Judging from the NY Times coverage of the 1917 episode, legislators paid little attention to the implications of mandating a ceiling. They focused instead on Treasury Secretary McAdoo’s request for a higher borrowing limit so as to fund an expensive war effort. The ceiling was created to empower, not rein in, Treasury (prompting a failed effort to create a congressional committee to oversee Treasury’s actions). Similarly, the creation of the aggregate ceiling in 1939 reflected congressional deference to Treasury, granting the department flexibility in refinancing short term notes with longer term bonds. As the Senate floor debate makes clear, senators viewed the move as removing a partition in the law that hampered Treasury’s ability to manage the debt.
……. This seems to be a case of the often unintended consequences of institutional design. That is, we can’t always understand why we have a particular institution or practice by looking only at its contemporary usage. Moreover, institutions crafted in a specific context to solve a particular problem often prove sticky, taking on new significance once politicians discover new ways to exploit them. The often unintended consequences of institutional design will likely be central to any broader explanation of the evolving politics of the debt limit.
That is Sarah writing on the Monkey Cage blog.
I was struck by this post because I picked up Pierson’s Book – Politics in Time – today and couldn’t put it down. I highly recommend it for those of you out there interested in the temporal dynamics of institutional design and development.
Also, I just discovered this (in Pierson, 2004 p. 41): Stockman Reagan adviser in 1981 said of Social Security refrom that he didn’t want to waste “a lot of political capital on some other guys problem in the year 2010.” He was only one year off.