US Government Debt Different - Finance Department - University of ...

Howell E. Jackson 556The 2011 Debt Ceiling ImpasseRevisitedHowell E. Jackson 1In 2011, the federal government came perilously close to reachingthe statutory limit on public debt. For the first seven months of theyear, the Obama Administration and congressional Republican leadersengaged in an elaborate sequence of press conferences and closeddoor negotiations. Straightforward measures to increase the publicdebt ceiling were caught up in partisan politics and larger questionsof deficit reduction and fiscal policy. Only on the eve of crisis – onAugust 2, 2011 – when the federal government was within hours ofbeing unable to pay its bills in a timely manner, did a compromiseemerge in the form of the Budget Control Act of 2011, which establisheda three step process for raising the debt ceiling by at least$2.1 trillion. For the first time in a generation, policy analysts andbudget scholars confronted the question of what would happen ifpolitical processes had in fact broken down and the debt ceiling hadbeen reached.1 James S. Reid, Jr., Professor of Law, Harvard Law School. This essay draws onexcellent research assistance from Jeremy Kreisberg and Kelley O’Mara, whose BudgetPolicy Briefing Paper, The 2011 Debt Limit Impasse: Treasury’s Actions & theCounterfactual – What Might Have Happened if the National Debt Hit the StatutoryLimit (Sept. 4, 2012) appears in Appendix A. Additional Budget Policy BriefingPapers appear at http://www.law.harvard.edu/faculty/hjackson/budget.php.