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CRS Updates Report on Debt Limit History

APR. 5, 2011

RL31967

DATED APR. 5, 2011
DOCUMENT ATTRIBUTES
  • Authors
    Austin, D. Andrew
    Levit, Mindy R.
  • Institutional Authors
    Congressional Research Service
  • Subject Area/Tax Topics
  • Jurisdictions
  • Language
    English
  • Tax Analysts Document Number
    Doc 2011-7337
  • Tax Analysts Electronic Citation
    2011 TNT 67-28
Citations: RL31967

 

D. Andrew Austin

 

Analyst in Economic Policy

 

 

Mindy R. Levit

 

Analyst in Public Finance

 

 

April 5, 2011

 

 

Congressional Research Service

 

 

7-5700

 

www.crs.gov

 

RL31967

 

 

Summary

Total debt of the federal government can increase in two ways. First, debt increases when the government sells debt to the public to finance budget deficits and acquire the financial resources needed to meet its obligations. This increases debt held by the public. Second, debt increases when the federal government issues debt to certain government accounts, such as the Social Security, Medicare, and Transportation trust funds, in exchange for their reported surpluses. This increases debt held by government accounts. The sum of debt held by the public and debt held by government accounts is the total federal debt. Surpluses reduce debt held by the public, while deficits raise it. Total federal debt outstanding was $14,251 billion on April 1, 2011. The U.S. Treasury projects the federal debt will reach its statutory limit before May 16, 2011, although extraordinary measures could extend Treasury's borrowing capacity until July 8, 2011. Tax policy, spending changes, and economic trends could affect that timing. Without a debt limit increase, funding federal operations after the middle of 2011 may be complicated.

A statutory limit has restricted total federal debt since 1917, when Congress passed the Second Liberty Bond Act. Congress has voted to raise the debt limit 10 times since 2001. Deficits each year since 2001 and the persistent increases in debt held by government accounts repeatedly raised the debt to or near the limit in place at the time. Congress raised the limit in June 2002, and by December 2002 the U.S. Department of the Treasury asked Congress for another increase, which was passed in May 2003. In June 2004, the Treasury asked for another debt limit increase. After Congress recessed in mid-October 2004 without acting, the Secretary of the Treasury told Congress he could avoid exceeding the debt limit would suffice only through mid-November. Congress approved a debt limit increase in a post-election session, which the President signed on November 19, 2004. In 2005, reconciliation instructions in the FY2006 budget resolution (H.Con.Res. 95) included a debt limit increase. The Secretary of the Treasury sent letters warning Congress that the Treasury would exhaust its options to avoid default by mid-March 2006. Congress passed an increase that the President signed on March 20. The House indirectly approved legislation (H.J.Res. 43) to raise the debt limit by $850 billion to $9,815 billion. The Senate approved the resolution on September 27, 2007, and the President signed it two days later.

The current economic slowdown led to sharply higher deficits in recent years, which led to a series of debt limit increases. The Housing and Economic Recovery Act of 2008 (H.R. 3221), signed into law (P.L. 110-289) on July 30, 2008, included a debt limit increase. The Emergency Economic Stabilization Act of 2008 (H.R. 1424), signed into law on October 3 (P.L. 110-343), raised the debt limit again. The debt limit rose a third time in less than a year to $12,104 billion with the passage of the American Recovery and Reinvestment Act of 2009 on February 13, 2009 (ARRA; H.R. 1), which was signed into law on February 17, 2009 (P.L. 111-5).

The House's adoption of the conference report on the FY2010 budget resolution (S.Con.Res. 13) on April 29, 2009, triggered the automatic passage of H.J.Res. 45 to raise the debt limit to $13,029 billion. In August 2009, Treasury reportedly said that the debt limit would be reached in mid-October, although it later stated that the limit would not be reached until December 2009. H.R. 4314, passed by the House on December 16, 2009, and by the Senate on December 24, raised the debt limit to $12,394 billion when the President signed the measure (P.L. 111-123) on December 28. On January 28, the Senate passed an amended version of H.J.Res. 45, which the House passed on February 4 and the President signed on February 12 (P.L. 111-139), raising the limit to $14,294 billion. This report, written with the assistance of Joseph McCormack, will be updated as events warrant.

                                Contents

 

 

 Introduction

 

 

      The Debt Limit and the Treasury

 

 

      Why Have a Debt Limit?

 

 

 A Brief History of the Federal Debt Limit

 

 

      Origins of the Federal Debt Limit

 

 

      World War II and After

 

 

 The Debt Ceiling in the Last Decade

 

 

      The Debt Limit Issue in 2002

 

 

           Resolving the Debt Limit Issue in 2002

 

 

      The Debt Limit Issue in 2003

 

 

      The Debt Limit Issue in 2004

 

 

      The Debt Limit Issue in 2005, 2006, and 2007

 

 

      The Economic Slowdown and Federal Debt

 

 

           Fiscal Policy Considerations

 

 

           Raising the Debt Ceiling in 2008, 2009, and 2010

 

 

           Deficit Estimates

 

 

 Concluding Comments

 

 

 Further Reading

 

 

 Figures

 

 

 Figure 1. Components of Federal Debt As a Percentage of GDP, FY1940-FY2009

 

 

 Tables

 

 

 Table 1. Components of Debt Subject to Limit, FY1996-FY2010

 

 

 Table 2. Increases in the Debt Limit Since 1993

 

 

 Table A-1. Debt Subject to Limit by Month, September 2001-December 2010

 

 

 Appendixes

 

 

 Appendix. Debt Subject to Limit by Month Since September 2001

 

 

 Contacts

 

 

 Author Contact Information

 

 

Introduction

The statutory debt limit applies to almost all federal debt.1 The limit applies to federal debt held by the public (that is, debt held outside the federal government itself) and to federal debt held by the government's own accounts. Federal trust funds, such as Social Security, Medicare, Transportation, and Civil Service Retirement accounts, hold most of this internally held debt.2 The government's surpluses or deficits determine essentially all of the change in debt held by the public.3 The government's on-budget fiscal balance, which excludes a small U.S. Postal Service net surplus or deficit and a large Social Security surplus of payroll taxes net of paid benefits, does not directly affect debt held in government accounts.4 Increases or decreases in debt held by government accounts result from net financial flows into accounts holding the debt, such as the Social Security Trust Fund. Legal requirements and government accounting practices also affect levels of debt held by government accounts.5

At the end of April 1, 2011, total federal debt outstanding was $14,251 billion, and debt subject to the debt limit was $14,199 billion, about $95 billion below the current statutory debt limit of $14,294 billion.6 The U.S. Treasury said it will draw down the Supplementary Financing Program (SFP), an initiative intended to help manage monetary policy, from $200 billion to $5 billion, which will provide additional headroom under the limit.7 Given the size of the FY2011 federal deficit, estimated at $1,480 billion by the Congressional Budget Office (CBO) in January 2011, that additional headroom may not provide substantial additional time before the debt limit nears.8

The U.S. Treasury projects the federal debt will reach its statutory limit before May 16, 2011, although extraordinary measures could extend Treasury's borrowing capacity until July 8, 2011.9 The Treasury Secretary, Timothy Geithner, previously estimated the debt limit would be reached between April 15 and May 31, 2011.10 Some Wall Street analysts have been expecting federal debt to near its limit in that time frame, although many factors, including federal tax policy and the strength of the economic recovery, could affect federal debt trends.11 On January 6, 2011, Treasury Secretary Geithner sent a letter to Senate Majority Leader Harry Reid requesting an increase in the debt limit. At that time, Secretary Geithner stated that federal debt would likely reach its statutory limit between March 31 and May 16, 2011.12 Without a debt limit increase, the U.S. Treasury may face difficulty in funding federal operations after the middle of 2011.

The Debt Limit and the Treasury

Standard methods of financing federal activities or meeting government obligations used by the U.S. Department of Treasury (Treasury) can be hobbled when federal debt nears its legal limit. The government's income and outlays vary over the course of the year, producing monthly surpluses and deficits that affect the level of debt, whether or not the government has a surplus or deficit for the entire year. The government accounts holding federal debt also can experience monthly deficits and surpluses, even for the major accounts that usually show annual surpluses. The ability to borrow is central to Treasury cash management systems that handle fluctuations in federal revenues and outlays. When federal debt has neared the debt limit in the past, limiting the U.S. Treasury's borrowing authority, financial management has become more complicated.

If the U.S. Treasury were precluded from borrowing due to a binding debt limit in times when federal outlays outpaced revenues, the government would no longer meet all of its legal obligations in a timely manner.13 If the limit prevents the Treasury from issuing new debt to manage short-term cash flows or to finance an annual deficit, the government may be unable to obtain the cash needed to pay its bills or it may be unable to invest the surpluses of designated government accounts (federal trust funds) in federal debt as generally required by law. In either case, the Treasury is left in a bind; the law requires that the government's legal obligations be paid, but the debt limit may prevent it from issuing the debt that would allow it to do so on time.

Among other consequences, a sustained inability to pay obligations on time could hinder the U.S. Treasury's ability to borrow on advantageous terms in the future. A delay in interest payments on Treasury securities would trigger a default and risk serious negative repercussions for economies and financial markets around the world. Default might be avoided in such situations by delaying other types of federal payments and transfers. A government that delays payment of an obligation, in effect, borrows from vendors, contractors, beneficiaries, state and local governments, or employees who are not paid on time. In some cases, delaying payments incurs interest penalties under some statutes such as the Prompt Payment Act, which directs the government to pay interest penalties to contractors if it does not pay them by the required payment date,14 and the Internal Revenue Code, which requires the government to pay interest penalties if tax refunds are delayed beyond a certain date.15

Past Treasury Secretaries, when faced with a nearly binding debt ceiling, have used special strategies to handle cash and debt management responsibilities. Actions taken in the past include suspending sales of nonmarketable debt, postponing or downsizing marketable debt auctions, and withholding receipts that would be transferred to certain government trust funds. Congress has authorized the Treasury Secretary to invoke a "debt issuance suspension period" to use some of these strategies using the Civil Service Retirement Fund and the Thrift Savings Fund, along with the authority to make those funds whole after an easing of the debt constraint.16

Some U.S. Treasury responses to the credit crunch that began in mid-2007 created balance sheet items that might expand options available to the Treasury Secretary. The U.S. Treasury began selling off certain mortgage-backed securities acquired in late 2008.17 The pace of those sales, targeted at $10 billion per month in order to minimize any market disruptions in the mortgage securities market, is unlikely to have major effects on the timing of when the U.S. Treasury will reach the debt limit. The U.S. Treasury, however, is unlikely to maintain smooth debt management operations indefinitely in the face of a continuing imbalance between federal revenues and outlays without an increase in the debt limit.

