The Debt Limit: How Do We Get Out of This Mess?

The United States is on the brink of a devastating debt default, but a bold new effort is underway in the House to help pave the way to fiscal sanity.

U.S. Treasury Building in Washington, D.C.


Paul Savala via Flickr, CC BY 4.0

You’ve probably noticed the recent proliferation of headlines about our looming debt limit crisis. This is for good reason as we are, once again, on the precipice of a disastrous default, and a path out of this manufactured crisis has not yet been settled upon. But what does it all mean? Why is NRDC—which is, after all, an environmental organization—piping up about what seems to be a purely fiscal concern? And how do we get out of this mess without the infliction of devastating and unnecessary financial harm? 

All good questions. I try my hand at tackling them in the plainest terms possible below. 

What is the debt limit? 

To understand the debt limit, you first have to understand what constitutes the national debt. You’ll probably be unsurprised to learn that Congress usually authorizes the federal government to spend more money than it takes in. This fact is sometimes framed to sound dire, but the accumulation of debt is a normal part of governance. Just as one takes out a mortgage to buy a house rather than waiting to save enough funds to pay for it with cash, the government also takes on debt to make important investments of all kinds. How does this work? When spending outpaces revenue, the U.S. Department of the Treasury can issue securities to make up the difference. This is known as “debt held by the public.” The Treasury also carries debt in the form of “intragovernmental holdings,” which are comprised of monies owed to other parts of the federal government to support key programs, like the Social Security trust funds. Of course, the assumption of too much debt can be a bad thing. Whether the federal government carries too much debt and what the way out is from under such debt are complicated questions! I don’t purport to answer those questions here, other than to say that they raise issues that require serious, deliberative thought and concerted, bipartisan intentionality on the part of those who are tackling them.

That brings us to the debt limit (also called the “debt ceiling”), which is a legal cap on the amount of debt that the Treasury can accumulate to cover the federal government’s pre-existing commitments. If the debt limit is reached, the Treasury ultimately would have to miss (or reduce) payments on debt instruments of the type outlined above. Failure to honor debt held by the public would result in a credit downgrade for the United States, shaken confidence in our ability to honor our commitments, and, in the end, global financial mayhem. Failure to honor debt in the form of intragovernmental holdings would lead to the missed payment of, for example, Social Security benefits and military salaries. These failures would comprise what is referred to as a “default” on our debt. All parties agree—with the exception of a handful of real outliers who seem to be at peace with the notion of utter financial chaos—that a default would be unprecedented and utterly catastrophic.

Why is there a debt limit?

A general limit was first placed on the public debt by Congress in 1939 as part of an effort to exert more forceful legislative control over federal borrowing. That limit was enshrined in law and took the form of a hard dollar amount, kind of like the limit on your credit card. Thus, whenever the debt limit needs to be raised, the enactment of a new law is required to set a higher dollar figure. This has been accomplished dozens of times since the debt limit was created by congresses under the control of both parties, and with the signature of both Republican and Democratic presidents.

The notion that we need an additional congressional check over federal borrowing is an odd one, as Congress already controls the executive branch’s revenue and spending, but let’s set that broader conundrum aside for the purposes of this blog. Whatever one thinks of the need for a rigid, redundant legislative control over a process so fundamental to our government’s basic functioning, we all should agree that you need a legislature that is capable, well-informed, and acting in good faith for such a control to be workable. Based on the volume of statements coming from certain quarters of the Capitol—including from members of Congress—that evince a fundamental misunderstanding of what the debt limit is, how it operates, and the terrible consequences of default, one has to wonder whether we’re in real trouble on this front, and if there is a path forward. Fortunately, there does appear to be such a path, and I will address it in detail below.

But first, let’s tackle the elephant in the room.

Why does NRDC care about all this?

On a fundamental level, we all have an interest in good governance and the avoidance of global financial calamity—but that’s not why I’m writing this blog. I’m taking time out of my more standard environmental advocacy to write about the national debt because of the recent effort by the majority leadership in the U.S. House of Representatives to address the pending debt limit crisis. It took the form of a laughable messaging bill that would devastate our nation’s ability to protect the environment and fight climate change while hindering the basic functioning of our government.

Speaker of the House Kevin McCarthy is surrounded by reporters after speaking on the House floor about the Limit, Save, Grow Act on April 19, 2023


Kent Nishimura/Los Angeles Times via Getty Images

At the end of April, with a federal default looming, House majority leadership forced the passage (by a razor-thin margin) of H.R. 2811, which it styled as the “Limit, Save, Grow Act.” The good news: The bill raised the debt limit, albeit for less than a year. The bad news: As the price for doing so…

  • H.R. 2811 recklessly slashed federal spending. “But wait!” one might say. “Aren’t spending cuts necessary to prevent the national debt from continuing to grow?” Well, that’s an understandable question that demands serious legislative soul-searching and an answer of real complexity—and that’s the problem with messaging bills! They counter involved, difficult problems with reductive, extremist solutions that might sound good at first blush but fall apart under actual scrutiny.

