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The History Of The Debt Ceiling

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The History Of The Debt Ceiling

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The History Of The Debt Ceiling

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ROBERT SIEGEL, Host:

But Robert Smith of our Planet Money team reports that the whole idea of a debt limit was meant to make things easier.

ROBERT SMITH: One hundred years ago, it all seemed so straightforward.

SMITH: Congress appropriates all monies.

SMITH: Don Ritchie, the Senate historian, says when Congress wanted to spend, it spent. And if it needed to borrow, it approved the sale of a bunch of Treasury bonds.

SMITH: They were thinking ahead as to what monies would be needed.

SMITH: Susan Irving from the Government Accountability Office says in the old days, Congress would consider each new piece of debt individually.

SMITH: And they would literally approve the form of the security, what the duration was going to be.

SMITH: So this could take all day long. You could say bridges, post offices, a canal through Panama.

SMITH: So much for shoeing the horses for the Department of X, I mean, really.

SMITH: Congressmen earned their salaries back in those days. But with the start of World War I, such due diligence became way too complex.

SMITH: You think about the number of decisions that go on during a war. You know, suddenly, if they're going to have to approve every single one, you're coming in sort of constantly. Oh, now we have to borrow up to so much to build up more tanks.

SMITH: So the wartime Congress said enough, and it delegated the hard part. Hey, Treasury Department, they said, you borrow whatever you have to in order to cover our spending, OK? But Don Ritchie says that Congress was wary about giving too much power over to the Treasury.

SMITH: They knew they had to do it. There was an urgency to it. But one way to control it of course was to say you have a cap, there's - you just can't go beyond that limit.

SMITH: But there's always a lot of drama. Congress argues back and forth on the debt limit, and the Treasury tries every trick it can to keep the U.S. from running out of cash.

SMITH: You see the daily Treasury statement. You see the buildup of a cash balance. You see Treasury doing constant forecasting.

SMITH: Robert Smith, NPR News, New York.

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