Why Have a Debt Limit?

The debt limit can hinder the Treasury's ability to manage the federal government's finances, as noted above. In extreme cases, when the federal debt is very near its statutory limit, the Treasury must take unusual and extraordinary measures to meet federal obligations.18 While the debt limit has never caused the federal government to default on its obligations, it has at times caused great inconvenience and has added uncertainty to Treasury operations.

The debt limit also provides Congress with the strings to control the federal purse, allowing Congress to assert its constitutional prerogatives to control spending.19 The debt limit also imposes a form of fiscal accountability that compels Congress and the President to take visible action to allow further federal borrowing when the federal government spends more than it collects in revenues. In the words of one author, the debt limit "expresses a national devotion to the idea of thrift and to economical management of the fiscal affairs of the government."20 On the other hand, some budget experts have advocated elimination of the debt limit, arguing that other controls provided by the modern congressional budget process established in 1974 have superseded the debt limit, and that the limit does little to alter spending and revenue policies that determine the size of the federal deficit.21

A Brief History of the Federal Debt Limit

Origins of the Federal Debt Limit

The statutory limit on federal debt began with the Second Liberty Bond Act of 1917,22 which helped finance the United States' entry into World War I.23 By allowing the Treasury to issue long-term Liberty Bonds, which were marketed to the public at large, the federal government held down its interest costs.24

Before World War I, Congress often authorized specific loans, such as the Panama Canal loan, or allowed the Treasury to issue specific types of debt instruments, such as certificates of indebtedness, bills, notes, and bonds.25 In other cases, especially in time of war, Congress provided the Treasury with discretion, subject to broad limits, to choose debt instruments.26 For example, the 1898 War Revenue Act (30 Stat. 448-470) that funded Spanish-American War costs granted the Treasury Secretary the authority to issue $100 million in certificates of indebtedness with maturities under a year and $400 million in longer-term notes and bonds.27 Proponents of the act made clear their intention to allow the Treasury Secretary substantial administrative leeway.28

With the passage of the Second Liberty Bond Act, Congress enacted aggregate constraints on certificates of indebtedness and on bonds that allowed the Treasury greater ability to respond to changing conditions and more flexibility in financial management. Debt limit legislation in the following two decades also set separate limits for different categories of debt, such as bills, certificates, and bonds.

In 1939, Congress eliminated separate limits on bonds and on other types of debt, which created the first aggregate limit that covered nearly all public debt.29 This measure gave the Treasury freer rein to manage the federal debt as it saw fit. Thus, the Treasury could issue debt instruments with maturities that would reduce interest costs and minimize financial risks stemming from future interest rate changes.30 On the other hand, although the Treasury was delegated greater independence of action, the debt limit on the eve of World War II was much closer to total federal debt than it had been at the end of World War I. For example, the 1919 Victory Liberty Bond Act (P.L. 65-328) raised the maximum allowable federal debt to $43 billion, far above the $25.5 billion in total federal debt at the end of FY1919.31 By contrast, the debt limit in 1939 was $45 billion, only about 10% above the $40.4 billion total federal debt of that time.

World War II and After

The debt ceiling was raised to accommodate accumulating costs for World War II in each year from 1941 through 1945, when it was set at $300 billion.32 After World War II ended, the debt limit was reduced to $275 billion. Because the Korean War was mostly financed by higher taxes rather than by increased debt, the limit remained at $275 billion until 1954. After 1954, the debt limit was reduced twice and increased seven times, until March 1962 when it again reached $300 billion, its level at the end of World War II. Since March 1962, Congress has enacted 74 separate measures that have altered the limit on federal debt.33 Most of these changes in the debt limit were, measured in percentage terms, small in comparison to changes adopted in wartime or during the Great Depression. Some recent increases in the debt limit, however, were large in dollar terms. For instance, in May 2003, the debt limit increased by $984 billion.

The Debt Ceiling in the Last Decade

During the four years (FY1998-FY2001) the government ran surpluses, federal debt held by intergovernmental accounts grew by $855 billion and debt held by the public fell by almost $450 billion. Since FY2001, however, debt held by the public has grown due to persistent and substantial budget deficits. Debt held in government accounts also has grown, in large part because Social Security payroll taxes have exceeded payments of beneficiaries. Table 1 shows components of debt in current dollars and as percentages of gross domestic product (GDP).34

Figure 1 shows the components of federal debt as shares of gross domestic product (GDP) from FY1940 through FY2010.35 Federal debt held by government accounts has grown steadily since 1980. Debt held by the public, which changes in response to total surpluses or deficits, grew as a share of GDP through the mid-1990s. After FY1992, deficits shrank, and from FY1998 through FY2001 the federal government ran surpluses.36 Those surpluses, along with rapid GDP growth, reduced debt held by the public as a percentage of GDP. When large deficits returned and GDP growth slowed in the early 2000s, debt held by the public as a share of GDP again increased.

Smaller deficits in FY2006 and FY2007 led to smaller increases in publicly held debt. The total FY2007 deficit fell to 1.2% of GDP according to CBO.37 Financial turmoil in 2007 and 2008 and a subsequent recession that began in late 2007 led to federal actions taken to stabilize the housing and financial markets. The recession reduced federal revenues and increased federal spending, leading to large deficits and a series of debt limit increases.

          Table 1. Components of Debt Subject to Limit, FY1996-FY2010

 

 

           (in billions of current dollars and as percentage of GDP)

 

 _____________________________________________________________________________

 

 

                                    Debt Subject to Limit

 

                         _____________________________________________________

 

 

                                          Held by Government     Held by

 

                               Total           Accounts         the Public

 

                         _____________________________________________________

 

 

 End of Fiscal    Debt

 

 Year             Limit  $ Billion  % GDP  $ Billion  % GDP  $ Billion    %GDP

 

 _____________________________________________________________________________

 

 

 1996            $5,500  $ 5,137.2   65.7%   1,432.4  18.3%    3,704.8   47.4%

 

 1997             5,950    5,327.6   64.2    1,581.9  19.0     3,745.8   45.1

 

 1998             5,950    5,439.4   62.2    1,742.1  19.9     3,697.4   42.3

 

 1999             5,950    5,567.7   60.1    1,958.2  21.1     3,609.5   38.9

 

 2000             5,950    5,591.6   57.0    2,203.9  22.4     3,387.7   34.5

 

 2001             5,950    5,732.8   56.6    2,436.5  24.1     3,296.3   32.5

 

 2002             6,400    6,161.4   58.9    2,644.2  25.3     3,517.2   33.6

 

 2003             7,384    6,737.6   61.4    2,846.7  25.9     3,890.8   35.5

 

 2004             7,384    7,333.4   62.5    3,056.6  26.0     4,276.8   36.4

 

 2005             8,184    7,871.0   64.0    3,301.0  26.9     4,570.1   37.2

 

 2006             8,965    8,420.3   64.2    3,610.4  27.5     4,809.8   36.7

 

 2007             9,815a   8,921.3   65.4    3,903.7  28.6     5,017.6   36.8

 

 2008             10,615b  9,960.0   70.0    4,180.0  29.4     5,780.3   40.6

 

 2009             12,104c 11,909.8   84.1    4,358.0  30.8     7,551.9   53.3

 

 2010             14,294d 13,510.8   92.1    4,585.7  31.3     9,022.8   61.5

 

 

 Change during

 

 FY1998 - FY2001            $405.2            $854.6           $-449.5

 

 

 Change during

 

 FY2002 - FY2010          $7,778.0          $2,073.1          $5,704.9

 

 _____________________________________________________________________________

 

 

 Source:U.S. Department of the Treasury, Financial Management Service,

 

 Treasury Bulletin, June 2001 and December 2006. Bureau of the Public

 

 Debt, Monthly Statement of Public Debt, various issues. CRS

 

 calculations.

 

 

 Notes: For the fiscal years 1996 through 2000, the amounts held by

 

 government accounts and held by the public are approximations. In 2001, the

 

 Treasury publications began distinguishing holders of debt subject to limit.

 

 The numbers in the table showing this breakdown for FY1996 through FY2000 were

 

 calculated by subtracting debts of the Federal Financing Bank, an arm of the

 

 Treasury whose debt is not subject to limit, from total debt held by

 

 government accounts. This calculation approximates the amount of that debt

 

 subject to limit. This approximation overestimates debt by billions of dollars

 

 because estimates of unamortized discount are unavailable. This adjusted

 

 amount was then subtracted from total debt subject to limit to produce an

 

 approximate measure of debt held by the public subject to limit. Because the

 

 amount held by government accounts is overestimated, the resulting measure of

 

 debt held by the public subject to limit is underestimated. Totals may not sum

 

 due to rounding.

 

 

                                   FOOTNOTES

 

 

      a Debt limit increased September 29, 2007, to $9,815 billion.

 

 

      b The debt limit was increased twice in 2008 -- to $10,615

 

 billion on July 30 and then to $11,315 billion on October 3, at the start of

 

 FY2009.

 

 

      c Debt limit was increased February 17, 2009, to $12,104

 

 billion.

 

 

      d Debt limit was increased February 12, 2010, to $14,294

 

 billion.

