This again? The US will be unable to borrow enough money to pay its bills sometime between February 28 and March 25, and so far it’s not clear whether its lawmakers will choose to raise the debt limit in time to avoid a potential default or costly brinksmanship.
When the debt ceiling siren started wailing in Quartz’s newsroom last week, we began to plotting our debt ceiling coverage: Spot the falling prices of the short-term bonds coming due near the X-date, publish a road-map of the various outlandish scenarios that could result from default, assess the viability of a platinum coin, ask if the Fed can save us, check in with skeptical bond rating agencies, find the corporations with better cash balances the government, fret about the potential collapse of the financial system, and look longingly toward the sensible Danes.
But maybe things are about to change and we can hold our horses. The borrowing limit is something of the appendix of the US fiscal system: It doesn’t typically do much, but if it goes wrong, the results could be catastrophic. Originally enacted to make it easier (pdf) for the US Treasury to issue debt, it evolved into a symbolic check on federal borrowing: The president’s party was generally expected to supply most of the votes to get it to pass, but everyone knew—then as now—that actual decisions about how much to borrow are made when lawmakers and the president agree on how much to tax and spend during the budget process.
Since 2010, that changed, as Republicans made the debt ceiling a second bite at the apple for goals they did not achieve during earlier negotiations, increasingly unrelated to fiscal policy. While US president Obama initially responded by opening fiscal talks in 2011, brinksmanship and policy disagreements led to a near-default and the bond rating agency S&P to downgrade US debt to AA+—not out of an inability to pay, but out of fear that political gridlock could result in an unwillingness to pay. But in subsequent increases, Obama has largely refused to negotiate over the debt ceiling to avoid setting a precedent for the minority party to hold the government hostage, and Republicans appeared to overstep last fall, when a government shutdown and debt ceiling brinksmanship hurt the party’s public image.
That tack has resulted in decreasing drama around the debt ceiling: When this all started in 2010, Republicans demanded budget cuts equal to an increase in the debt ceiling—a literally catastrophic scale. This time around, Republicans in the US House of Representatives couldn’t decide if, in exchange for avoiding a default, they wanted to repeal part of health care reform (which would actually increase borrowing by $8 billion) or demand that the president authorize an oil pipeline between the US and Canada.
Now, it seems, they’ve been unable to agree on either demand. It looks more likely now—especially with the number of Republicans who voted for a recent omnibus spending bill creating the need for borrowing—that the debt ceiling may be returning to normal: Democrats in the Senate will take the lead in raising the debt ceiling, and Republican leadership will let such a bill come to the floor for a “clean” increase. It’ll still be an occasion for political grandstanding, but without the US economy on the line. For now.