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2011 U.S. debt ceiling crisis 1

2011 U.S. debt ceiling crisis

The 2011 United States debt ceiling crisis concerns the ongoing debate over whether the debt ceiling of the United

States should be increased and, if so, the amount of the extension. Also under discussion are: what future spending

policies and/or tax code policies should be associated with the action to increase the debt ceiling[1]

and what

structural changes for future budgeting processes if any (for example, spending caps and/or a balanced budget

amendment to the U.S. Constitution) should be associated with that action.[2]

The situation is regarded as a crisis due

to the potential for a major worsening of the economic status of the U.S. in case of government default.

The debate is contentious due to the implications of not raising the debt ceiling, political ideologies[3]

, long-term

debt concerns, and competing plans to address these concerns.[4]

Background

U.S. debt from 1940 to 2010. Red lines indicate the Debt Held by the Public (net

public debt) and black lines indicate the Total Public Debt Outstanding (gross

public debt), the difference being that the gross debt includes funds held by the

government (e.g. the Social Security Trust Fund). The second panel shows the two debt

figures as a percentage of U.S. GDP (dollar value of U.S. economic production for that

year). Data from the President's proposed budget (Historical Tables) and other tables

listed when you click on the figure. The top panel is deflated so every year is in 2010

dollars.

Current situation

Federal law currently sets the debt

ceiling at $14.3 trillion.[5]

According to

the Treasury, the debt ceiling was

reached on May 16, at which time the

Treasury began extraordinary measures

to temporarily finance the government

(see Debt issuance suspension period and

alternate methods of funding). The

Treasury estimated that these measures

would enable government payments to

continue until August 2, 2011, after

which Treasury would not be able to

fulfill all US obligations.[6]

As of May 2011, approximately 40

percent of US government spending

relied on borrowed money.[7]

Raising the

debt ceiling would allow the Federal

Government to continue to borrow

money to support current spending

levels. If the debt ceiling is not raised,

the Federal Government would have to

cut spending immediately by 40 percent,

affecting many daily operations of the

government.[7]

The Treasury would

determine what items would be paid.[8]

If

the interest payments on the national

debt are not made, the United States

would be in default, potentially causing

catastrophic economic consequences for the US and the wider world as well. (Effects outside the US are anticipated
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because the United States has a very high gross domestic product with the world's largest single national economy;

because the US is a major trading partner to many countries, including other major world powers who hold its debt

and could demand repayment; and because spending and investment power enable the US to act as a mediator and

economic model.)

According to the US Treasury, "failing to increase the debt limit would... cause the government to default on its legal

obligationsan unprecedented event in American history".

[9]

These legal obligations include paying Social Securityand Medicare benefits, military salaries, interest on the debt and many other items. If the debt ceiling is not raised,

then the Treasury will prioritize the items to pay with its ongoing revenue stream. Treasury could choose to pay

interest so that the US does not default on its sovereign debt.[10]

What is the debt ceiling?

If the Treasury does not collect enough in revenue to pay for expenditures by the Federal Government, it may be

authorized by Congress to issue debt (in other words, borrow money) to pay for the federal budget deficit. Prior to

1917, the Congress had to authorize each round of borrowing directly. In 1917, in order to provide more flexibility to

finance the United States' involvement in World War I, the Congress instituted the concept of "debt ceiling". Since

then, the Treasury can only borrow money as long as the total debt (excepting some small special classes) does not

exceed a ceiling stated by law. To change the debt ceiling, Congress must enact specific legislation and the President

must sign it into law.

The process of setting the debt ceiling is separate and distinct from the regular process of financing government

operations, and raising the debt ceiling neither directly increases nor decreases the budget deficit. The US

government passes a federal budget every year. This budget details projected tax collections and outlays and,

therefore, the amount of borrowing the government would have to do in that fiscal year. A vote to increase the debt

ceiling is, therefore, usually seen as a formality, needed to continue spending that has already been approved

previously by the Congress and the President. The Government Accountability Office explains, "the debt limit does

not control or limit the ability of the federal government to run deficits or incur obligations. Rather, it is a limit on

the ability to pay obligations already incurred."[11] The apparent redundancy of the debt ceiling has led to

suggestions that it should be abolished altogether.[12]

[13]

The United States has had public debt since its inception. Debts incurred during the American Revolutionary War

and under the Articles of Confederation led to the first yearly report on the amount of the debt ($75,463,476.52 on

January 1, 1791). Every President since Harry Truman has added to the National Debt expressed in absolute dollars.

