State and Local Government Series (SLGS) Treasury Debt: A Description [May 6, 2011] [open pdf - 121KB]
"The U.S. Treasury projects the federal debt will reach its statutory limit before May 16, 2011. On May 2, 2011, in anticipation of reaching the statutory debt limit, U.S. Treasury Secretary Timothy Geithner sent a letter to Congress indicating that he would declare a debt issuance suspension period on May 16 to extend Treasury's borrowing capacity until early August 2011. In the same letter, Secretary Geithner also indicated that Treasury would use its existing authorities to extend borrowing capacity. One example of this is that on May 6, 2011, the Treasury Department will 'suspend until further notice the issuance of State and Local Government Series (SLGS) Treasury securities.'1 As of April 30, 2011, SLGS represented 1.27% ($180.8 billion) of total debt outstanding (approximately 0.5% of outstanding debt is not subject to the debt limit). Suspending SLGSs will not change the debt limit, rather just delay the date when it is reached. Some have expressed concern that this suspension will have a negative impact on state and local government finances. This report explains SLGS, a nonmarketable custom tailored security, and how suspension may impact state and local government issuers."
CRS Report for Congress, R41811