The Debt Ceiling Has One Purpose – Extortion

Even though Republican lawmakers, Fox News pundits and conservatives at large believe the debt ceiling puts a limit on federal spending, that doesn’t make it so. The debt ceiling (or limit) is a 1917 law (part of the Second Liberty Bond Act) that gave the executive branch power to take on debt without congressional approval. So it sounds like Mitch McConnell and other Republicans are right when they say President Obama wants to do away with the debt limit so that he has the free rein to spend all he wants, right? — Wrong! Only congress can authorize new spending. However, it is up to the Treasury Department to actually pay the bills, and Treasury is part of the executive branch. And when the federal government is running a deficit, that means some bills are paid by loan (government bonds).

So let’s sum up: The president does not authorize new spending, only congress has that power. And the debt ceiling does not stop congress from authorizing new spending. The debt ceiling only limits Treasury’s ability to raise more money (debt / government bonds) to pay for previous congressional authorized spending.

That means the debt ceiling really only has one purpose — extortion. Or as Representative Jerrold Nadler (D-NY) puts it:

The debt ceiling must go:

The debt ceiling was raised seven times during the George W. Bush administration, with no great battles and no threats of economic chaos. But now that we have a Democratic president, the Republicans have chosen to exploit the debt ceiling as a means of blackmailing the American people in order to impose their extreme and regressive agenda. The result of this extortion, in 2011, was a downgrading of the U.S. credit rating for the first time in history and a terrible compromise that punishes middle and working class people, retracts social safety nets, and inhibits economic progress just when we most need federal leadership toward economic recovery.

– Jerrold Nadler (D-NY)

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