The debt ceiling has been raised 74 times since March 1962,[14]

including 18 times under Ronald Reagan, 8 times

under Bill Clinton, 7 times under George W. Bush and 3 times to date under President Obama.

President Obama opposed one of those increases to the debt ceiling under George W. Bush and criticized Bush for a

lack of leadership. "The fact that we are here today to debate raising America's debt limit is a sign of leadership

failure. It is a sign that the US Government can't pay its own bills," Obama said before a March 16, 2006, vote onraising the debt limit. The Senate narrowly approved raising the limit along partisan lines, 5248, with all Democrats

opposed.[15] This apparent contradiction can be explained by the fact that Democrats and Republicans disagree on

how the government spends money and whatthe money is spent on, not on the idea itself of raising the debt ceiling.
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Impact of budget deficits and long-term debt on debt ceiling debate

The growing anxiety since 2009 over the large United States federal budget deficits and mounting debt led to the

contentious debate over raising the debt ceiling:

According to the Congressional Budget Office (CBO): At the end of 2008, that debt equaled 40 percent of the

nations annual economic output (a little above the 40-year average of 37 percent). Since then, the figure has shot

upward: By the end of fiscal year 2011, the Congressional Budget Office (CBO) projects federal debt will reach

roughly 70 percent of gross domestic product (GDP)the highest percentage since shortly after World War II.

The sharp rise in debt after 2008 stems largely from lower tax revenues and higher federal spending related to the

severe recession and persistently high unemployment in 200811.[16]

[17]

In 2009, the Tea Party movement sprang out of Americans being concerned about the increased government

spending.[18]

[19]

In early 2010, to address concerns of deficits and debt, President Obama established the Bowles-Simpson

Commission to propose recommendations to balance the budget by 2015.[20]

The commission issued their report

in December 2010 but the recommendations were never adopted.

The Tea Party helped usher in a wave of new Republicans in the 2010 mid-term elections[21]

whose major planks

during the campaign included cutting Federal spending[22] and stopping any tax increases.[23] These new

Republicans and the new Republican House majority greatly affected the political debate in 2011 on raising the

debt ceiling.

In early- and mid-2011, Standard & Poor's and Moodys credit rating services issued warnings that United States

could be downgraded because of the continued large deficits and increasing debt.[24]

[25]

[26]

According to CBOs 2011 Long-Term Budget Outlook, without major policy changes the large budget deficits

and growing debt would continue, which would reduce national saving, leading to higher interest rates, more

borrowing from abroad, and less domestic investmentwhich in turn would lower income growth in the United

States.[27]

Through 20102011, the European sovereign debt crisis was playing out, and there were concerns that the United

States was on the same trajectory.[28]

Debt issuance suspension period and alternate methods of funding

When the debt ceiling is reached, the U.S. Treasury can declare a debt issuance suspension period, and utilize

methods other than issuing new debt to acquire funds to meet federal obligations. Several of these methods are

described in detail in an Appendix attached to Secretary Geithner's April 4, 2011 letter to Congress[29]

These

"extraordinary measures" include using some federal employee payroll deductions (those directed to the Civil

Service Retirement and Disability Fund and to the federal employee Government Securities Investment Fund [G

Fund], which is part of a 401(k)-like program known as the Thrift Savings Plan or TSP). These methods have been

used in several previous episodes in which federal debt neared its statutory limit.

