Reaching the Debt Limit: Background and Potential Effects on Government Operations
Abstract
The gross federal debt, which represents the federal government's total outstanding debt, consists of two types of debt: (1) debt held by the public and (2) debt held in government accounts, also known as intragovernmental debt. Federal government borrowing increases for two primary reasons: (1) budget deficits and (2) investments of any federal government account surpluses in Treasury securities, as required by law. Nearly all of this debt is subject to the statutory limit. The federal debt limit currently stands at $14,294 billion. Following current policy, Treasury has estimated that the debt limit will be reached in spring 2011. Treasury has yet to face a situation in which it was unable to pay its obligations as a result of reaching the debt limit. In the past, the debt limit has always been raised before the debt reached the limit. However, on several occasions Treasury took extraordinary actions to avoid reaching the limit and, as a result, affected the operations of certain programs. If the Secretary of the Treasury determines that the issuance of obligations of the United States may not be made without exceeding the public debt limit, a debt issuance suspension period can be authorized. This gives Treasury the authority to utilize nontraditional methods to finance obligations.
Document Details
- Document Type
- Technical Report
- Publication Date
- Feb 11, 2011
- Accession Number
- ADA540664
Entities
People
- Alison M. Shelton
- Clinton T. Brass
- Dawn Nuschler
- Mindy R. Levit
- Thomas J. Nicola
Organizations
- Library of Congress