ECONOMY
Has the US ever defaulted on the national debt?
The debt ceiling was first established in 1917 and has been raised many times to accommodate increasing debt levels.
The national debt ceiling was first introduced in 1917 when Congress passed the Second Liberty Bond Act, providing a formal limit on the amount of debt that the government could assume. Debt was issued in the form of government bonds which could be sold off to raise funds.
The level of public debt has fluctuated ever since but has always remained beneath the upper threshold, preventing a default on those debts. In the 20th century alone the debt ceiling was raised more than 90 times and has never been lowered.
However, despite the risks the US has never defaulted on its debt.
History of the debt ceiling
President Ronald Reagan raised the limit 18 times; while President Bill Clinton did so eight times. Since 2001 the debt ceiling had been raised 15 times, with another coming imminently once the House passes the latest iteration and President Biden signs it into law.
In 2008, at the time of the Great Recession, the total public debt stood at $9.65 trillion. That figure rose to $31.4 trillion when the new increase is enacted.
Raising the debt ceiling has been done countless times in the last century, and it has been proved that a catastrophic default can be avoided by enacting a suspension of the limit. This is what happened in 2019 when President Trump signed a bill suspending the debt ceiling until July 2021, a measure which was then extended until the following December.
How many times has the US raised the debt ceiling?
According to the Treasury Department, the US “Congress has acted 78 separate times to permanently raise, temporarily extend, or revise the definition of the debt limit,” since 1960. The increases have been approved under both Democratic and Republican presidential administrations, 29 times and 49 times respectively, over that period.
This has been the case as both have recognized that it is a necessary measure to avoid “irreparable harm to the US economy, the livelihoods of all Americans, and global financial stability,” in the words of Treasury Secretary Janet Yellen.