 

END OF FOOTNOTES

 

 

Figure 1. Components of Federal Debt As a Percentage of GDP,

 

FY1940-FY2009

 

 

 

 

Source: OMB, Budget of the United States for FY2010, Historical Tables, February 2009; Mid-Session Review, August 2009.

The Debt Limit Issue in 2002

Accumulating debt in government accounts produced most of the pressure on the debt limit that occurred early in 2002. As deficits reemerged in FY2002, increases in debt held by the public added to the pressure on the debt limit in the spring of 2002. During the four fiscal years with surpluses (FY1998-FY2001), the increases in federally held debt and decreases in debt held by the public produced a net increase of $405 billion in total debt subject to limit. At the beginning of FY2002 (October 1, 2001), debt subject to limit was within $217 billion of the existing $5,950 billion debt limit.38 Between then and the end of May 2002, debt subject to limit increased by another $217 billion, divided between a $117 billion increase in debt held by government accounts and a $100 billion increase in debt held by the public, putting the debt close to the $5,950 billion limit. Table A-1, presented in the Appendix, shows month-by-month debt totals and accumulations from September 2001 through December 2010.

In the fall of 2001, the Administration recognized that a deteriorating budget outlook and continued growth in debt held by government accounts were likely to lead to the debt limit soon being reached. In early December 2001, it asked Congress to raise the debt limit by $750 billion to $6,700 billion. As the debt moved closer to and reached the debt limit over the first six months of FY2002, the Administration asked Congress repeatedly to increase the debt limit, warning of adverse financial consequences were the limit not raised.

On April 4, 2002, the Treasury held debt below the limit by invoking its legislatively mandated authority to suspend reinvestment of government securities in the G-Fund of the federal employees' Thrift Savings Plan (TSP). This allowed the Treasury to issue new debt and meet the government's obligations. On April 15, debt subject to limit stood at $5,949,975 million, just $25 million below the limit. Once April 15 tax revenues flowed in, the Treasury "made whole" the GFund by restoring all of the debt that had not been issued to the TSP over this period and crediting the fund with interest it would have earned on that debt.39 By the end of April, debt subject to limit had fallen back $35 billion below the limit.

Resolving the Debt Limit Issue in 2002

By the middle of May 2002, debt subject to limit had again risen to within $15 million of the statutory limit. At the FY2002 average spending rate, $15 million equaled about five minutes of federal outlays. The Treasury, for the second time in 2002, used its statutory authority to avoid a default. The Treasury's financing problems, however, would persist without an increase in the debt limit. On May 14, the Treasury asked Congress to raise the debt limit or enact other statutory changes allowing the Treasury to issue new debt. A Treasury news release stated "absent extraordinary actions, the government will exceed the statutory debt ceiling no later than May 16," and that

 

a "debt issuance suspension period" will begin no later than May 16 [2002]. . . . [This] allows the Treasury to suspend or redeem investments in two trust funds, which will provide flexibility to fund the operations of the government during this period.40

 

The Treasury reduced federal debt held by these government accounts by replacing it with noninterest-bearing, non-debt instruments, which enabled it to issue new debt to meet the government's obligations. The Treasury claimed these extraordinary actions would suffice, at the latest, through June 28, 2002. Without a debt limit increase by that date, the Treasury indicated it would need to take other actions to avoid breaching the ceiling. By June 21, the Treasury had postponed a regular securities auction, but took no other actions. With large payments and other obligations due at the end of June and at the beginning of July, the Treasury stated it would soon exhaust all options to issue debt and fulfill government obligations, putting the government on the verge of a default.

During May and June 2002, Congress took steps to increase the debt limit. The FY2002 supplemental appropriations bill (H.R. 4775) passed by the House on May 24 included, after extended debate, language allowing any eventual House-Senate conference on the legislation to increase the debt limit. However, the Senate's supplemental appropriations bill (S. 2551; incorporated as an amendment to H.R. 4775, June 3, 2002) omitted debt-limit-increasing language. The Senate leadership expressed strong reluctance to include a debt limit increase in the supplemental appropriation bill. Instead, on June 11, the Senate adopted a bill (S. 2578), without debate, to raise the debt limit by $450 billion to $6,400 billion. At that time, a $450 billion debt limit increase was thought to provide enough borrowing authority for government operations through the rest of calendar year 2002, if not through the summer of 2003. With the possibility of default looming over it, the House passed the $450 billion debt limit increase by a single vote on June 27. The President signed the bill into law on June 28 (P.L. 107-199, 116 Stat. 734), ending the 2002 debt limit crisis.41

The Debt Limit Issue in 2003

On Christmas Eve, 2002, Kenneth Dam, Deputy Secretary of the Treasury, sent a letter to Congress requesting an unspecified increase in the debt limit by late February 2003, signaling that the $6,400 billion debt limit would then be reached.42 The 108th Congress, still in the process of organizing itself, did not immediately respond. Through the winter and into the spring, the Treasury repeatedly requested that the debt limit be raised to avoid serious financial problems. By February 20, 2003, the Treasury, as in 2002, used legislatively mandated measures to manage debt holdings of certain government accounts to avoid reaching the debt limit. These actions included the replacement of internally held government debt with non-debt instruments in certain government accounts and not issuing new debt to these accounts. These actions allowed the Treasury to issue additional debt to the public to acquire the cash needed to pay for the government's commitments or to issue new debt to other federal accounts.

Through the rest of February and into May, the Treasury held debt subject to limit $15 million below the debt ceiling.43 The adoption of the conference report on the FY2004 budget resolution (H.Con.Res. 95; H.Rept. 108-71) on April 11, 2003, in the House triggered the "Gephardt rule" (House Rule XXVII) that deems to have passed legislation (in this case, H.J.Res. 51) raising the debt limit to accommodate the spending and revenue levels approved in the adopted budget resolution.44

The Senate received the debt-limit legislation on April 11, but did not act until May 23, after receiving further Treasury warnings of imminent default. On that day, debt subject to limit was $25 million (or 0.0004%) below the existing $6,400 billion limit. The Senate adopted the legislation, after rejecting eight amendments and sent it to the President, who signed it on May 27. This legislation raised the debt limit to $7,384 billion (P.L. 108-24, 117 Stat. 710).

The Debt Limit Issue in 2004

In January 2004, CBO estimated that the debt limit, then set at $7,384 billion, would be reached the following summer.45 In June 2004, the Treasury asked Congress to raise the debt limit in order to avoid the disruptions to government finances experienced in the previous two years.46 In August, and again in September, the Treasury declared that the debt limit would be reached in the first half of October. On October 14, debt subject to limit reached $7,383,975 million, just $25 million below the existing limit. The Treasury employed methods used in the previous two years to keep debt under the legal limit. On October 14, Secretary of the Treasury John Snow informed Congress, just before the election recess, that available measures to avoid breaching the debt limit would be exhausted by mid-November.47 Without an increase in the debt limit, the Treasury would be unable to meet all of the government's existing obligations, which could undermine the U.S. government's reputation in capital markets and raise costs of federal borrowing.

Although the House passed a budget resolution for FY2005 in the spring of 2004, it did not reach final agreement with the Senate on the measure. Without a budget resolution passed by Congress, no resolution to raise the debt limit could be deemed passed by the House automatically under the Gephardt rule. Consequently, no measure was available to send to the Senate. As the debt approached the limit through the summer and into the fall, no legislation was moved to raise the debt limit.

Earlier, in September 2004, the House had added an amendment to the FY2005 Transportation-Treasury appropriations (H.R. 5025) in an effort to remove the Treasury's flexibility in financing the government as federal debt approached and reached the existing limit. Without that flexibility, the government would be unable to meet its financial obligations as the amount of debt neared the limit. The legislation cleared the House, but the Senate did not act on it.

After the elections, Senator Frist, on November 16, 2004, introduced legislation (S. 2986) to raise the debt limit by $800 billion, from $7,384 billion to $8,184 billion. The Senate approved the increase on November 17, 2004. The House considered and approved the increase on November 18. The President signed the legislation into law (P.L. 108-415, 118 Stat. 2337) on November 19, 2004. Estimates made at that time anticipated the new limit would be reached between August and December 2005.

Shortly before the increase in the debt limit, the Treasury delayed a debt auction and informed Congress that it would invoke a "debt limit suspension period" as it had in previous years. The increase in the debt limit in mid-November allowed the Treasury to reschedule the debt auction and cancel, before it began, the "debt limit suspension period."

The Debt Limit Issue in 2005, 2006, and 2007

Debt limit increases in 2005, 2006, and 2007 took a less dramatic path than those in President Bush's first term. In 2005, Congress included three reconciliation instructions in the FY2006 budget resolution (H.Con.Res. 95, 109th Congress; April 28, 2005), the third of which directed the House Committee on Ways and Means and the Senate Finance Committee to report bills raising the debt limit. The instructions specified a $781 billion debt limit increase, to $8,965 billion, with a reporting date of no later than September 30, 2005. Neither committee reported a bill to raise the debt limit.

The adoption of the conference report on the FY2006 budget resolution in late April 2005 also triggered the Gephardt rule (House Rule XXVII), producing a House Joint Resolution (H.J.Res. 47) that also would raise the debt limit by $781 billion to $8,965 billion. Under the rule, the resolution was automatically deemed passed by the House and sent to the Senate. Through the end of the first session of the 109th Congress, the Senate had not considered H.J.Res. 47, nor had Congress considered a reconciliation bill raising the debt limit as called for in the budget resolution.

At the end of December 2005, Secretary of the Treasury Snow wrote Congress that the debt limit would probably be reached in mid-February 2006, although the Treasury could take actions that maintain the debt below its limit until mid-March. He therefore requested an increase in the debt limit.48 In two more letters, sent on February 19 and March 6, Secretary Snow advised Congress that the Treasury was taking measures within its legal discretion to avoid reaching the limit and that these measures would suffice only until the middle of March 2006. Secretary Snow authorized actions used previously by the Treasury, including declaring a debt issuance suspension period. As March began, the government was again close to becoming unable to meet its obligations. During the week of March 13 the Senate took up H.J.Res. 47. On March 16, the Senate passed a debt limit increase after rejecting several amendments. The President's signature on March 20, 2006, then raised the debt limit (P.L. 109-182) to $8,965 billion.

