Historical Experience with Short-Term Debt Ceiling Increases and Budget Agreements
In a blog earlier today, we endorsed a very short-term debt ceiling increase if it allowed time for the Gang of Six plan to be passed. We floated this basic model a while back when we said that lawmakers should avoid any long-term debt limit increases without concrete steps on controlling our debt. Considering there is less than two weeks until the predicted default date for the U.S., a small increase in the debt ceiling may be necessary to buy time for any piece of deficit reduction legislation. So, we decided to look historically at how many times deficit-reduction or budget agreements had been preceded by short-term debt ceiling increases.
Since 1940, there have been 37 short-term debt ceiling increases, which we define as an increase that lasts less than six months. Of these 37, 14 have preceded budget agreements or budget-related pieces of legislation, mostly in the mid 80s through the early 90s. The first case is the Balanced Budget and Emergency Deficit Control Act of 1985 (commonly known as Gramm-Rudman-Hollings). That piece of legisation required a debt ceiling increase one month in advance before a longer-term debt increase passed with the final bill. Other lesser-known budget bills in the 1980s required short-term increases prior to passage, such as the budget acts of 1986 and 1989 (passed through reconociliation) and the reauthorization of Gramm-Rudman-Hollings in 1987.
Examples from the 1990s can be found in our most recent debt ceiling paper. The 1990 budget deal required numerous short-term debt limit increases to stave off default while negotiations of the final package were going on. In total, six short-term increases were passed prior to the final package being agreed on. In addition, the deficit reduction package in 1993 required an increase that lasted four months prior to its passage. The final short-term increase connected with a budget agreement was the December 2009 increase, which preceded the February 2010 long-term increase that included statutory PAYGO rules and the creation of the Fiscal Commission.
|Historical Examples of Short-Term Debt Limit Increases|
|Budget Bill||Number of Short-Term Increases Passed|
|Stat. PAYGO and Fiscal Commission (2010)||One|
As we said earlier, lack of time is not an excuse for failing to act. The Gang of Six plan or a similar one can, and should, be put into place in accordance with an increase in the debt ceiling.