[30]

These methods were implemented as of May 16, 2011 (as the current debt ceiling was exceeded) when, in a letter to

Congress, Secretary Geithner declared a debt issuance suspension period, which provides the Secretary authority to

sell assets from the Civil Service Retirement and Disability trust fund and the G Fund of the TSP. According to this

letter, this period could "last until August 2, 2011, when the Department of the Treasury projects that the borrowing

authority of the United States will be exhausted".[31]
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Implications of not raising the debt ceiling

On August 2, without a raise in the debt ceiling, the Treasury will reach the point at which it will, in addition to

being unable to further borrow money to pay its bills, be unable to gather enough funds from alternative sources to

pay for all of the federal government's obligations. While the government has enough income from tax revenues and

other sources to pay some governmental obligations, it would have to choose which obligations to meet and which

not to meet. Choosing which appropriations to pay for does not necessarily amount to defaulting on obligations tobondholders. As an example, satisfying existing interest payments to bondholders, Medicare payments, Social

Security payments, unemployment insurance and defense contractors would leave no remaining funds to pay active

duty military, federal workers, taxpayers due refunds and many other obligations generally considered essential.[32]

Failure to extend the limit may have serious repercussions. This would probably include causing panic in bond

markets and damaging the economic recovery from the Great Recession.[11]

[33]

Such a crisis could throw the United

States back into a recession.

Former Treasury Secretary Lawrence Summers warned of serious consequences of a default in July 2011, including:

(a) higher borrowing costs for the U.S. government (as much as 1% or $150 billion/year in additional interest costs);

and (b) the equivalent of bank runs on the money and other financial markets, potentially as severe as those of

September 2008.[34] Bank failures and a potential bank run, curbed by government intervention, were a major

catalyst of the Global Financial Crisis that caused the Great Recession.

In response to Jim DeMint and other Republican Senators, who suggested that the current level of the debt ceiling

could be maintained by prioritizing payments on the debt above other government spending, Treasury Secretary

Timothy Geithner wrote a letter of reply in late June. He said that this would require "cutting roughly 40 percent of

all government payments", which could only be achieved by "selectively defaulting on obligations previously

approved by Congress". He argues that this would harm the reputation of the United States so severely that there is

"no guarantee that investors would continue to re-invest in new Treasury securities", forcing the government to repay

the principal on existing debt as it matures, which it would be unable to do under any conceivable circumstances. He

concluded: "There is no alternative to enactment of a timely increase in the debt limit."

[35]

Even if the Treasury were to prioritize payments on the debt above other spending and avoid formal default on its

bonds, failure to raise the debt ceiling would force the government to reduce its spending by as much as 10% of GDP

overnight, leading to a corresponding fall in aggregate demand. Such a significant shock, if sustained, is thought to

be able to reverse the recovery and send the country into a recession.[36]

[37]

Deadline

According to the Treasury Department, the deadline to increase the debt ceiling is August 2, 2011, when the U.S.

government would run out of cash to pay all its bills.[38]

According to Barclays Capital the Treasury may run out of

cash around August 10, when $8.5 billion in Social Security payments are due. According to Wall Street analysts,

the U.S. Treasury can't borrow from the capital markets after August 2, but still has enough cash to meet its

obligations until August 15. Analysts also predict that the U.S. Treasury will be able to roll over the $90 billion in

U.S. debt that matures on August 4 and gain additional time to avert a crisis.[39]

No one knows how the financial

market and investors will react if U.S. Treasury is unable to borrow additional funds or meet its financial obligations.

Proposed resolutions

Congress is now considering whether and by how much to extend the debt ceiling (or eliminate it), and what

long-term policy changes (if any) should be made concurrently.[40]

The House of Representatives has refused to raise

the debt ceiling without deficit reduction, voting down a 'clean' bill to increase the debt ceiling without conditions.

The May 31 vote was 318 to 97, with all 236 Republicans and 82 Democrats voting to defeat the bill.[41]

TheRepublicans largely believe a deficit reduction deal should be based solely on spending cuts, including cuts to
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entitlements, without any tax increases, to reduce or solve the long term issue of debt.[42]

President Obama and the

Democrats in the US Congress want an increase in the debt ceiling to solve the short-term borrowing problem, and in

exchange support a decrease in the budget deficit to be funded by a combination of spending cuts and revenue

increases.[43]

Some prominent liberal economists, such as Paul Krugman, Larry Summers, and Brad DeLong, and

prominent investors such as Bill Gross, go even further, and argue that not only the debt ceiling should be raised, but

it should be accompanied by a short-term increase in federal spending (and, therefore, deficit), which would

stimulate the economy, reduce unemployment, and ultimately reduce the deficit in medium to long term.[44]

[45]

Some Tea Party Caucus and other Republicans, however, (including, but not limited to, Senators Jim DeMint, Rand

Paul, and Mike Lee, and Representatives Michele Bachmann, Ron Paul, and Allen West, etc.) are skeptical about

raising the debt ceiling altogether (with some suggesting the consequences of default are exaggerated), arguing that

the debt ceiling should not be raised and "instead the federal debt be cappedat the current limit,"[46]

"although that

would oblige the government to cut spending by almost half overnight."[47]

For more, see "consequences of not

raising the debt ceiling."

