Editing United States debt-ceiling crisis of 2011 (section)

==Context==
Under US law, an administration can spend only if it has sufficient funds to pay for it. These funds can come either from tax receipts or from borrowing by the [[United States Department of the Treasury]]. Congress has set a debt ceiling, beyond which the Treasury cannot borrow (this is similar to a [[credit limit]] on a [[credit card]]). The debt limit does not restrict Congress's ability to enact spending and revenue legislation that affects the level of debt or otherwise constrains fiscal policy; it restricts Treasury's authority to borrow to finance the decisions already enacted by Congress and the President. Congress also usually votes on increasing the debt limit after fiscal policy decisions affecting federal borrowing have begun to take effect.<ref>{{cite web|title=Analysis of 2011-2012 Actions Taken and Effects of Delayed Increase on Borrowing Costs|url=http://www.gao.gov/products/GAO-12-701|publisher=Government Accountability Office|access-date=November 27, 2012}}</ref> In the absence of sufficient revenue, a failure to raise the debt ceiling would result in the administration being unable to fund all the spending which it is required to do by prior acts of Congress. At that point, the government must cancel or delay some spending, a situation sometimes referred to as a partial government shut down.

In addition, the Obama administration stated that, without this increase, the US would enter [[sovereign default]] (failure to pay the interest and/or principal of US treasury securities on time) thereby creating an international crisis in the [[financial markets]]. Alternatively, default could be averted if the government were to promptly reduce its other spending by about half.<ref>[http://www.slate.com/id/2300207/ ''It's Not "Default"'' By Annie Lowrey at Slate]</ref><ref>[http://www.realclearpolitics.com/articles/2011/04/22/the_truth_about_the_debt_ceiling_and_default_109633.html ''The Truth About the Debt Ceiling and Default'' By Sen. Pat Toomey at realclearpolitics.com]</ref><ref>[http://www.creditwritedowns.com/2011/05/debt-ceiling-chance-default.html ''Debt Ceiling: No Chance of US default'' By Warren Mosler at creditwritedowns.com]</ref>

An increase in the debt ceiling requires the approval of both houses of Congress. Republicans and some Democrats insisted that an increase in the debt ceiling be coupled with a plan to reduce the growth in debt. There were differences as to how to reduce the expected increase in the debt. Initially, nearly all [[United States Republican Party|Republican]] legislators (who held a majority in the House of Representatives) opposed any increase in taxes and proposed large spending cuts. A large majority of [[United States Democratic Party|Democratic]] legislators (who held a majority in the Senate) favored tax increases along with smaller spending cuts. Supporters of the [[Tea Party movement]] pushed their fellow Republicans to reject any agreement that failed to incorporate large and immediate spending cuts or a [[constitutional amendment]] requiring a [[balanced budget]].<ref>{{cite news|url=https://www.cbsnews.com/8301-503544_162-20084416-503544.html|title=McCain blasts "bizarro" Tea Party debt limit demands|publisher=CBS News|author=Stephanie Condon|date=July 27, 2011|access-date=July 30, 2011}}</ref><ref name="FoxNews_20110725">{{cite news|url=http://www.foxnews.com/politics/2011/07/25/reid-boehner-offer-competing-plans-to-cut-spending-raise-debt-ceiling/|title=Reid, Boehner Outline Competing Deficit Plans|publisher=Fox News|agency=[[Associated Press]]|date=July 25, 2011|access-date=July 29, 2011}}</ref>