Almost half of U.S. registered voters said Congress should not increase the nation’s borrowing limit, according to a new Morning Consult poll. Twenty-four percent of respondents said lawmakers should pass a bill that would allow the federal government to borrow more money, while 27 percent have no opinion on the matter.
At the same time, a plurality – 40 percent – said an economic crisis would ensue if Capitol Hill failed to raise the country’s debt limit. That contrasts with the 30 percent who said no such catastrophe would ensue.
Alice Rivlin, former director of both the Congressional Budget Office and the Office of Management and Budget, said in an interview this week that the out-of-sync responses are due to the issue’s complexity.
“What people don’t understand about the debt ceiling is that it applies to past actions and paying your bills,” said Rivlin, who was the director of OMB from 1994 to 1996 and is now a senior fellow at the Brookings Institution. “It doesn’t have anything to do with the size of the debt.”
The poll comes a little more than a week after the expiration of a debt-limit suspension agreement that forced the Treasury Department to begin taking extraordinary measures to prevent the U.S. from defaulting on its debt. Those measures, according to the CBO, will only allow the government to meet its payment obligations until sometime in October or November, when the issue will once again come to a head on Capitol Hill.
Last week, a group of conservative House Republicans voiced their frustration with their party’s record on the issue by saying Speaker John Boehner (R-Ohio) has no strategy to ensure a debt limit increase is coupled with an overhaul of the nation’s finances.
For attendees at the American Bankers Association Government Relations Summit in Washington this week – a conference that brings together more than 1,000 community bankers to meet with lawmakers and regulators – the question of whether to raise the debt ceiling was less important than the effects of political gridlock in their communities.
“For the person on the street, it’s the inability for Congress to come together to solve this that is the main problem,” said Craig W. Best, president and chief executive officer of Peoples Security Bank & Trust in Scranton, Penn.
The ongoing clash between congressional Republicans and the White House tracks back to the summer of 2011, when the new Republican majority in the House balked at raising the debt limit without simultaneous deficit-reduction measures. The standoff panicked investors and financial analysts, who worried about the market reaction to the U.S. defaulting on its payments.
The eventual compromise, the Budget Control Act of 2011, coupled a debt limit increase with future spending cuts. Similar standoffs occurred in 2012 and 2013.
The Morning Consult poll found that 79 percent of respondents expressed concern that another debt-ceiling confrontation might jeopardize the U.S. credit rating. The 2011 fallout prompted Standard & Poor’s to downgrade the nation’s credit rating from its sterling AAA status for the first time.
Yet credit ratings agencies such as Moody’s Investors Service have indicated recently that another debt-ceiling standoff would not put the nation’s rating at risk. Sovereign credit ratings provide an evaluation of the risks involved with investing in a country and so affect the attractiveness of a nation’s bond offerings.
A spokesman for Standard & Poor’s said the current U.S. rating already takes political gridlock into account.
“Our AA+ rating on the U.S., which we lowered in August 2011 following the 11th-hour budget agreement (The BCA), already incorporates this level of partisan discord which is being further demonstrated by the current budget debate,” John Piecuch said in an email. “The political brinkmanship is a key factor why our rating is no longer AAA.”
A respondent’s political affiliation was likely to correlate with their position on the debt ceiling. Sixty-eight percent of Republicans said that Congress should not raise the limit again this fall, while 14 percent said the debt ceiling should be increased. Democrats were almost evenly split on the question, with about one-third on each side of the issue.
Democratic respondents were more certain about the effects of not raising the debt ceiling – 45 percent said financial turmoil would follow. Nineteen percent of Democrats said nothing significant would happen if no action is taken.
Thirty-five percent of Republicans said failing to raise the debt limit would result in economic catastrophe, while 41 percent said no such crisis would ensue.
The poll was conducted among a national pool of 1,004 registered voters on March 22. The margin of error is plus or minus 3.1 percentage points.