Jack Balkin, the Knight Professor of Constitutional Law and the First Amendment at Yale Law School, besides

arguing that the President can invoke Section 4 of the 14th Amendment to solve the crisis (see next section), also

suggests two other ways to solve the debt ceiling crisis: he points out that the U.S. Treasury has the power to issue

platinum coins in any denomination, so it could solve the debt ceiling crisis by simply issuing two platinum coins in

denominations of one trillion dollars each, depositing them into its account in the Federal Reserve, and writing

checks on the proceeds. Another way to solve the debt ceiling crisis, Balkin suggests, would be for the Federal

Government to sell the Federal Reserve an option to purchase government property for $2 trillion. The Fed would

then credit the proceeds to the government's checking account. Once Congress lifts the debt ceiling, the president

could buy back the option for a dollar, or the option could simply expire in 90 days.[48]

Among others, in a report issued by the credit rating agency Moody's, analyst Steven Hess suggested that the

government should consider getting rid of the limit altogether, because the difficulty inherent in reaching an

agreement to raise the debt ceiling creates a high level of uncertaintyand an increased risk of default. As reported

by The Washington Post, "without a limit dependent on congressional approval, the report said, the agency would

worry less about the governments ability to meet its debt obligations."[49]

Additionally, some argue the debt limit is unconstitutional, and suggest that the President could simply declare the

debt ceiling as such to resolve the crisis. For more, see the section entitled "constitutionality of the debt ceiling"

below.

Constitutionality of the debt ceiling

During the debate, some scholars and Democratic lawmakers[50]

suggested that the President could declare that the

debt ceiling violates the United States Constitution and direct the Treasury to issue more debt.[51]

They point to

Section 4 of the Fourteenth Amendment to the United States Constitution, passed in the context of the Civil War

Reconstruction, that states that the validity of the public debt shall not be questioned:

Section. 4. The validity of the public debt of the United States, authorized by law, including debts incurred for

payment of pensions and bounties for services in suppressing insurrection or rebellion, shall not be

questioned. But neither the United States nor any State shall assume or pay any debt or obligation incurred in

aid of insurrection or rebellion against the United States, or any claim for the loss or emancipation of any

slave; but all such debts, obligations and claims shall be held illegal and void.

Arguments:

Jack Balkin, looking into the Legislative History of the Fourteenth Amendment, argues that Section 4 was

adopted precisely to guard against politically-determined default. Referencing the sponsor of the provision,Senator Benjamin Wade, Balkin argues that "the central rationale for Section Four... was to remove threats of
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default on federal debts from partisan struggle." Whereas the debt ceiling gives Congress the power for the United

States to default on its debts by requiring approval of a higher debt limit; Balkin quotes Senator Wade: "every

man who has property in the public funds will feel safer when he sees that the national debt is withdrawn from the

power of a Congress to repudiate it and placed under the guardianship of the Constitution than he would feel if it

were left at loose ends and subject to the varying majorities which may arise in Congress." Balkan claims that this

reveals "an important structural principle. The threat of defaulting on government obligations is a powerful

weapon, especially in a complex, interconnected world economy. Devoted partisans can use it to disrupt

government, to roil ordinary politics, to undermine policies they do not like, even to seek political revenge.