In mid-May 2007, Congress passed the conference report (H.Rept. 110-153) on the FY2008 budget resolution. The House's Gephardt rule, triggered by the adoption of the conference report on the budget resolution, resulted in the automatic engrossment of a joint resolution (in this case, H.J.Res. 43, 110th Congress) raising the debt limit by $850 billion to $9,815 billion, and sending it to the Senate. At the end of July 2007, the Treasury asked Congress to raise the debt limit, stating the limit would be reached in early October 2007. In August, the CBO Director said that projections suggested that the limit would be reached in late October or early November. Without an increase, the Treasury indicated that it would take steps within its legal authority to avoid exceeding the debt limit. The Senate Finance Committee approved the House resolution (H.J.Res. 43) without changes on September 12, 2007. The Senate then passed the measure on September 27, which the President signed on September 29, 2007 (P.L. 110-91).

The Economic Slowdown and Federal Debt

Fiscal Policy Considerations

The U.S. economy is currently recovering slowly from a severe economic recession that began in December 2007 and ended in June 2009.49 The economic slowdown began with a rapid deceleration of housing prices and a rise in interest rate spreads between private lending rates and benchmark Federal Reserve rates, indicating an increasing reluctance of major financial institutions to lend to each other as well as to firms and individuals. This led to sharply higher federal deficit spending in FY2008 spurred by several major actions taken by Congress to unfreeze credit markets, boost consumption, and increase spending. Deficit spending was even higher in FY2009, with higher than average deficits as a percentage of GDP persisting into the next decade, likely leading to further increases in the federal debt and debt limit. While deficits for FY2010 were slightly lower and fiscal conditions are projected to improve in FY2011, deficits remain high relative to historical experience.

Economic recession affects the federal deficit in several ways. First, falling prices of many assets and equities can sharply reduce federal revenues from capital gains taxes and from the corporate tax. Second, individual income taxes, the largest component of federal revenues, may also fall if jobs are cut and unemployment increases due to economic conditions. Third, "automatic stabilizers" such as unemployment insurance and income support programs pay out more money as unemployment rises and the number of households eligible for means-tested benefits rises, thus increasing federal spending.

Boosting the economy through deficit spending provides a fiscal stimulus if the output levels of goods and services produced in the nation are below their potential levels. Deficit spending, however, can help accelerate inflation if output levels are near or at potential levels, and in addition, exacerbates long-term fiscal challenges. Several economists have expressed concerns that inflation, which had been relatively low since the early 1980s, could accelerate due to rising prices of food, energy, and primary commodities. While inflation would reduce the market value of the federal deficit, it would require Treasury to pay higher nominal interest rates on federal debt. The U.S. economy, however, is currently operating well below its potential, which has kept inflation at lower levels.

Raising the Debt Ceiling in 2008, 2009, and 2010

In a March 2008 report, CBO estimated the President's budget would lead to a $396 billion deficit in FY2008 and a $342 billion deficit in FY2009.50 The actual deficit for FY2008 reached $455 billion. In August 2009, CBO estimated the deficit would total $1,587 billion in FY2009 and $1,381 billion in FY2010.51 As a result of the current economic conditions and the actions of the federal government to bring the economy out of recession, the federal debt limit was raised twice in the second half of 2008 and twice in 2009.

The House Concurrent Resolution on the Budget (H.Con.Res. 312) recommended policies that would result in a $10,200 billion debt in FY2009. The Senate Concurrent Resolution on the Budget S.Con.Res. 70) recommended policies that would result in a total debt of $10,278 billion in FY2009.52 Implementing either set of policies would require an increase in the federal debt limit. The conference agreement (H.Rept. 110-659) also recommended spending levels that would lead to a debt subject to limit of $10,207 billion in FY2009, a level that would require an increase in the statutory debt limit. The budget conference report passed the Senate on a 48-45 vote on June 4, 2008. The House passed the measure on the next day by a 214-210 vote. Agreement on the FY2009 budget resolution automatically created and deemed passed in the House legislation (H.J.Res. 92) that would increase the debt limit from its current level of $9,815 billion to $10,615 billion. Because the Senate did not take up H.J.Res. 92, the debt limit remained at $9,815 billion.

Subsequently, the House passed an amended version of the Housing and Economic Recovery Act of 2008 (H.R. 3221) by a vote of 272-152 that included a debt limit increase to $10,615 billion on July 23, 2008. The Senate then passed the measure on July 26 on a 72-13 vote. The President signed the bill on July 30 (P.L. 110-289), increasing the debt limit. In addition to increasing the debt limit, the act also contained provisions that would temporarily authorize the Secretary of Treasury to extend a line of credit to mortgage guarantee agencies Freddie Mac and Fannie Mae. The act also created the a new independent agency called the Federal Housing Finance Agency (FHFA), which replaced the Department of Housing and Urban Development Office of Federal Housing Enterprise Oversight (OFHEO) and the Federal Housing Finance Board (FHFB).

While CBO indicated that it was more likely than not that such intervention would not be needed, it also estimated a 5% chance of a cost to taxpayers of more than $100 billion.53 Because debt subject to limit was just $339 billion less than the debt ceiling of $9,815 billion when the Senate passed H.R. 3221, some financial market participants may have worried that the debt limit, without an increase, might have hindered the Treasury Secretary's ability to intervene to support Freddie Mac and Fannie Mae. On September 7, 2008, the FHFA placed Fannie Mae and Freddie Mac in conservatorship, providing FHFA with the full powers to control the assets and operations of the firms.

Since the deprivatization of Fannie Mae and Freddie Mac, the federal government has acted to provide stability to financial markets.54 On September 20, 2008, the U.S. Treasury submitted a proposal to Congress to authorize the Treasury Secretary to buy mortgage-related assets in order to stabilize financial markets. The Treasury proposal would allow Treasury holdings of mortgage-related securities up to $700 billion and would raise the debt limit to $11,315 billion.55

Representative Barney Frank proposed an amendment (Emergency Economic Stabilization Act of 2008) to a vehicle measure (H.R. 3997) that incorporated the main tenets of the Treasury proposal including raising the debt limit to $11,315 billion.56 On September 29, 2008, however, the House rejected that amendment.

On October 1, 2008, the Senate voted on, and passed, a different version of the Emergency Economic Stabilization Act of 2008 (H.R. 1424) that included the same debt limit increase.57 The House passed H.R. 1424 on October 3, 2008, and it was signed into law by the President (P.L. 110-343) on the same day, raising the debt limit to $11,315 billion.

Current economic conditions led Congress to consider another economic stimulus measure. This measure contains both tax cuts and spending increases, which will increase the deficit by reducing revenues and increasing outlays. The American Recovery and Reinvestment Act of 2009 (ARRA) as passed by the Senate on February 10, 2009 (Division B of the Senate Substitute amendment to H.R. 1 and S. 350), contained a provision which would raise the debt limit to $12,140 billion. The version of this legislation originally passed by the House omitted this provision. The final conference agreement on ARRA was passed by the House and Senate on February 13, 2009, and signed by the President on February 17, 2009 (P.L. 111-5). This measure contained a provision increasing the debt limit to $12,104 billion.

The conference report on the Concurrent Resolution on the Budget for FY2010 (S.Con.Res. 13) recommended policies that would lead to a debt subject to limit of $13,233 billion in FY2010, a level that would require an increase in the statutory debt limit. The budget resolution also contained a revised estimate of debt subject to limit of $12,016 billion for FY2009. The adoption of this conference report on April 29, 2009, triggered the Gephardt rule (House Rule XXVII), producing a House Joint Resolution (H.J.Res. 45) that would raise the debt limit by $925 billion to $13,029 billion. Under the rule, the resolution was automatically deemed passed by the House and sent to the Senate.

In August 2009, according to media reports, Secretary of Treasury Timothy Geithner notified Congress that the debt limit would be reached in mid-October.58 On November 4, the U.S. Treasury announced that it could postpone the time when federal debt would reach its statutory limit until the middle or the end of December.59 Treasury dropped nearly $185 billion from its balance sheet by reducing the amount of loans available through the Supplemental Financing Program, an emergency loan program created in the days following Lehman Brothers' bankruptcy, from $200 billion to $15 billion, which extended the time until the debt limit would be reached.60 According to media reports, the Obama Administration also contemplated scaling back the Troubled Asset Relief Program (TARP), which could also lower federal debt subject to statutory limit. Repayments of TARP funds by major financial institutions could also lower the amount of debt subject to limit.61 Other measures, such as those taken in 2003 during a "debt issuance suspension period" (described above), could also have extended the U.S. Treasury's ability to operate within the debt limit. On the other hand, the U.S. Treasury was scheduled to issue $48 billion of nonmarketable securities to the FDIC on December 30 and to make interest payments to various federal trust funds on December 31 totaling about $100 billion, according to Wall Street analysts, which in the absence of a debt limit increase, could have challenged Treasury's debt management activities in the absence of special accounting measures.62 In mid-December, according to media reports, senior Members of the House chose to forgo a larger increase in the debt limit in favor of a smaller increase in the debt limit that would allow the U.S. Treasury Department to continue normal debt management operations for two months or so.63 H.R. 4314, a measure to raise the debt limit to $12,394 billion, was introduced on December 15, 2009, and passed by the House the next day on a 218-214 vote. The Senate passed it on December 24 by a 60-39 vote, and the President signed the measure on December 28. On January 28, the Senate passed an amended version of H.J.Res. 45 on a 60-39 vote. The measure would raise the debt ceiling by $1,900 billion, to $14,294 billion.64 In addition, one amendment to impose certain pay-as-you-go (PAYGO) restrictions was approved on a 60-40 vote.65

Some Members of Congress have called for the creation of a national commission to address federal debt and the government's fiscal situation, which could be enabled through a measure linked to an increase in the debt limit.66 An amendment (S.Amdt. 3302 to S.Amdt. 3299) to H.J.Res. 45 that would have established a "Bipartisan Task Force for Responsible Fiscal Action" was not approved on a 53-46 vote, having failed to reach 60 votes, on January 26, 2010. President Obama then charged a National Commission on Fiscal Responsibility and Reform (Fiscal Commission) with identifying "policies to improve the fiscal situation in the medium term and to achieve fiscal sustainability over the long run."67 The Fiscal Commission issued a report on December 1, 2010, and several commissioners issued their own fiscal proposals as well.68

The House approved H.J.Res. 45 on a 233-187 vote on February 4, forwarding the measure to the President. The Obama Administration had previously voiced its strong support for a debt limit increase.69 The President signed the measure (P.L. 111-139) on February 12, 2010.

