With most of the focus in Washington, D.C., being centered on the repeal and replacement of the Affordable Care Act, a topic that had garnered a great deal of attention in the past seems to be flying under the radar: the debt ceiling. This disparity in media coverage will more than likely continue, but in the weeks ahead, the debt ceiling debate definitely will be heating up.

What Is It?

The debt ceiling, also known as the debt limit, is the total amount of money the U.S. government is allowed to borrow to meet its legal obligations. According to the Treasury Department, since 1960, Congress has acted 78 times to permanently raise, temporarily extend or revise the definition of the debt limit. For the record, adjustments have been made 49 times and 29 times under Republican and Democratic presidents, respectively.

Recent Episodes

Two of the more noteworthy episodes in the recurring debt ceiling saga occurred relatively recently. The first, and perhaps the most infamous, occurred in 2011. As you may recall, politics was in full play as President Obama and the House Republicans each vied to hold sway, but unfortunately, a budget impasse ensued, with raising the debt ceiling being held hostage in the process. Ultimately, the two aisles came together and produced the Budget Control Act (BCA) of 2011, which not only dealt with budgetary issues but also ended up increasing the debt limit in three steps by a total of $2.1 trillion, to $16.4 trillion.

However, the BCA was too little, too late, as the S&P 500 still decided to downgrade the U.S. credit rating a notch to AA+ on August 5, 2011, only days after the legislation was signed into law. The move reflected S&P’s opinion that the BCA “falls short of what…would be necessary to stabilize the government’s medium-term debt dynamics.” In addition, the S&P also cited “political brinksmanship” making “America’s governance and policymaking becoming less stable, less effective and less predictable.”