Section Four was placed in the Constitution to remove this weapon from ordinary politics."[52]

Bruce Bartlett, a libertarian former Reagan adviser and columnist for The Fiscal Times, argues that Section 4

renders the debt ceiling unconstitutional, and that the President should disregard the debt limit.[53]

In July 2011, The Nation editor Katrina vanden Heuvel argued that the President could use the public debt section

of the Fourteenth Amendment to force the Treasury to continue paying its debts if an agreement to raise the debt

ceiling is not reached.[54]

Laurence Tribe, professor of Constitutional Law at Harvard Law School, has called the argument that the public

debt clause can nullify the debt ceiling "false hope" and has noted that nothing in the Constitution enabled thepresident to "usurp legislative power" with regards to the debt. Tribe also notes that since Congress has means

other than borrowing to pay the federal debt (including raising taxes, coining money, and selling federal assets),

the argument that the president could seize the power to borrow could be extended to give the President the ability

to seize those powers as well.[55]

Garrett Epps argues that the President would not be usurping Congressional power by invoking Section 4 to

declare the debt ceiling unconstitutional, because the debt ceiling exceeds Congressional authority: calling it

legislative "double-counting," as paraphrased in The New Republic, "because Congress already appropriated the

funds in question, it is the executive branchs duty to enact those appropriations."[56]

In other words, given

Congress has appropriated money via federal programs, the Executive is obligated to enact and, therefore, fund

them; the debt ceiling's limit on debt prevents the executive from carrying out those instructions given byCongress, on the constitutional authority to set appropriations, and is therefore unconstitutional. President Bill

Clinton endorsed this line of argument, saying he would eliminate the debt ceiling using the 14th amendment,

calling it "crazy" that Congress is allowed to first appropriate funds and then gets a second vote on whether to pay

for them.[57]

Furthermore, Matthew Zeitlin argues that, were Section 4 invoked, members of Congress would not have standing

to sue the President for allegedly usurping congressional authority, even if they were willing to do so; and those

likely to have standing would be people "designed to elicit zero public sympathy: those who purchased credit

default swaps which would pay off in the event of government default."[56]

Relatedly, Matthew Steinglass argues

that, because it would come down to the Supreme Court, the Court would not vote in the favor of anyone who

could and would sue: it would rule the debt ceiling unconstitutional. This is because, for the Court to rule touphold the debt ceiling, it would, in effect, be voting for the United States to default, with the consequences that

would entail; and, Steinglass argues, the Court would not do that.[58]

Michael Stern, Senior Counsel to the U.S. House of Representatives from 1996 to 2004, stated that Garrett Epps

"had adopted an overly broad interpretation of the Public Debt Clause and that this interpretation, even if

accepted, could not justify invalidating the debt limit" because "the Presidents duty to safeguard the national debt

no more enables him to assume Congresss power of the purse than it would enable him to assume the judicial

power when (in his opinion) the Supreme Court acts in an unconstitutional manner."[59]

Rob Natelson, former Constitutional Law Professor at University of Montana, argues that "this is not some issue

in the disputed boundaries between legislative and executive power." He continues "Thats why the Constitution

itself (Article I, Section 8, Clause 2) gives only Congress, not the President, the power To borrow Money on thecredit of the United States.In another agrument, Natelson states that Bruce Bartlett "deftly omits a crucial part of
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the quote from the Fourteenth Amendment. It actually says, 'The validity of the public debt of the United States,

AUTHORIZED BY LAW . . . shall not be questioned.' In other words, Congress has to approve the debt for it not

to be questioned. And note that this language refers to existing debt, not to creating new debt. He also neglects to

mention that Section 5 of the Fourteenth Amendment specifically grants to Congress, not to the President,

authority to enforce the amendment."[60]

:

Section 5. The Congress shall have power to enforce, by appropriate legislation, the provisions of thisarticle.

George Madison, General Counsel to the US Treasury, wrote on 8 July 2011 that "Secretary Geithner has never

argued that the 14th Amendment to the U.S. Constitution allows the President to disregard the statutory debt limit"

and that "the Constitution explicitly places the borrowing authority with Congress." He additionally affirmed that

"Secretary Geithner has always viewed the debt limit as a binding legal constraint that can only be raised by

Congress."[61]

President Obama himself later stated that he would not use this method to solve the crisis.

Timeline

February 12, 2010. The most recent increase in the debt ceiling was signed into law by President Obama, after

being passed by the Democratic 111th Congress. It increased the debt ceiling by $1.9 trillion from $12.4 trillion to

$14.3 trillion.[62]

February 18, 2010. President Obama issues an Executive Order to establish the National Commission on Fiscal

Responsibility and Reform, also known as the Bowles-Simpson Commission. The mission of the Commission

was to propose recommendations designed to balance the budget, excluding interest payments on the debt, by

2015. It was tasked to issue a report with a set of recommendations by December 1, 2010.[63]

November 2, 2010. United States midterm elections: Considered a major victory, the Republican Party gained 63

seats in the U.S. House of Representatives, recapturing the majority by 242193 in the 112th Congress.[64]

Major

planks for the House Republicans during the election campaign were cutting Federal spending[65]

and stoppingany tax increases.