    The answer to the question of how one addresses the national debt requires nuance and deliberation. For example, no one likes to be taxed, but there is a very strong argument that certain corporate interests, and the unimaginably wealthy, should be contributing more to the federal fisc by way of taxes. More revenue means a lower deficit between what the federal government makes and what it spends, and a lower deficit means less debt. Are there also cuts out there that would make sense? Sure, probably! But cuts can be painful, and even dangerous, if implemented capriciously; incisive analysis and thoughtful consideration should be a necessary component of any sudden reduction in spending before it is made. In Congress, that’s what the committee process is for, and that’s why there are appropriators with oversight authority over the executive branch.

    No such deliberation happened in the development of H.R. 2811, however. Instead, in the bill’s first few pages, H.R. 2811 casually sets out a series of spending reductions that—if taken in concert with the House majority leadership’s promise to insulate any and all defense spending from their rash austerity measures—would result in cuts of, on average, 22 percent to nondefense discretionary programs across the federal government. These are programs that, for example, safeguard low-wage workers, ensure affordable housing…and protect the environment, which is where we come in. To cite a few of the more outrageous examples in the environmental space, these cuts would:
    • disrupt national parks and stress surrounding communities (via an $830 million cut to the U.S. National Park Service);
    • weaken efforts to prepare for deadly wildfires (by eliminating $337 million in funding for wildfire preparedness);
    • jeopardize work to upgrade water systems and other priority infrastructure (by slashing $986 million from local grant and infrastructure accounts); and
    • slow the replacement of lead pipes while kneecapping efforts to reduce flood threats (by axing $626 million from the U.S. Environmental Protection Agency’s annual funding to replace lead pipes, upgrade drinking water systems, address combined sewer outflows, and support other priority water infrastructure needs).

And those represent just a taste of the harm that H.R. 2811’s reckless cuts would cause. No matter how strongly you feel that the national debt must be addressed, we all can agree that it is a problem that should not be solved by letting our forests burn or allowing poisons to lurk in our drinking water. Unbelievable.

  • H.R. 2811 rolled back important renewable energy incentives that only just became law. That’s right, H.R. 2811 didn’t stop at draconian spending cuts. It also struck many of the vital climate and clean energy incentives that were carried in the Inflation Reduction Act (IRA) just last year. The industry incentives nixed by the bill have proven to be both popular and resoundingly successful, generating a manufacturing renaissance spurred by the pursuit of clean energy. Though the IRA was enacted just nine months ago, it has resulted in an incredible corporate investment of $75 billion in clean energy and the production of solar panels, wind turbines and components, electric vehicles, and advanced EV batteries—all right here in the United States. This investment carries the promise of 60,000 direct jobs in states both red and blue. These incentives also continue to strengthen the domestic supply chain for the building blocks of a modern economy, spurring innovation, productivity, and competitiveness while making important investments for environmental justice and disadvantaged communities.

    So why cut these programs when they provide such a fantastic return on investment for such a bracingly small percentage of the federal budget? Particularly when the notion of “energy security” is all the rage on Capitol Hill, and these programs incentivize the build-out of our country’s green energy infrastructure?

  • H.R. 2811 carried the text of another messaging bill, one that was chock-full of horrendous environmental and dirty energy provisions. That’s right, why take on a very real crisis with a single absurd messaging bill when you can load it up with another extreme piece of legislation? Back in March, the House majority passed H.R. 1, a real gremlin of a bill that would: (1) cut vulnerable communities out of environmental review processes; (2) strip from law vital safeguards that protect the environment and public health; and (3) quixotically force us to double down on our fossil fuel dependence. Indeed, NRDC—and nearly 100 other organizations from across the environmental spectrum—signed a letter detailing the many flaws of H.R. 1 back when it first was considered. We were dismayed, if not surprised, to see that the text of this bill had been air-dropped into H.R. 2811. Its provisions have effectively no relationship to the national debt, and it is a piece of legislation that is so plainly nonserious that, as I write this, the House has not yet even bothered transmitting it to the Senate, despite its passage more than a month ago. In short, H.R. 1 is an anti-environmental wish list that was included in the debt limit bill as a ransom for ensuring our nation’s full faith and credit.

OK, I need to get back to the debt limit, but please bear in mind that the bulleted items above are just the most prominent of H.R. 2811’s ills in the environmental sector. This Trojan horse piece of legislation carries so much more in the way of harmful, unvetted language that would hurt our most vulnerable—blithely adding obstacles to the accessing of key social safety net programs like Medicaid, Temporary Assistance for Needy Families, and the Supplemental Nutrition Assistance Program, for example.

So, what do we do? 

We raise the debt limit before disaster strikes. Of course, for all the reasons set out above, H.R. 2811 cannot be the vehicle for accomplishing this aim, and it is so far gone that it cannot even serve as the starting point for fruitful negotiation. It is the legislative equivalent of screaming, “Your firstborn!” when someone asks you what you want for your 1992 Corolla. In fact, given the importance of raising the debt limit, and the gravity of the consequences if a debt limit raise is not done in a timely fashion, no policy should be held out as a cost for fulfilling this important responsibility. With that said, what’s to be done?

