Explain the role of the “debt limit” and explain why the Congress has agreed not to deal with it until after 2016 elections.

The federal debt limit (often called the debt ceiling) is the amount of money that the US government is authorized to borrow.  The Constitution says that only Congress can authorize the US government to borrow money.  Therefore, Congress has to either A) authorize each specific debt that the government incurs, or B) authorize borrowing up to a certain limit.  For nearly 80 years, the government has chosen the latter option.  The debt limit, then, is a limit on how much the government can borrow.

Congress has put off dealing with the debt limit until March of 2017.  This is mainly because the debt limit has become so politicized and American politics have become so polarized.  Many Republicans have wanted to use the debt limit to force President Obama to cut spending.  They have tried to say that they will not raise the debt limit until he agrees to various concessions.  However, there are at least three major problems with this. 

First, raising the debt limit does not authorize any new spending.  It only allows the government to borrow so as to pay for things it has already authorized.  In other words, Congress is trying to force the President to cut spending by refusing to pay for spending that Congress itself has authorized.  Second, Republicans in Congress have made demands that they know that President Obama will never accept.  They have essentially, at times, demanded that Obama accept their entire agenda in exchange for them allowing the government to pay for debts it has already incurred.  Finally, if Congress refused to raise the debt limit, the effects could be catastrophic.  The US would, in essence, have to default on its debt.  It would have to refuse to pay back loans it had already taken out.  This could lead to a situation where the US would have to pay much higher interest rates to borrow money because it would no longer be seen as a good credit risk.

Because of these factors, the Congress decided to kick the can down the road.  They knew Obama could not agree to their demands and they knew that the country could not really afford to default on its debts.  Therefore, they gave in, hoping that by March of 2017 there will be a Republican president in office who will not block them from enacting the policies that they favor.