The Debt Ceiling and Fiscal Reforms

With federal debt subject to the limit currently at $31.38 trillion, the federal government has officially run up against its debt ceiling. In January, Treasury Secretary Janet Yellen informed Congress that the Treasury Department had begun employing “extraordinary measures” in order to continue making scheduled payments without breaching the debt ceiling. While these accounting maneuvers are expected to last until late summer or early fall, Congress should act sooner rather than later to raise or suspend the debt ceiling and avoid default.

As Committee for a Responsible Federal Budget president Maya MacGuineas recently remarked, "Without qualification, the debt limit must be increased or suspended, and it should be done so as quickly as possible." A debt ceiling increase or suspension could be accompanied by responsible fiscal reforms, as it often has in the past. 

The table below – which we've shown before – lists numerous occasions over the past four decades in which significant fiscal reforms were enacted alongside a raise or suspension of the debt ceiling, oftentimes with the effect of reducing deficits. Most of the legislation in the table was passed on a bipartisan basis. Unfortunately, on three occasions between 2015 and 2019, Congress paired suspensions of the debt ceiling with deficit-increasing policies. Lawmakers must avoid making the same mistake again.

Reforms Have Often Advanced With the Debt Ceiling