Table 2 summarizes the increases in the debt limit since 1993.70

             Table 2. Increases in the Debt Limit Since 1993

 

 _____________________________________________________________________________

 

 

                                                             Change From

 

                    Public Law (P.L.)     New Debt Limit    Previous Limit

 

 Date                   Number             ($ billion)      ($ billion)

 

 _____________________________________________________________________________

 

 

 April 6, 1993        P.L. 103-12             $4,370a            $225

 

 August 10, 1993      P.L. 103-66              4,900             530

 

 February 8, 1996     P.L. 104-103               b               --

 

 March 12, 1996       P.L. 104-115               c               --

 

 March 29, 1996       P.L. 104-121             5,500             600d

 

 August 5, 1997       P.L. 105-33              5,950             450

 

 June 28, 2002        P.L. 107-199             6,400             450

 

 May 27, 2003         P.L. 108-24              7,384             984

 

 Nov. 19, 2004        P.L. 108-415             8,184             800

 

 Mar. 20, 2006        P.L. 109-182             8,965             781

 

 Sept. 29, 2007       P.L. 110-91              9,815             850

 

 July 30, 2008        P.L. 110-289            10,615             800

 

 Oct. 3, 2008         P.L. 110-343            11,315             700

 

 Feb. 17, 2009        P.L. 111-5              12,104             789

 

 Dec. 28, 2009        P.L. 111-123            12,394             290

 

 February 12, 2010    P.L. 111-139            14,294           1,900

 

 _____________________________________________________________________________

 

 

 Source: CRS, compiled using the Legislative Information System,

 

 available at http://www.congress.gov

 

 

                                   FOOTNOTES

 

 

      a Increased the debt limit temporarily through September 30,

 

 1993.

 

 

      b Temporarily exempted from limit obligations in an amount equal

 

 to the monthly insurance benefits payable under Title II of the Social

 

 Security Act in March 1996, the exemption to expire on the earlier of an

 

 increase in the limit or March 15, 1996.

 

 

      c Temporarily exempted from limit (a) obligations in an amount

 

 equal to the monthly insurance benefits payable under Title II of the Social

 

 Security Act in March 1996 and (b) certain obligations issued to trust funds

 

 and other Federal Government accounts, both exemptions to expire on the

 

 earlier of an increase in the limit or March 30, 1996.

 

 

      d Difference from debt limit set on August 10, 1983.

 

END OF FOOTNOTES

 

 

Deficit Estimates

The size of the debt may remain a concern in the future due to the size of impending federal deficits necessitating further increases in the debt limit. CBO warns that the current trajectory of federal borrowing is unsustainable and could lead to slower economic growth in the long run as debt rises as a percentage of GDP. The total federal deficit rose from $455 billion in FY2008 to $1,413 billion in FY2009, and is estimated to reach $1,342 billion in FY2010.71 Much of the increase in deficits can be attributed to weak economic and financial market turmoil that started in late 2007, as well as to federal responses. Nonetheless, many budget experts remain concerned that a slow economic recovery or a "double-dip" recession could keep federal revenues below previous trendline projections for several years, and that the federal government would continue to run large deficits.

Concluding Comments

Since the late 1950s, the federal government increased its borrowing from the public in all years, except in FY1969 following imposition of a war surcharge and in the period FY1997-FY2001. The persistence of federal budget deficits has required the government to issue more and more debt to the public.72 The accumulation of Social Security and other trust funds, particularly after 1983 when recommendations of the Greenspan Commission were implemented, led to sustained growth in government-held debt subject to limit.73 The growth in federal debt held by the public and in intergovernmental accounts, such as trust funds, has periodically obliged Congress to raise the debt limit.

Between August 1997, when the debt limit was raised to $5,950 billion, and the beginning of FY2002 in October 2001, federal budget surpluses reduced debt held by the public. From the end of FY2001, the last fiscal year with a surplus, until the end of FY2008, debt held by the public subject to limit grew by $2,484 billion. Federal debt held in intergovernmental accounts grew steadily throughout the period, rising by $1,743 billion since the beginning of FY2002.

In early 2001, the 10-year budget forecasts projected large and growing surpluses, indicating rapid reduction in debt held by the public. Some experts expressed concern about consequences of retiring all federal debt held by the public.74 Most long-term forecasts computed at that time, however, showed large deficits emerging once the baby boomers began to retire. Short-term forecasts projected continuous growth in debt held by government accounts, largely due to the difference between Social Security tax revenues and benefit payments. The combination of falling levels of publicly held debt and rising levels of debt held by government accounts moderated the expected growth of total debt. The moderate growth in total debt those projections had forecast was expected to postpone the need to increase the debt limit until late into the decade, when accumulating debt in government accounts would overtake reductions in debt held by the public.

New budget projections released in early 2002 smashed expectations of large, persistent surpluses, and hopes for reductions in debt held by the public collapsed. The return to large federal deficits accelerated the growth of total debt. Increases in the debt limit would be necessary much sooner than previously expected.

Early in 2003, the FY2003 deficit and the persistent rise in debt held by government accounts drove the federal debt up to the $6,400 billion limit in effect at the time. The Treasury avoided breaching the limit into May. Congress adopted a debt limit increase of $934 billion on May 23, 2003, that provided enough room for the growing federal debt through the fall of 2004. The debt limit increase passed by Congress late in 2004 was expected, at the time, to accommodate the government's debt growth well into 2005, if not into early 2006. In late December 2005, and early in 2006, the Treasury informed Congress that the limit would be reached between mid-February and mid-March 2006. On March 16, 2006, the Senate passed the House-initiated debt limit increase, raising the debt limit to $8,965 billion. The debt limit crisis was resolved when the President signed the debt limit increase on March 20.

Smaller than expected deficits in FY2006 and FY2007 postponed, but did not end the need for a new, higher debt limit. The House passed legislation in May 2007 (H.J.Res. 43) to raise the debt limit. The Senate passed the measure (P.L. 110-91) on September 27, which the President signed on September 29. Turmoil in some financial markets in August 2007, according to some observers, appeared to constrain contention over the debt limit increase.

The 2008 economic slowdown, which reduced federal tax revenues and increased federal outlays, caused federal deficit spending to rise, thus bringing forward the projected date when the federal debt will reach its current limit. The House passed an amended version of the Housing and Economic Recovery Act of 2008 (H.R. 3221) that included a debt limit increase to $10,615 billion on July 23, 2008. The Senate passed the measure on July 26, and the President signed it on July 30, raising the debt limit for the first time in 2008. Subsequently, the Emergency Economic Stabilization Act of 2008 (H.R. 1424), signed into law on October 3 (P.L. 110-343), raised the debt limit for the second time in 2008 to $11,315 billion. The debt limit was raised for the third time in less than a year as a result of passage of the American Recovery and Reinvestment Act of 2009. President Obama signed this measure on February 17, 2009 (P.L. 111-5), which raised the debt limit to $12,104 billion.

The debt limit was again raised in late 2009. H.R. 4314, passed by the House on December 16, 2009, and by the Senate on December 24, raised the debt limit to $12,394 billion when the President signed the measure on December 28. In early 2010, Congress voted for a larger increase in the debt limit, which would put the limit at $14,294 billion, raising the debt ceiling by $1,900 billion. President Obama signed the measure on February 12, 2010. This debt limit, according to projections, will allow the Treasury Department to issue new debt at projected levels until spring 2011.

Amendments offered during consideration of the latest debt limit increase may signal a growing concern with the fiscal sustainability. One amendment, which was not approved, would have established a statutory commission to consider long-term fiscal issues. Another amendment, which was approved, would impose certain PAYGO restrictions.75 President Obama then created the National Commission on Fiscal Responsibility and Reform (Fiscal Commission), which was charged with identifying "policies to improve the fiscal situation in the medium term and to achieve fiscal sustainability over the long run."76 A Fiscal Commission report, along with several other budget policy proposals, could provide one framework for changes that might strengthen the federal government's fiscal outlook.77

Over the next decade, without major changes in federal policies, persistent and possibly growing deficits, along with the ongoing growth in the debt holdings of government accounts, would increase substantially the amount of federal debt subject to limit. Unless federal policies change, Congress would repeatedly face demands to raise the debt limit to accommodate the growing federal debt in order to provide the government with the means to meet its financial obligations.

Further Reading

Drishnakumar, Anita S., "In Defense of the Debt Limit Statute," Harvard Journal on Legislation, vol. 42, 2005, pp. 135-185.

Gordon, John Steele, Hamilton's Blessing: the Extraordinary Life and Times of Our National Debt, New York: Penguin, 1998.

Hormats, Robert D., The Price of Liberty: Paying for America's Wars from the Revolution to the War on Terror, New York: Times Books, 2007.

Noll, Franklin, "The United States Public Debt, 1861 to 1975," EH.Net Encyclopedia, edited by Robert Whaples, May 26, 2004. Available at http://eh.net/encyclopedia/article/noll.publicdebt.

Wright, Robert E., One Nation Under Debt: Hamilton, Jefferson, and the History of What We Owe, New York: McGraw-Hill, 2008.

