Danger and deja vu: what 2011 can tell us about the US debt ceiling crisis

theguardian.com:

Angry at the size of the government debt, House Republicans have passed a bill that ties spending cuts to any lifting of the US’s debt limit. A tense fight is escalating, with Democrats refusing to budge and hard-line Republicans digging in. Without a solution, economists and others warn, the US could be plunged into an “economic catastrophe”.

You can be forgiven a sense of déja vu. This has all happened before. Only this time, it could be worse.

The federal government has a legal maximum on how much debt it can accumulate –often called the debt ceiling or the debt limit. Congress has to vote to raise that limit and has done 78 times since 1960 – often without fuss. But in recent years, the debt negotiations have become Washington’s most heated – and potentially dangerous – debate.

This year’s fight looks like the most high-risk one since 2011, when Republicans used the debt limit debate as a bargaining chip for spending cuts. It was a fight to the bitter end. One former congressman told the New York Times that the battle drew “parallels and distinctions with other tumultuous times such as the civil war”.

With stock markets reeling and 72 hours left before the US would have defaulted on its debts, a disaster that threatened to wreak havoc on the economy, Republicans and Democrats finally agreed on a bill that raised the debt ceiling by $900bn and cut spending by nearly the same amount.

For Republicans, particularly the new rightwing Tea Party members who refused to budge even as default loomed, it was a political win.

Politics are once again deeply embedded in this year’s debt ceiling debate and many see a mirroring of the debt ceiling crisis of 2011.

The House speaker, Kevin McCarthy, is caught between his party’s moderate and