[66]

December 1, 2010. The Bowles-Simpson Commission on Fiscal Responsibility and Reform issues its report but

the recommendations fail to win support of at least 14 of the 18 members necessary to adopt it formally.[67]

[68]

The recommendations were never adopted by Congress nor President Obama.

January 6, April 4 and May 2, 2011. Secretary of the Treasury Timothy Geithner sends three letters requesting an

increase in the debt ceiling.[69]

[70]

[71]

January 28, 2011. Moodys Investors Service says it may place a negativeoutlook on the Aaa rating of U.S. debt

sooner than anticipated as the countrys budget deficit widens.[72]

February 14, 2011. President Obama releases his budget proposal for fiscal year 2012.[73]

Republicans criticize

the budget for doing too little to rein in the burgeoning U.S. deficit.[74]

The CBO analysis released in April 2011estimated that the budget would increase total deficits over 10 years by $2.7 trillion: from $6.7 Trillion of the

March 2011 baseline to $9.4 Trillion with the proposed budget.[75]

The Senate rejects the budget proposal on May

25, 2011 (see below).

April 14, 2011. Both the House of Representatives and the Senate voted in favor of the 2011 United States federal

budget, 260167 and 8119 respectively. This budget projected the 2011 deficit to be $1.645 trillion, and

therefore ensured that the debt ceiling would be hit during this fiscal year.

April 15, 2011. On a party-line vote 235193, the House of Representatives passed the Republican 2012 budget

proposal aimed to reduce total spending by $5.8 trillion and reduce total deficits by $4.4 trillion over 10 years

compared to the current-policy baseline.[76]

It included reform to Medicare and Medicaid entitlement programs

which the Democrats criticized as an attempt to leave seniors and poor holding the bag on health care costs. The

criticism resonated with the many in the public who voiced opposition to the proposed changes.[77]

The Senate
http://en.wikipedia.org/w/index.php?title=The_Path_to_Prosperityhttp://en.wikipedia.org/w/index.php?title=The_Path_to_Prosperityhttp://en.wikipedia.org/w/index.php?title=2011_United_States_federal_budgethttp://en.wikipedia.org/w/index.php?title=2011_United_States_federal_budgethttp://en.wikipedia.org/w/index.php?title=Debt_ceilinghttp://en.wikipedia.org/w/index.php?title=Timothy_Geithnerhttp://en.wikipedia.org/w/index.php?title=United_States_Secretary_of_the_Treasuryhttp://en.wikipedia.org/w/index.php?title=Bowles-Simpson_Commissionhttp://en.wikipedia.org/w/index.php?title=112th_Congresshttp://en.wikipedia.org/w/index.php?title=United_States_elections%2C_2010http://en.wikipedia.org/w/index.php?title=Bowles-Simpson_Commissionhttp://en.wikipedia.org/w/index.php?title=111th_Congresshttp://en.wikipedia.org/w/index.php?title=Democratic_Partyhttp://en.wikipedia.org/w/index.php?title=Barack_Obamahttp://en.wikipedia.org/w/index.php?title=George_Madisonhttp://en.wikipedia.org/w/index.php?title=Fourteenth_Amendment_to_the_United_States_Constitutionhttp://en.wikipedia.org/w/index.php?title=Fourteenth_Amendment_to_the_United_States_Constitution


8/12


rejects the budget proposal on May 25, 2011 (see below).