Appendix. Debt Subject to Limit by Month Since September 2001

Table A-1 provides data on the dollar amount, in current dollars, of federal debt and the changes in these amounts by month between the end of September 2001 (the end of FY2001) and the end of December 2010. The table shows outstanding monthly balances, subject to the debt limit, of total federal debt, debt held by government accounts, and debt held by the public.

All three measures of debt subject to limit increased over this period. From the end of September 2001 (the end of FY2001) to the end of September 2010 (the most recently completed fiscal year), total federal debt increased by $7,778 billion, debt held in government accounts increased by $2,073 billion, and debt held by the public increased by $5,705 billion. All three measures experienced periodic reductions in some months. Because federal receipts and outlays are spread unevenly over the fiscal year, debt may rise or fall in a given month, even if debt measures follow an overall increasing trend.

    Table A-1. Debt Subject to Limit by Month, September 2001-December 2010

 

 

                        (in millions of current dollars)

 

 _____________________________________________________________________________

 

 

                         Change                 Change                Change

 

                         from      Held by      from                  from

 

 End of                  Previous  Government   Previous Held by the  Previous

 

 Month           Total   Period    Accounts     Period   Public       Period

 

 _____________________________________________________________________________

 

 

 Sept. 2001  $5,732,802      --    $2,436,521      --    $3,296,281      --

 

 Oct. 2001    5,744,523   $11,721   2,451,815   $15,294   3,292,709    $-3,572

 

 Nov. 2001    5,816,823    72,300   2,469,647    17,832   3,347,176     54,467

 

 Dec. 2001    5,871,413    54,590   2,516,012    46,365   3,355,401      8,225

 

 Jan. 2002    5,865,892    -5,521   2,525,755     9,743   3,340,138    -15,263

 

 Feb. 2002    5,933,154    67,262   2,528,494     2,739   3,404,659     64,521

 

 Mar. 2002    5,935,108     1,954   2,528,318      -176   3,406,789      2,130

 

 Apr. 2002    5,914,816   -20,292   2,549,438    21,120   3,365,378    -41,411

 

 May 2002     5,949,975    35,159   2,553,350     3,912   3,396,625     31,247

 

 June 2002    6,058,313   108,338   2,630,646    77,296   3,427,667     31,042

 

 July 2002    6,092,050    33,737   2,627,980    -2,666   3,464,070     36,403

 

 Aug. 2002    6,142,835    50,785   2,620,946    -7,034   3,521,890     57,820

 

 Sept. 2002   6,161,431    18,596   2,644,244    23,298   3,517,187     -4,703

 

 Oct. 2002    6,231,284    69,853   2,680,812    36,568   3,550,472     33,285

 

 Nov. 2002    6,294,480    63,196   2,680,788       -24   3,613,692     63,220

 

 Dec. 2002    6,359,412    64,932   2,745,787    64,999   3,613,625        -67

 

 Jan. 2003    6,355,812    -3,600   2,753,301     7,514   3,602,511    -11,114

 

 Feb. 2003    6,399,975    44,163   2,750,471    -2,830   3,649,504     46,993

 

 Mar. 2003    6,399,975       0     2,722,812   -27,659   3,677,163     27,659

 

 Apr. 2003    6,399,975       0     2,731,042     8,230   3,668,933     -8,230

 

 May 2003     6,498,658    98,683   2,755,895    24,853   3,742,763     73,830

 

 June 2003    6,625,519   126,861   2,842,361    86,466   3,783,158     40,395

 

 July 2003    6,704,814    79,295   2,835,566    -6,795   3,869,247     86,089

 

 Aug. 2003    6,743,775    38,961   2,829,387    -6,179   3,914,388     45,141

 

 Sept. 2003   6,737,553    -6,222   2,846,730    17,343   3,890,823    -23,565

 

 Oct. 2003    6,826,668    89,115   2,869,493    22,763   3,957,175     66,352

 

 Nov. 2003    6,879,626    52,958   2,879,117     9,624   4,000,509     43,334

 

 Dec. 2003    6,952,893    73,267   2,940,736    61,619   4,012,157     11,648

 

 Jan. 2004    6,966,851    13,958   2,951,219    10,483   4,015,633      3,476

 

 Feb. 2004    7,049,163    82,312   2,953,123     1,904   4,096,040     80,407

 

 Mar. 2004    7,088,648    39,485   2,941,195   -11,928   4,147,453     51,413

 

 Apr. 2004    7,089,700     1,052   2,960,151    18,956   4,129,549    -17,904

 

 May 2004     7,151,523    61,823   2,973,869    13,718   4,177,653     48,104

 

 June 2004    7,229,320    77,797   3,039,987    66,118   4,189,334     11,681

 

 July 2004    7,271,328    42,008   3,033,396    -6,591   4,237,933     48,599

 

 Aug. 2004    7,305,531    34,203   3,037,149     3,753   4,268,382     30,449

 

 Sept. 2004   7,333,350    27,819   3,056,590    19,441   4,276,760      8,378

 

 Oct. 2004    7,383,975    50,625   3,096,207    39,617   4,287,768     11,008

 

 Nov. 2004    7,464,740    80,765   3,087,834    -8,373   4,376,906     89,138

 

 Dec. 2004    7,535,644    70,904   3,158,531    70,697   4,377,114        208

 

 Jan. 2005    7,567,702    32,058   3,171,089    12,558   4,396,615     19,501

 

 Feb. 2005    7,652,726    85,024   3,176,406     5,317   4,476,320     79,705

 

 Mar. 2005    7,715,503    62,777   3,175,460      -946   4,540,042     63,722

 

 Apr. 2005    7,704,041   -11,462   3,185,364     9,904   4,518,677    -21,365

 

 May 2005     7,717,574    13,533   3,207,232    21,868   4,510,342     -8,335

 

 June 2005    7,778,128    60,554   3,280,914    73,682   4,497,214    -13,128

 

 July 2005    7,829,029    50,901   3,278,725    -2,189   4,550,304     53,090

 

 Aug. 2005    7,868,395    39,366   3,284,696     5,971   4,583,699     33,395

 

 Sept. 2005   7,871,040     2,645   3,300,969    16,273   4,570,071    -13,628

 

 Oct. 2005    7,964,782    93,742   3,345,589    44,620   4,619,193     49,122

 

 Nov. 2005    8,028,918    64,136   3,351,093     5,504   4,677,826     58,633

 

 Dec. 2005    8,107,019    78,101   3,424,304    73,211   4,682,715      4,889

 

 Jan. 2006    8,132,290    25,271   3,442,543    18,239   4,689,747      7,032

 

 Feb. 2006    8,183,975    51,685   3,457,409    14,866   4,726,567     36,820

 

 Mar. 2006    8,281,451    97,476   3,443,602   -13,807   4,837,849    111,282

 

 Apr. 2006    8,262,718   -18,733   3,479,623    36,021   4,783,095    -54,754

 

 May 2006     8,263,812     1,094   3,492,648    13,025   4,771,165    -11,930

 

 June 2006    8,330,646    66,834   3,566,186    73,538   4,764,460     -6,705

 

 July 2006    8,352,614    21,968   3,569,550     3,364   4,783,064     18,604

 

 Aug. 2006    8,423,321    70,707   3,576,166     6,616   4,847,155     64,091

 

 Sept. 2006   8,420,278    -3,043   3,622,378    46,212   4,828,972    -18,183

 

 Oct. 2006    8,498,016    77,738   3,650,241    27,863   4,847,775     18,803

 

 Nov. 2006    8,545,715    47,699   3,649,736      -505   4,895,979     48,204

 

 Dec. 2006    8,592,513    46,798   3,724,450    74,714   4,868,063    -27,916

 

 Jan. 2007    8,619,499    26,986   3,737,894    13,444   4,881,605     13,542

 

 Feb. 2007    8,690,921    71,422   3,744,299     6,405   4,946,622     65,017

 

 Mar. 2007    8,760,735    69,814   3,740,127    -4,172   5,020,608     73,986

 

 Apr. 2007    8,753,070    -7,665   3,778,255    38,128   4,974,815    -45,793

 

 May 2007     8,740,892   -12,178   3,792,201    13,946   4,948,691    -26,124

 

 June 2007    8,779,168    38,276   3,867,819    75,618   4,911,348    -37,343

 

 July 2007    8,845,417    66,249   3,873,239     5,420   4,972,178     60,830

 

 Aug. 2007    8,918,493    73,076   3,854,115   -19,124   5,064,377     92,199

 

 Sept. 2007   8,921,343     2,850   3,903,710    49,595   5,017,633    -46,744

 

 Oct. 2007    8,994,639    73,296   3,958,357    54,647   5,036,281     18,648

 

 Nov. 2007    9,065,827    71,188   3,950,468    -7,889   5,115,358     79,077

 

 Dec. 2007    9,144,715    78,888   4,038,566    88,098   5,106,149     -9,209

 

 Jan. 2008    9,155,842    11,127   4,053,199    14,633   5,102,644     -3,505

 

 Feb. 2008    9,275,683   119,841   4,045,007    -8,192   5,230,676    128,032

 

 Mar. 2008    9,358,135    82,452   4,051,685     6,678   5,306,450     75,774

 

 Apr. 2008    9,298,567   -59,568   4,080,887    29,202   5,217,680    -88,770

 

 May 2008     9,324,137    25,570   4,071,992    -8,895   5,252,144     34,464

 

 June 2008    9,427,901   167,869   4,169,509   134,950   5,258,392     32,920

 

 July 2008    9,520,220    92,319   4,144,377   -25,132   5,375,843    117,451

 

 Aug. 2008    9,580,508    60,288   4,129,413   -14,964   5,451,095     75,252

 

 Sept. 2008   9,959,850   379,342   4,179,574    50,161   5,780,276    329,181

 

 Oct. 2008   10,504,702   544,852   4,231,878    52,304   6,272,824    492,548

 

 Nov. 2008   10,595,725    91,023   4,228,270    -3,608   6,367,454     94,630

 

