On Thursday, Treasury Secretary Jack Lew warned that the federal government will run out of cash on November unless Congress raises the debt ceiling to increase Uncle Sam’s borrowing authority. Under pressure from hard liners in his own party, Senate Majority Leader Mitch McConnell is returning to his role as hostage-taker, threatening to block the debt limit hike unless President Obama agrees to cuts in Medicare and Social Security spending. But a default by the United States, as outgoing House Speaker John Boehner (R-OH) first warned in 2011, “would be a financial disaster, not only for our country but for the worldwide economy.”
Which is why Boehner and McConnell should simply do for President Obama what they did for President Bush. In November 2004, they gave Bush a “clean,” $800 billion boost in the debt ceiling with no strings attached. With the current annual budget deficits at an eight-year
that would give the Treasury almost two years before coming back to Congress and the new president to ask for more.
That October, President Bush called for his fourth hike in the nation’s borrowing authority. His Treasury Secretary John Snow warned, “Given current projections, it is imperative that the Congress take action to increase the debt limit by mid-November,” adding that his arsenal of fiscal tools, including tapping money intended for the civil service retirement fund, “will be exhausted.”
Boehner’s predecessor made it clear that President Bush had nothing to worry about. As the Washington Post recounted that October:
“Typically with Congress, they do it when they need to do it,” said John Feehery, spokesman for House Speaker J. Dennis Hastert (R-Ill.). “And we’ll do it when we need to do it.”
And do it they did. But as the New York Times explained on November 17, 2004, Bush had to wait for his debt ceiling increase for a very simple reason:
Faced with the prospect of a government unable to pay its bills, the Senate voted on Wednesday to raise the federal debt limit by $800 billion.
Though an increase in the debt ceiling was never in doubt, Republican leaders in both houses of Congress postponed action on it last month, until after the elections, to deprive Democrats of a chance to accuse them of fiscal irresponsibility.
The ironies in that 2004 debt limit expansion didn’t end there, as you’ll see below.