On May 2, the ranking member of the House Committee on Rules, Representative Jim McGovern (MA-02), introduced a resolution that probably appears hyper-technical to anyone not working on Capitol Hill. Called House Resolution 350, it is what’s known in the House as a “rule” (or a “special order of business”) that sets out parameters for the consideration of a particular piece of legislation. Under the House’s default rules for considering bills, there exists the prospect for almost endless debate and, theoretically, infinite amendments; for this reason, important measures typically are considered under “rules” like House Resolution 350 to limit the maximum time for debate, control the offering of amendments, and so forth. McGovern’s rule does precisely this. It provides for the consideration of a measure, H.R. 626, waives points of order against the bill, prevents the Speaker from recessing the House during the legislation’s consideration, and provides for the execution of a single amendment to H.R. 626’s text.

If you clicked on the link to H.R. 626 above, you’re probably saying to yourself, “Huh? This bill is a mishmash of seemingly unrelated ideas, none of which address the debt limit. How does this help?” This is where a little procedural wizardry comes into play. In the House, there is a tool known as a “discharge petition,” which enables rank-and-file members to force the consideration of bills on the House floor if they file a discharge petition with respect to a particular measure, and the petition accumulates 218 signatures. To be susceptible to a discharge petition, a measure must be introduced and sit unreported by committee for 30 legislative days (i.e., days when the House is in session). You also can file a discharge petition for a rule—like House Resolution 350—that provides for the consideration of a bill that has hit the 30-legislative day mark, and such rules need only sit unreported for seven legislative days before ripening for discharge. Importantly, rules that are discharged in this way can provide for an amendment to the bill they target, provided the amendment is “germane” to the bill. 

H.R. 626 was introduced by Representative Mark DeSaulnier (CA-10) back in January, so it has sat untouched in committee for the requisite 30 legislative days. The bill was specifically calibrated to be as broad as possible, and to be referred to as many committees as possible, such that essentially any amendment would be germane to it under the House’s rules. As noted above, McGovern’s House Resolution 350 provides for a single amendment to H.R. 626. What is the text of that amendment, you ask? It is whatever the ranking minority member of the House Committee on Ways and Means, Representative Richard Neal (MA-01), sees fit to place into the Congressional Record at least one day prior to H.R. 626’s consideration. Why the ranking minority member of Ways and Means, you ask? Because Ways and Means is the committee of jurisdiction over the raising of the debt limit.

So, let’s connect the dots here. McGovern’s rule, House Resolution 350, will ripen for discharge seven legislative days after its May 2 introduction (meaning it will be ready to go). Assuming the present House schedule holds, that’ll be on May 17. At that point, a discharge petition will be filed for House Resolution 350. If that petition hits 218 signatures, the door will be unlocked to force the consideration of H.R. 626, with an amendment to be submitted by Neal. I’d bet you dollars to doughnuts that Neal’s amendment will strike the text of H.R. 626 and replace it with a clean debt limit increase. Hallelujah, we’re all saved! Right?

Well, not exactly. A number of obstacles remain, the most notable of which are the following:

  • For the discharge petition for House Resolution 350 to hit 218 signatures, a small number of moderate members of the House’s majority will have to sign it. The Speaker of the House surely will bring massive pressure to bear on them to ensure that they do not.
  • If the discharge petition does hit 218 signatures, the Speaker has a number of procedural tools at his disposal to ensure that the discharged measure is never brought to the floor
  • Even if the discharge petition hits 218 signatures and proceeds, House Resolution 350 still would have to lay over on the “Discharge Calendar” for seven legislative days (with potential for an additional two-legislative day layover thereafter). Thus, depending on how the House schedule shapes up for the rest of May, we might hit the presently projected June 1 default date before the discharge can occur.
  • Even if the above all plays out perfectly prior to a default, the clean debt limit increase still would have to pass the Senate, and 60 senators would have to vote to proceed to its consideration. 

In sum, the discharge petition for House Resolution 350 is no panacea. Ideally, the House, Senate, and White House can come up with a viable route forward through negotiation and compromise—one that does not lay out for sacrifice the many environmental concerns discussed in this article—and they do it before we default. But until that happens, House Resolution 350 is the best path forward. It also provides an objective marker that the public can view to see who is in favor of a clean debt limit increase and, thereby, responsible governance.


If you made it through the above and are still reading this, you obviously care about some combination of the environment, our nation’s financial future, and good government. Thank you. All that remains to be said is this: Do what you can to support a clean debt limit increase. Don’t allow our hard-fought environmental priorities to be held hostage as our nation’s financial future is threatened. Don’t permit a recalcitrant faction of our legislature to trigger a global financial meltdown. Encourage lawmakers to sign the discharge petition for House Resolution 350. And consider doing your part to ensure that we never again are beholden to legislators who would so recklessly lead us to the precipice of ruin.

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