 Dec. 2008   10,640,274    44,549   4,298,482    70,212   6,341,792    -25,662

 

 Jan. 2009   10,569,310   -70,964   4,278,424   -20,058   6,290,886    -50,906

 

 Feb. 2009   10,814,630   245,320   4,261,734   -16,690   6,552,896    262,010

 

 Mar. 2009   11,066,217   251,587   4,258,272    -3,462   6,807,946    255,050

 

 Apr. 2009   11,178,827   112,610   4,273,005    14,733   6,905,822     97,876

 

 May 2009    11,260,445    81,618   4,265,719    -7,286   6,994,725     88,903

 

 June 2009   11,487,470   227,025   4,336,673    70,954   7,150,797    156,072

 

 July 2009   11,611,178   123,708   4,299,673   -37,000   7,311,505    160,708

 

 Aug. 2009   11,755,205   144,027   4,294,923    -4,750   7,460,282    148,777

 

 Sept. 2009  11,853,434    98,229   4,325,124    30,201   7,528,311     68,029

 

 Oct. 2009   11,836,629   -16,805   4,372,308    47,184   7,464,321    -63,990

 

 Nov. 2009   12,057,363   220,734   4,367,935    -4,373   7,689,428    225,107

 

 Dec. 2009   12,254,506   197,143   4,466,279    98,344   7,788,227     98,799

 

 Jan. 2010   12,222,507   -31,999   4,485,502    19,223   7,737,005    -51,222

 

 Feb. 2010   12,383,717   161,210   4,469,373   -16,129   7,914,344    177,339

 

 Mar. 2010   12,716,511   332,794   4,448,645   -20,728   8,267,866    353,522

 

 Apr. 2010   12,892,729   176,218   4,480,458    31,813   8,412,271    144,405

 

 May 2010    12,992,539    99,810   4,498,120    17,662   8,494,419     82,148

 

 June 2010   13,149,560   157,021   4,537,716    39,596   8,611,844    117,425

 

 July 2010   13,185,208    35,648   4,504,601   -33,115   8,680,607     68,763

 

 Aug. 2010   13,398,794   213,586   4,493,418   -11,183   8,905,376    224,769

 

 Sept. 2010  13,510,840   112,046   4,509,632    16,214   9,001,208     95,832

 

 Oct. 2010   13,617,337   106,497   4,568,895    59,263   9,048,442     47,234

 

 Nov. 2010   13,809,121   191,784   4,555,396   -13,499   9,253,725    205,283

 

 Dec. 2010   13,972,513   163,392   4,603,888    48,492   9,368,625    114,900

 

 ____________________________________________________________________________

 

 

 Source: U.S. Treasury, Bureau of the Public Debt, Monthly

 

 Statement of the Public Debt, Sept. 2001-Nov. 2010, available at

 

 http://www.treasurydirect.gov/govt/reports/pd/mspd/mspd.htm

 

 calculations. Dec. 2010 data computed from Daily Treasury Statement.

 

 

Author Contact Information

 

 

D. Andrew Austin

 

Analyst in Economic Policy

 

aaustin@crs.loc.gov, 7-6552

 

 

Mindy R. Levit

 

Analyst in Public Finance

 

mlevit@crs.loc.gov, 7-7792

 

FOOTNOTES

 

 

1 Approximately 0.5% of total debt is excluded from debt limit coverage. The Treasury defines "Total Public Debt Subject to Limit" as "the Total Public Debt Outstanding less Unamortized Discount on Treasury Bills and Zero-Coupon Treasury Bonds, old debt issued prior to 1917, and old currency called United States Notes, as well as Debt held by the Federal Financing Bank and Guaranteed Debt." For details, see http://www.treasurydirect.gov. The debt limit is codified as 31 USC 3101.

2 Although there are hundreds of trust funds, the overwhelming majority are very small. The 12 largest trust funds hold 98.8% of the federal debt held in government accounts.

3 Other means of financing -- including cash balance changes, seigniorage, and capitalization of financing accounts used to fund federal credit programs -- have relatively little effect on the changes in debt held by the public.

4 In future years, when some trust funds are projected to pay out more than they take in, funds that the Treasury would use to redeem those intergovernmental debts must be obtained via higher taxes or lower government spending.

5 Trust fund surpluses by law must be invested in special federal government securities.

6 Daily data on federal debt can be obtained at the Treasury Department's Bureau of the Public Debt website: http://www.treasurydirect.gov/NP/BPDLogin?application=np. Data on debt subject to limit are provided in the Daily Treasury Statement, available at http://fms.treas.gov/dts/index.html.

7 U.S. Treasury, "Treasury Announces Marketable Borrowing Estimates," press release TG-1038, January 31, 2011, available at http://www.treasury.gov/press-center/press-releases/Pages/tg1038.aspx.

8 U.S. Congressional Budget Office, The Budget and Economic Outlook, January 26, 2011, available at http://www.cbo.gov/doc.cfm?index=12039.

9 Secretary of the U.S. Treasury Timothy Geithner, letter to Majority Leader Harry Reid, dated April 4, 2011, available at http://www.treasury.gov/connect/blog/Documents/FINAL%20Letter%2004-04-2011%20Reid%20Debt%20Limit.pdf.

10 U.S. Treasury, "Treasury Issues Updated Debt Limit Projections," March 1, 2011, available at http://www.treasury.gov/press-center/press-releases/Pages/tg1084.aspx.

11 Wrightson ICAP, The Money Market Observer, December 13, 2010.

12 Paul M. Krawzak, "Showdown Ahead on Debt Limit as Geithner Urges Action," CQ Today Online News, January 6, 2011; Secretary of the U.S. Treasury Timothy Geithner, letter to Majority Leader Harry Reid, dated January 6, 2011.

13 For details, see the CRS congressional distribution memorandum Reaching the Debt Limit, December 28, 2010, coordinated by Mindy R. Levit. This memorandum is available upon request by congressional offices.

14 31 U.S.C. § 3902.

15 26 U.S.C. § 6611.

16 For details, see archived CRS Report 95-1109, Authority to Tap Trust Funds and Establish Payment Priorities if the Debt Limit is not Increased, by Thomas J. Nicola and Morton Rosenberg. Available upon request from authors. 5 U.S.C. Sec. 8348(b) defines a debt issuance suspension period as "any period for which the Secretary of the Treasury determines for purposes of this subsection that the issuance of obligations of the United States may not be made without exceeding the public debt limit." After a debt issuance suspension period ends, the Treasury Secretary must report to Congress as soon as possible regarding fund balances and any extraordinary actions taken. For details, see 5 USC Sec. 8348(j,k).

17 U.S. Treasury, "Treasury to Begin Orderly Wind Down of Its $142 Billion Mortgage-Backed Securities Portfolio," press release, March 21, 2011, available at http://www.treasury.gov/press-center/press-releases/Pages/tg1111.aspx.

18 U.S. General Accounting Office (GAO), Analysis of Actions Taken during the 2003 Debt Issuance Suspension Period, GAO-04-526, May 2004, available at http://www.gao.gov/new.items/d04526.pdf.

19 For a vigorous assertion of the utility of the debt ceiling, see Anita S. Drishnakumar, "In Defense of the Debt Limit Statute," Harvard Journal on Legislation, vol. 42, 2005, pp. 135-185.

20 Marshall A. Robinson, The National Debt Ceiling: An Experiment in Fiscal Policy, Washington, DC: The Brookings Institution, 1959, p. 5.

21 Bruce Bartlett, "Why Congress Must Now Abolish its Debt Limit," Financial Times, October 22, 2009, p. 11.

22 P.L. 65-43, 40 Stat. 288, enacted September 24, 1917. Currently codified as amended as 31 U.S.C. § 3101.

23 H. J. Cooke and M. Katzen, "The Public Debt Limit," Journal of Finance, vol. 9, no. 3 (September 1954), pp. 298-303.

24 Robert D. Hormats, The Price of Liberty, (New York: Henry Holt, 2007), ch. 4.

25 Treasury certificates of indebtedness were short-term, interest-bearing securities. Treasury bills are securities with a maturity of a year or less. Treasury notes are interest-bearing securities that generally have maturities of two to five years. Treasury bonds are interest-bearing securities that generally have maturities of 10 or more years.

26 Marshall A. Robinson, The National Debt Ceiling: An Experiment in Fiscal Policy, (Washington, DC: The Brookings Institution, 1959), pp.1-6.

27 The War Revenue Act, formally "An Act to Provide Ways and Means to Meet War Expenditures and for Other Purposes," was enacted June 13, 1898. Much of the legislative text of the Act's public borrowing sections (§ 32, 33) were drawn from the Acts of June 30, 1864, ch. 172, § 1 (13 Stats. 218) and of March 3, 1865, ch. 77 (13 Stats. 469).

28 Some opponents raised concerns that granting the Treasury Secretary authority to issue debt could affect monetary policies, which might tighten credit conditions. Such concerns became less relevant after the establishment of the Federal Reserve System in 1913. See House debate, Congressional Record, vol. 31, part 6 (June 9, 1898), pp. 5713-5728; and Senate debate on June 10, 1898, pp. 5734-5749.

29 P.L. 76-201. Some authors claimed the aggregate limit was first created in Public Debt Act of 1941 (P.L. 77-7). The 1939 Senate floor debate, however, makes clear that Congress intended to lift categorical debt restrictions. See Senate debate, Congressional Record, vol. 84, part 6 (June 1, 1939), pp. 6480, 6497-6501.

30 This limit did not apply to certain previous public debt issues that constituted a minor portion of the federal debt.

31 U.S. Bureau of the Census, Historical Statistics of the United States: Colonial Times to 1970, H. Doc. 93-78 (Washington: GPO, 1975), Series Y 493-504.

