris.
• Debts incurred during the American Revolutionary War
  American Revolutionary War
  The American Revolutionary War , the American War of Independence, or simply the Revolutionary War, began as a war between the Kingdom of Great Britain and thirteen British colonies in North America, and ended in a global war between several European great powers.The war was the result of the...
  
   and under the Articles of Confederation
  Articles of Confederation
  The Articles of Confederation, formally the Articles of Confederation and Perpetual Union, was an agreement among the 13 founding states that legally established the United States of America as a confederation of sovereign states and served as its first constitution...
  
   led to the first yearly report on the amount of the debt ($75,463,476.52 on January 1, 1791).
• Every President since Harry Truman has added to the national debt expressed in absolute dollars. The debt ceiling has been raised 74 times since March 1962, including 18 times under Ronald Reagan
  Ronald Reagan
  Ronald Wilson Reagan was the 40th President of the United States , the 33rd Governor of California and, prior to that, a radio, film and television actor....
  
  , eight times under Bill Clinton
  Bill Clinton
  William Jefferson "Bill" Clinton is an American politician who served as the 42nd President of the United States from 1993 to 2001. Inaugurated at age 46, he was the third-youngest president. He took office at the end of the Cold War, and was the first president of the baby boomer generation...
  
  , seven times under George W. Bush
  George W. Bush
  George Walker Bush is an American politician who served as the 43rd President of the United States, from 2001 to 2009. Before that, he was the 46th Governor of Texas, having served from 1995 to 2000....
  
   and three times (to August 2011) under Barack Obama
  Barack Obama
  Barack Hussein Obama II is the 44th and current President of the United States. He is the first African American to hold the office. Obama previously served as a United States Senator from Illinois, from January 2005 until he resigned following his victory in the 2008 presidential election.Born in...
  
  .

Mechanics

The process of setting the debt ceiling is separate and distinct from the regular process of financing government operations, and raising the debt ceiling neither directly increases nor decreases the budget deficit.

The US government passes a federal budget every year. This budget details projected tax collections and outlays and, therefore, the amount of borrowing the government would have to do in that fiscal year.

A vote to increase the debt ceiling is, therefore, usually seen as a formality, needed to continue spending that has already been approved previously by the Congress and the President.

The Government Accountability Office

Government Accountability Office

The Government Accountability Office is the audit, evaluation, and investigative arm of the United States Congress. It is located in the legislative branch of the United States government.-History:...

 explains, "the debt limit does not control or limit the ability of the federal government to run deficits or incur obligations. Rather, it is a limit on the ability to pay obligations already incurred." The apparent redundancy of the debt ceiling has led to suggestions that it should be abolished altogether.

State governments have different legal debt-ceiling constraints that should never be confused with the Federal Government's debt ceiling:

• Some US state governments in the late 20th century and early 21st century have modified their constitutions to impose hard debt ceilings separate from the Federal Government.
• Some US states more or less have constitutionally forbidden all borrowing by the state government. The US debt-ceiling issue has evolved in the current era into a Federal (but not state) issue.
• No US territory or dependency has so far modified their own constitution so as to forbid borrowing (where a debt ceiling would come into effect) in the past 50 years, but these entities do have the right to do so in US and international law.

19th century

At the beginning of the 19th century, the US was still financially unstable from its war of independence. The War of 1812 created conditions that required the US to borrow money into the 1820s.

The US Civil War (and its long term effects) forced the US to borrow large amounts from 1862 to 1880. During this time the US currency was more or less a fiat currency.

20th century

Depending on who is doing the research, it is said that the US has raised its debt ceiling (in some form or other) at least 90 times in the 20th century.http://www.cbsnews.com/8301-503544_162-5987341-503544.html

Before 1950

A statutorily imposed debt ceiling has been in effect since 1917 when the US Congress passed the Second Liberty Bond Act.

After 1950

The US Congress has raised the debt limit some 8 times in the decade 2001-2011. Since 1965, this frequency of Debt Ceiling increases is about on average.http://www.concordcoalition.org/issue-briefs/2011/0708/understanding-federal-debt-limit

21st century

Yearly deficits since 2001 coupled with the persistent increases in debt held by government accounts has led to repeated increases of the Debt Limit in the 21st century.

US Debt Ceiling Changes since 1788

This table should show all the changes in the US Debt ceiling since 1788 to the current day. cellpadding="2" cellspacing="2">

Year	Debt celing amount	Debt celing change	% change	Source
1788
1917
1945

External links

• History and Recent Increases (2010)
• History and Recent Increases (2008)
• Interview on US Debt Ceiling issues