Garrett Epps: The Civil War Roots of the Debt Ceiling Crisis

The present-day Republican Party is like a big rowdy family who live next door and come out into the yard occasionally to point guns at your house. Usually, they don’t kill you. There may be an exception coming up, though: the ongoing battle over the federal debt ceiling, a statute that sets an upper limit on how much money the federal government can borrow to, among other things, repay the interest on the federal bonds that constitute most of the national debt.

For the third time in the past decade, the Republican Party is suggesting that it might not feel like going along with a debt ceiling increase.

This is not the same as threatening a government shutdown unless Congress passes a budget resolution. Government shutdowns are very, very bad for the economy and the world reputation of the United States. We know because we have had three in the 21st century; in each instance, it was because Republicans in Congress tried to hold a Democratic president hostage to their unreasonable demands.

But the U.S. has never defaulted on its national debt. That, sane economists agree, would be an economic catastrophe. It would tank the U.S. economy—and probably the world’s—overnight and deal a blow to American credit that would likely never be repaired.

But Republicans find it fun to think about. They are now, once again, threatening to tank the nation’s credit if they don’t get their way. In a letter to President Biden dated August 10, 2021, 47 of the 50 Republican senators announced flatly that “we will not vote to increase the debt ceiling, whether that increase comes through a stand-alone bill, a continuing resolution, or any other vehicle.” Their reasoning is that public debt is a “problem created by Democrat spending. Democrats will have to accept sole responsibility for facilitating it.”

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This partisan threat, however, takes us back to Civil War–era issues, because it violates the Fourteenth Amendment, ratified in 1868. Here’s why: After the collapse of the “Confederate States,” southern whites found themselves focusing on the national debt. They didn’t want to pay it.

Almost nonexistent at the time of “secession,” the debt had increased thirtyfold by the time of Appomattox. Most of this money was raised by the sale of government bonds to investors at home and abroad. It was used to build and maintain the weapons, railroads, iron mills, naval vessels, and armament factories that created the North’s mighty industrial and military machine—one that, after an uncertain start, had crushed the South’s ability to resist. Now the time had come to begin paying back those who had opened their coffers to save the Union.

The white South, however, didn’t want to be part of paying it back. “What, ruin us, and then make us pay the cost of our own whipping?” one white South Carolinian complained to Sidney Andrews of the Chicago Tribune. “I reckon not.”

In fact, white southerners figured that the Union owed them money—a lot of money. Yankee meddling, after all, had destroyed slaveholders’ “property” rights in their slaves—capital assets that, in the words of the Yale historian David Blight, amounted to “the largest single financial asset in the entire U.S. economy.” The divested slave owners wanted compensation for what they saw as an act of theft.