Four years ago, a Democratic senator declared on the Senate floor that he was against raising the nation's debt ceiling.
"The fact that we are here today to debate raising America's debt limit is a sign of leadership failure," the senator said.
That was Sen. Barack Obama in 2006, shortly before he voted against it. Now President Obama finds himself in the awkward position of telling his former colleagues in Congress that it's critical to raise the limit. Failure to do so could have catastrophic consequences for the economy, his administration has warned.
Obama's change in position — rated a Full Flop by PolitiFact — is a reminder that the debt ceiling vote, an uncomfortable necessity for a Congress that routinely spends more than it can afford, has been a convenient playground for partisan politics. Historically, the vote has been shouldered by the party in power. That freed the minority party to harrumph about lack of leadership, fiscal irresponsibility and running up the nation's credit cards.
This time, though, the dynamics are different.
Against the backdrop of a fragile economic recovery, a power split in Congress and a new urgency to address the nation's rising debt, the vote in the next few weeks will not be automatic. Many Republicans — and more than a few Democrats — are insisting on budget cuts or other belt-tightening measures.
"I think that not raising the debt limit would have serious … implications for the worldwide economy and jobs here in America. But having said that, we're just not going to do the typical Washington thing, roll over, increase the debt limit, without addressing the underlying problems," House Speaker John Boehner said.
The possibility that Congress won't raise the debt ceiling is making some people nervous, particularly those who watch international financial markets. Jamie Dimon, the chairman and CEO of JPMorgan Chase, said last month that a default would be "catastrophic" for the U.S. economy, adding, "This chatter about not meeting our obligations, I just don't understand it. It's a moral obligation to ourselves and anyone who owns U.S. debt. They should know the United States is good for its money, period."
The danger of default
The debt ceiling is like a spending limit on a gargantuan credit card. It is the amount of debt the United States is allowed to hold, usually from issuing U.S. Treasury securities in exchange for cash from investors. If the government needs to go over, it has to ask Congress for permission.
The limit stands at $14.3 trillion. But that's not high enough.
U.S. Treasury Secretary Timothy Geithner said it must be raised by May 16 to allow the government to keep up with its obligations. The Treasury can juggle accounts until August, but after that, options would run out.
Failure to raise the debt limit and cover the nation's debts would be unprecedented in American history, Geithner has said, and could shake up international markets. "Even a very short-term or limited default would have catastrophic economic consequences that would last for decades," Geithner said in a letter to Congress this year.
Many conservatives say the government will meet its legal obligations. Talk of default is overstated, they say.
"It would be a disaster if we defaulted on our debt. It would be a disaster if we were hit by an asteroid. I think being hit by an asteroid is a more likely scenario," said J.D. Foster, an expert on fiscal policy with the conservative Heritage Foundation. He suggests Congress look for dramatic spending cuts or offer guidance through legislation on which debts should be paid first.
In 2006, when Republicans were in control of Congress and the White House, Obama and the Democrats did the complaining.
"I have no problem holding the line on spending but believe that it must be done in the context of a more responsible approach to tax policy. We must consider rolling back the tax cut for the wealthiest Americans," said Sen. Dianne Feinstein, D-Calif.
Republicans, meanwhile, said what some Democrats are saying now — that the vote should not be tied to budget reforms.
"Refusing to raise the debt limit is like refusing to pay your credit card bill — after you've used your credit card," said Sen. Charles Grassley, R-Iowa.
The votes — and the rhetoric — have been predictable.
Indeed, an analysis of the past 10 years of votes on the debt limit by the nonpartisan Tax Policy Center shows the vote typically splits along partisan lines, with the president's party in support.
For years, Congress has seemed tangled in partisan knots on nearly everything. But the current power split — Democrats control the Senate, Republicans control the House — means the parties must work together to pass legislation that both sides consider vital.
History suggests that could lead to more cooperation. The Tax Policy Center's analysis of debt limit votes shows that when government was divided during the Bush administration — Republicans controlling the presidency, Democrats controlling at least one chamber of Congress — the debt limit increase passed on a bipartisan basis.
Ideally, negotiations on the debt limit would include negotiations for the 2012 budget and a long-term budget plan, said Marc Goldwein, policy director for the bipartisan Committee for a Responsible Federal Budget. Coming to agreement on all three issues would reassure investors at home and abroad.
But in the near term, Goldwein sides with those who say raising the debt limit is critical. "We can't not increase the debt limit. 'Mistake' doesn't begin to describe it. You can play games for a little while, but ultimately, if we let the debt exceed the debt limit, we're going to default."