\n\n“The legislation, known as the Budget Control Act of 2011, initially increased the debt ceiling by $900 billion and guaranteed a similar amount in long-term savings across defense and non-defense expenditures. It also set up a super committee of lawmakers who were tasked with finding a set amount of additional spending cuts by late November, or automatic spending cuts would be triggered across the board.<\/p>\n\n\n\n
By the time the bill passed, however, some of the economic damage was already done. Because the US was so close to default, the stock market had already dipped and the cost of borrowing had increased for the government as well. Higher borrowing costs effectively mean the government has to pay more for loans and has fewer resources to spend on public investments like infrastructure.Additionally, in part due to the brinksmanship involved, the credit rating agency S&P downgraded the country\u2019s credit rating for the first time in US history, signaling to potential buyers that taking on US debt wasn\u2019t as safe as it once was, and undercutting global trust in the country\u2019s economy.<\/p>\n\n\n\n
The outcome in 2011 revealed that even getting close to a default was dangerous and had a problematic impact on the economy, experts say. \u201cThis is an entirely human-made crisis that adds extra cost to the taxpayer, that can lead to market volatility, and that\u2019s totally avoidable,\u201d said David Vandivier, a former Treasury Department official.<\/p>\n\n\n\n
\u201cRepeating it doesn\u2019t make sense,\u201d emphasized Furman.<\/p>\n\n\n\n
That warning may go unheeded, however. While Democrats have argued that the debt ceiling \u2014 which covers debts the US government has already incurred \u2014 should be separate from negotiations on the budget and spending, Republicans have indicated that they\u2019re eager to use this opportunity to secure possible savings, even if it incurs risks that became apparent in 2011.”<\/p>\n\n\n\n