April 18, 2011. Standard & Poor's Ratings Services revised its outlook on U.S. to negative due to recent and

expected further deterioration in the U.S. fiscal profile, and of the ability and willingness of the U.S. to soon

reverse this trend. With the negative outlook, S&P believes there is a likelihood of at least one-in-three of a

downward rating adjustment within two years.[78]

May 16, 2011. The debt ceiling is reached. Secretary Geithner issues a debt issuance suspension period, directing

the Treasury to utilize "extraordinary measures" to fund federal obligations.[79]

May 18, 2011. Bipartisan deficit-reduction talks among the "Gang of Six" high-profile Senators are suspended

when Republican Tom Coburn drops out.[80]

May 24, 2011. Vice President Joe Biden and four Democratic lawmakers begin meeting with the Republican

House Majority Leader Eric Cantor and the Republican Senate Minority Whip Jon Kyl, in an effort to continue

the talks. Cantor says that these talks would lay the groundwork for further discussions between President Obama,

Republican Speaker of the House John Boehner and other leaders of Congress.[81]

May 25, 2011. The Senate rejects both the Republican House budget proposal by a vote of 5740 and the Obama

budget proposal by a vote of 970.[82]

May 31, 2011. The House votes on a bill to raise the debt ceiling without any spending cuts tied to the increase.President Obama asked Congress to raise the debt ceiling in a clean vote that included no other conditions. The

bill, which would have raised the debt ceiling by $2.4 trillion, failed by a vote of 97318. Democrats accused

Republicans of playing politics by holding a vote they knew would fail.[83]

June 23, 2011. Biden's negotiations on the debt ceiling are cut off when both House Majority Leader Cantor and

Senate Minority Whip Kyl walk out over disagreements over taxes.[84]

July 19, 2011. The Republican Majority in the House bring the Cut, Cap and Balance Act (H.R.2560),[85]

their

proposed solution to the crisis, to a vote. They pass the bill by a vote of 234190, split closely along party lines:

229 Republicans and 5 Democrats 'for,' 181 Democrats and 9 Republicans 'against;' it is sent to the Senate for

consideration. The Bill authorized that the debt ceiling be raised by $2.4 trillion AFTER a Balanced Budget

Amendment was passed by Congress. Since Constitutional amendments require a two-thirds majority vote in bothchambers of Congress to pass, a vote for a Balanced Budget Amendment would require more support than the

Cut, Cap and Balance Act bill achieved in the House vote.[86]

July 22, 2011. The Senate votes along party lines to table the Cut, Cap and Balance Act; 51 Democrats voting to

table it and 46 Republicans voting to bring it to debate. Senate Majority Leader Harry Reid called the Act "one of

the worst pieces of legislation to ever be placed on the floor of the United States Senate." Even had it passed

Congress, President Obama had promised to veto the bill.[87]

July 25, 2011. Republicans and Democrats outlined separate deficit-reduction proposals.[88]

July 25, 2011. President Obama and Speaker of the House Boehner addressed the nation separately over network

television with regards to the debt ceiling.[89]

[90]

August 2, 2011. Date projected by the Department of the Treasury that the borrowing authority of the United

States will be exhausted.


9/12


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External links

"Apple Corporation Now Has More Cash on Hand than the U.S. Government"--$76.2 billion vs. $73.8

billion--CNN News July 29, 2011: (http://www.cnn.com/2011/TECH/innovation/07/29/apple. cash.

