In the worst political showdown over the U.S. debt limit to date, a little-known former Treasury official in 2011 helped convince lawmakers that raising the ceiling was the only option. He’s back at it now, but from a much higher perch: chair of the Federal Reserve.
Jerome Powell, a financier who was also then serving at a Washington think-tank, criss-crossed Capitol Hill in 2011 to shoot down alternatives to boosting the debt limit, at a time when a number of Republicans were shrugging off warnings from then President Barack Obama’s Treasury Department.
Then — as now — some lawmakers were starting to question whether a payments default would really be so bad. Powell rattled the cage until a last-minute deal averted a default. While his interventions didn’t forestall a damaging downgrade of the U.S. sovereign credit rating, they did pave Powell’s path to join the Fed board.