32 Public Debt Acts of 1941 (P.L. 77-7), 1942 (P.L. 77-510), 1943 (78-34), 1944 (P.L. 78-333), and 1945 (P.L. 79-48).

33 U.S. Office of Management and Budget, FY2010 Budget of the U.S. Government: Historical Tables, Table 7-3.

34 Until 2001, Treasury publications did not divide debt subject to limit by that held by the public and that held by government accounts. Table 1 uses CRS calculations that approximate levels of debt subject to limit held in these two categories for fiscal years prior to 2001.

35 The data show components of debt compared to the size of the economy. This avoids possible distortions resulting from changing price levels over time and includes changes in per capita incomes. This percentage increases when debt grows faster than GDP and falls when it grows more slowly than GDP.

36 Federal on-budget receipts and outlays nearly matched in FY1999, and the on-budget surplus in FY2000 was 0.9% of GDP. Prior to FY1999, the federal government last had an on-budget surplus in FY1960. Social Security receipts in excess of benefits make up most of the off-budget surplus, which has been positive since FY1985.

37 U.S. Congress, Congressional Budget Office, An Analysis of the President's Budgetary Proposals for Fiscal Year 2009, March 2008, available at http://www.cbo.gov/ftpdocs/89xx/doc8990/03-19-AnalPresBudget.pdf.

38 The debt limit was raised from $5,500 billion to $5,950 billion on August 5, 1997, as part of the Balanced Budget Act of 1997 (P.L. 105-33, 111 Stat. 251).

39 For a comprehensive discussion of the Treasury's previous uses of its short-term ability to avoid breaching the debt limit, see U.S. General Accounting Office, Debt Ceiling: Analysis of Actions During the 1995-1996 Crisis, GAO/AIMD-96-130, August 1996.

40 U.S. Department of the Treasury, Treasury News, Treasury Statement on the Debt Ceiling, May 14, 2002.

41 For additional details, see U.S. General Accounting Office, Debt Ceiling: Analysis of Actions During the 2002 Debt Issuance Suspension Period, GAO-03-134, December 2002.

42 Kenneth Dam, Deputy Secretary of the Treasury, letter to Speaker of the House, Dennis Hastert, December 24, 2002, available at http://www.treas.gov/press/releases/po3718.htm.

43 The Treasury reduced the amount of debt held by selected federal accounts while it sold an equal (or smaller) amount of debt to the public. This raised cash needed to pay for ongoing obligations and kept the debt below the limit.

44 The House Budget Committee has some discretion in setting the debt limit level in the House Joint resolution generated by the Gephardt rule. See CRS Report 98-453, Debt-Limit Legislation in the Congressional Budget Process, by Bill Heniff Jr. and CRS Report RL31913, Developing Debt-Limit Legislation: The House's "Gephardt Rule", by Bill Heniff Jr..

45 U.S. Congress, Congressional Budget Office, The Budget and Economic Outlook: Fiscal Years 2005 to 2014, January 2004.

46 Alan Fram, "Congress May Duck Debt Limit Raise," Oakland Tribune, June 5, 2004.

47 John W. Snow, Secretary of the U.S. Treasury, letter to Senate Majority Leader Bill Frist, October 14, 2004, available at http://www.treas.gov/press/releases/reports/frist.pdf.

48 John W. Snow, Secretary of the Treasury, letter to Senator Max Baucus, December 29, 2005, available at http://www.ombwatch.org/files/budget/pdf/snow_debtlimit_2006.pdf.

49 The end of a recession is said to occur when an economy has stopped shrinking, not when it has recovered. See National Bureau of Economic Research Business Cycle Dating Committee, press release, September 20, 2010, available at http://www.nber.org/cycles/sept2010.html.

50 U.S. Congress, Congressional Budget Office, An Analysis of the President's Budgetary Proposals for Fiscal Year 2009, Table 1.1, March 2008, available at http://www.cbo.gov/ftpdocs/89xx/doc8990/03-19-AnalPresBudget.pdf.

50 U.S. Congress, Congressional Budget Office, The Budget and Economic Outlook: An Update, Table 1-1, August 2009, available at http://www.cbo.gov/doc.cfm?index=10521.

51 Goldman Sachs U.S. Research, "US Daily: The Fiscal 2008 Deficit -- Likely to Top $500 Billion," March 25, 2008.

52 U.S. Congress, House Committee on the Budget, Report to Accompany H. Con. Res. 312, 110th Cong., 2nd sess., H.Rept. 110-543, March 2008, p. 99; U.S. Congress, Senate Committee on the Budget, Report to Accompany S. Res. 70, S.Prt. 110-039, March 2008.

53 U.S. Congress, Congressional Budget Office, Cost Estimate for H.R. 3221 "Housing and Economic Recovery Act of 2008" As passed by the Senate on July 11, 2008, with an amendment transmitted to CBO on July 22, 2008, July 24, 2008, available at http://www.cbo.gov/ftpdocs/95xx/doc9597/hr3221.pdf.

54 For additional information see CRS Report RS22956, The Cost of Government Financial Interventions, Past and Present, by Baird Webel, Marc Labonte, and N. Eric Weiss.

55 U.S. Department of Treasury, "Fact Sheet: Proposed Treasury Authority to Purchase Troubled Assets," Press release hp-1150, Sept. 20, 2008, available at http://www.treas.gov/press/releases/hp1150.htm.

56 U.S. Congress, House Financial Services Committee, Emergency Economic Stabilization Act of 2008 (Amendment to the Senate Amendment to H.R. 3997), available at http://www.house.gov/apps/list/press/financialsvcs_dem/amend_001_xml.pdf. For text of debt limit provision, see Congressional Record, (Sept. 29, 2008), p. H10355.

57 U.S. Congress, Senate Banking, Housing, and Urban Affairs Committee, Emergency Economic Stabilization Act of 2008 (In the Nature of a Substitute to H.R. 1424), available at http://banking.senate.gov/public/_files/latestversionAYO08C32_xml.pdf.

58CQ Weekly, "Fall 2009 Outlook: Debt Limit Increase," September 7, 2009, p. 1966.

59 U.S. Treasury, "November 2009 Quarterly Refunding Statement," press release tg346, November 4, 2009, http://www.ustreas.gov/press/releases/tg346.htm; David Clarke and CQ Staff, "Treasury Gives Congress More Breathing Room on Debt Limit," CQ Today Online News, November 4, 2009.

60 For details, see Joseph Haubrich and John Lindner, "The Supplemental Financing Program," Economic Trends, Federal Reserve of Chicago, September 28, 2009, available at http://www.clevelandfed.org/research/trends/2009/1009/03monpol.cfm.

61The Money Market Observer: Wrightson ICAP's Weekly Newsletter, December 7, 2009.

62The Money Market Observer: Wrightson ICAP's Weekly Newsletter, November 30, 2009.

63 Paul Kane, "House Democrats Discard Larger Debt Limit," Washington Post, December 15, 2009, p. A4.

64CQ Today Midday Update, "Senate Sends Debt Ceiling Increase to House," January 28, 2010.

65 S.Amdt. 3305. A second amendment (S.Amdt. 3300), approved on a 97-0 vote, provides certain protections to the Social Security program. Other amendments were not approved.

66 Jonathan Weisman and John D. McKinnon, "White House Weighs New Panel to Tackle Deficit: Bipartisan Commission Considered As Administration Seeks to Show Resolve on a Problem that Dogs Its Broader Agenda," Wall Street Journal, November 26, 2009, p. A10.

67 Executive Order 13531, "National Commission on Fiscal Responsibility and Reform," February 18, 2010; 75 FR 7927, February 23, 2010.

68 National Commission on Fiscal Responsibility and Reform, The Moment of Truth, report, December 1, 2010, available at http://www.fiscalcommission.gov/sites/fiscalcommission.gov/files/documents/TheMomentofTruth12_1_2010.pdf.

69 U.S. Office of Management and Budget, "H.J.Res. 45 -- Increasing the Statutory Limit on the Public Debt," Statement Of Administration Policy, January 20, 2010, available at http://www.whitehouse.gov/omb/assets/sap_111/saphjr45s_20100120.pdf.

70 For a discussion of earlier debt limit increases, see CRS Report 98-805 E, Public Debt Limit Legislation: A Brief History and Controversies In the 1980s and 1990s, by Philip D. Winters, which is available from the authors upon request.

71 U.S. Congressional Budget Office, The Budget and Economic Outlook: An Update, August 19, 2010, p. 1, available at http://www.cbo.gov/doc.cfm?index=11705.

72 The ability to run fiscal deficits gives the federal government useful flexibility in managing its finances, although large deficits may harm economic performance. See CRS Report RL33657, Running Deficits: Positives and Pitfalls, by D. Andrew Austin.

73Report of the National Commission on Social Security Reform, January 1983, available at http://www.ssa.gov/history/reports/gspan.html.

74 Testimony of Federal Reserve Chairman Alan Greenspan, in U.S. Congress, Senate Committee on the Budget, Outlook for the Federal Budget and Implications for Fiscal Policy, hearings, 107th Cong., 1st sess., January 25, 2001, available at http://www.federalreserve.gov/boarddocs/testimony/2001/20010125/default.htm.

75 For a discussion of PAYGO in the past, see CRS Report R41005, The Statutory PAYGO Process for Budget Enforcement: 1991-2002, by Robert Keith.

76 Executive Order 13531, "National Commission on Fiscal Responsibility and Reform," February 18, 2010; 75 FR 7927, February 23, 2010.

77 National Commission on Fiscal Responsibility and Reform, The Moment of Truth, report, December 1, 2010, available at http://www.fiscalcommission.gov/sites/fiscalcommission.gov/files/documents/TheMomentofTruth12_1_2010.pdf.

 

END OF FOOTNOTES
DOCUMENT ATTRIBUTES
  • Authors
    Austin, D. Andrew
    Levit, Mindy R.
  • Institutional Authors
    Congressional Research Service
  • Subject Area/Tax Topics
  • Jurisdictions
  • Language
    English
  • Tax Analysts Document Number
    Doc 2011-7337
  • Tax Analysts Electronic Citation
    2011 TNT 67-28
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