government/index. html?eref=mrss_igoogle_cnn)
http://www.cnn.com/2011/TECH/innovation/07/29/apple.cash.government/index.html?eref=mrss_igoogle_cnnhttp://www.cnn.com/2011/TECH/innovation/07/29/apple.cash.government/index.html?eref=mrss_igoogle_cnnhttp://www.cnn.com/2011/POLITICS/07/25/boehner.speech.transcript/http://www.cnn.com/2011/POLITICS/07/25/boehner.speech.transcript/http://www.cnn.com/2011/POLITICS/07/25/obama.speech.transcript/http://www.foxnews.com/politics/2011/07/25/reid-boehner-offer-competing-plans-to-cut-spending-raise-debt-ceiling/http://www.foxnews.com/politics/2011/07/25/reid-boehner-offer-competing-plans-to-cut-spending-raise-debt-ceiling/http://www.politico.com/news/stories/0711/59661.htmlhttp://en.wikisource.org/wiki/Constitution_of_the_United_States_of_America#Article_Vhttp://thomas.loc.gov/cgi-bin/bdquery/z?d112:H.R.2560:http://thomas.loc.gov/cgi-bin/bdquery/z?d112:H.R.2560:http://abcnews.go.com/Politics/top-republicans-walk-vp-bidens-debt-talks/story?id=13917319http://abcnews.go.com/Politics/top-republicans-walk-vp-bidens-debt-talks/story?id=13917319http://www.marketwatch.com/story/congress-plans-symbolic-vote-on-us-debt-ceiling-2011-05-31?link=MW_latest_newshttp://www.marketwatch.com/story/congress-plans-symbolic-vote-on-us-debt-ceiling-2011-05-31?link=MW_latest_newshttp://articles.cnn.com/2011-05-25/politics/senate.medicare_1_medicare-overhaul-budget-plan-budget-proposal?_s=PM:POLITICShttp://articles.cnn.com/2011-05-25/politics/senate.medicare_1_medicare-overhaul-budget-plan-budget-proposal?_s=PM:POLITICShttp://www.huffingtonpost.com/2011/05/24/debt-talks-joe-biden-lead_n_866038.htmlhttp://www.huffingtonpost.com/2011/05/24/debt-talks-joe-biden-lead_n_866038.htmlhttp://www.msnbc.msn.com/id/43075563/ns/politics-capitol_hill/t/gang-six-budget-talks-founder-senate/http://www.msnbc.msn.com/id/43075563/ns/politics-capitol_hill/t/gang-six-budget-talks-founder-senate/http://www.treasury.gov/connect/blog/Pages/Geithner-Implements-Additional-Extraordinary-Measures-to-Allow-Continued-Funding-of-Government-Obligations.aspxhttp://www.treasury.gov/connect/blog/Pages/Geithner-Implements-Additional-Extraordinary-Measures-to-Allow-Continued-Funding-of-Government-Obligations.aspxhttp://www.standardandpoors.com/ratings/articles/en/us/?assetID=1245302919686http://www.standardandpoors.com/ratings/articles/en/us/?assetID=1245302919686http://www.foxnews.com/politics/2011/04/15/house-vote-gop-2012-budget/http://www.foxnews.com/politics/2011/04/15/house-vote-gop-2012-budget/http://budget.house.gov/UploadedFiles/KeyFactsSummary.pdfhttp://www.cbo.gov/ftpdocs/121xx/doc12130/04-15-AnalysisPresidentsBudget.pdfhttp://abcnews.go.com/Politics/obama-defends-2012-budget-addresses-deficit-tax-overhaul/story?id=12921014http://abcnews.go.com/Politics/obama-defends-2012-budget-addresses-deficit-tax-overhaul/story?id=12921014http://blogs.abcnews.com/politicalpunch/2011/02/president-obamas-budget-and-the-pending-budget-fight.htmlhttp://blogs.abcnews.com/politicalpunch/2011/02/president-obamas-budget-and-the-pending-budget-fight.htmlhttp://www.moneynews.com/StreetTalk/Moody-sSaysTimeShortensforU-S-DebtOutlook/2011/01/28/id/384299http://www.moneynews.com/StreetTalk/Moody-sSaysTimeShortensforU-S-DebtOutlook/2011/01/28/id/384299http://www.treasury.gov/connect/blog/Pages/secretary-geithner-sends-debt-limit-letter-to-congress.aspxhttp://www.treasury.gov/connect/blog/Pages/secretary-geithner-sends-debt-limit-letter-to-congress.aspxhttp://www.treasury.gov/connect/blog/Pages/letter-to-congress.aspxhttp://www.treasury.gov/connect/blog/Pages/letter.aspxhttp://www.foxnews.com/politics/2010/12/03/deficit-commission-report-fails-advance-congress/http://www.foxnews.com/politics/2010/12/03/deficit-commission-report-fails-advance-congress/


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Article Sources and Contributors 12

Article Sources and Contributors2011 U.S. debt ceiling crisis Source: http://en.wikipedia.org/w/index.php?oldid=442108819 Contributors: Anoyatu, Antony-22, Arzel, Bearcat, Bender235, Bertotherobo, Bmfuller78,

Bookbrad, Btcoal, Btyner, CuriousEric, DougGold, Farcaster, Gobonobo, Gpvos, Groink, HillNo, Itinerant1, Jeff Carr, Jerzeykydd, Jo3sampl, Keraunos, Kinu, Kubigula, Lambiam,

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