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• Reaching the Debt Limit: Background and Potential Effects on Government Operations [June 3, 2011]

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  "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. 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, Treasury can make use of 'extraordinary measures.' […] The need to raise (or lower) the limit during a session of Congress is driven by previous decisions regarding revenues and spending stemming from legislation enacted earlier in the session or in prior years. Nevertheless, the consideration of debt-limit legislation often is viewed as an opportunity to reexamine fiscal and budgetary policy. Consequently, House and Senate action on legislation adjusting the debt limit often is complicated, hindered by policy disagreements, and subject to delay."

  Library of Congress. Congressional Research Service

  Nicola, Thomas J.; Brass, Clinton T.; Levit, Mindy R. . . .

  2011-06-03
• Federal Budget: Issues for FY2011, FY2012, and Beyond [April 29, 2011]

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  "The federal budget is central to Congress's ability to exercise its 'power of the purse.' Over the last several fiscal years the imbalance between spending and revenues has grown as a result of the economic downturn and policies enacted in response to financial turmoil. In FY2010, the last completed fiscal year, the U.S. government spent $3,456 billion (23.8% of GDP) and collected $2,162 billion in revenue (14.9% of GDP), resulting in a budget deficit of $1,294 billion (8.9% of GDP). The Congressional Budget Office (CBO) baseline estimates the FY2011 budget deficit at $1,399 billion or 9.3% of GDP and deficits throughout the 10-year budget window. The deficit is projected to be higher than that of FY2010 due to increases in mandatory spending and restrained growth in revenues as a result of the temporary payroll tax reduction. Under the President's Budget, deficit estimates for FY2011 amount to $1,645 billion or 10.9% of GDP. This is larger than CBO's baseline deficit estimate, primarily due to differences in assumptions used relating to funding levels for the remainder of the fiscal year. Congress enacted and the President signed, on April 15, 2011, the Department of Defense and Full-Year Continuing Appropriations Act, 2011 (P.L. 112-10), which completed action on the FY2011 regular appropriations acts. Prior to the enactment of this legislation, the federal government had been operating on a series of seven continuing resolutions (CRs) since the beginning of the fiscal year."

  Library of Congress. Congressional Research Service

  Levit, Mindy R.

  2011-04-29
• Debt Limit: History and Recent Increases [March 7, 2011]

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  "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. [...] 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."

  Library of Congress. Congressional Research Service

  Austin, D. Andrew; Levit, Mindy R.

  2011-03-07
• Debt Limit: History and Recent Increases [May 16, 2011]

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  "On May 16, 2011, U.S. Treasury Secretary Timothy Geithner announced that the federal debt had reached its statutory limit and declared a debt issuance suspension period, which would allow certain extraordinary measures to extend Treasury's borrowing capacity until early August 2011. While many of the extraordinary measures have been used by previous Treasury Secretaries, the funding provided by those measures may buy much less time than in previous debt limit episodes. Given the size of the FY2011 federal deficit, projected to reach $1,399 billion according to the latest Congressional Budget Office (CBO) baseline estimates, those extraordinary measures may provided limited additional time before the federal government becomes unable to meet its financial obligations. Thus, funding federal operations could soon become complicated without a debt limit increase."

  Library of Congress. Congressional Research Service

  Austin, D. Andrew; Levit, Mindy R.

  2011-05-16
• Reaching the Debt Limit: Background and Potential Effects on Government Operations [April 27, 2011]

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  "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. 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, Treasury can make use of 'extraordinary measures.' Some of these measures require the Treasury Secretary to authorize a debt issuance suspension period. [...] It is extremely difficult for Congress to effectively influence short-term fiscal and budgetary policy through action on legislation adjusting the debt limit. The need to raise (or lower) the limit during a session of Congress is driven by previous decisions regarding revenues and spending stemming from legislation enacted earlier in the session or in prior years. Nevertheless, the consideration of debt-limit legislation often is viewed as an opportunity to reexamine fiscal and budgetary policy."

  Library of Congress. Congressional Research Service

  Levit, Mindy R.; Brass, Clinton T.; Nicola, Thomas J.

  2011-04-27
• Federal Budget: Issues for FY2011, FY2012, and Beyond [April 12, 2011]

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  "The federal budget is central to Congress's ability to exercise its 'power of the purse.' Federal budget decisions express Congress's priorities and reinforce Congress's influence on federal policies. Making budgetary decisions for the federal government is a complex process and requires balancing competing goals. Recent economic turmoil has strained the federal budget as a result of declining revenues and increasing spending levels. As the economic recovery continues, the budget process will allow the President and Congress to negotiate priorities and refine spending plans. The federal government faces very large budget deficits, rising costs of entitlement programs, significant spending on overseas military operations, and low revenue levels. The enactment of financial intervention and fiscal stimulus legislation in FY [fiscal year] 2008 and FY2009 may have helped to bolster the economy, though it increased the budget deficit. While GDP [gross domestic product] growth has returned in recent quarters, unemployment remains elevated and government spending on 'automatic stabilizer' programs, such as unemployment insurance and income support, remains higher than historical averages. This suggests that the recession's effects on the budget will likely linger for several more fiscal years. In addition to the current challenges, concerns remain about the federal government's long-term fiscal situation. The rising costs of federal health care programs and the effects of the baby boom generation's retirement present serious challenges to future fiscal stability. Operating these programs in their current form may pass on substantial economic burdens to future generations. To avoid this would require significant government action and public sacrifice at levels greater than those needed to counteract the recent economic downturn."

  Library of Congress. Congressional Research Service

  Levit, Mindy R.

  2011-04-12
• Debt Limit: History and Recent Increases [May 2, 2011]

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  "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 $14,288 billion on April 29, 2011, of which $14,236 billion was subject to the debt limit. The U.S. Treasury projects the federal debt will reach its statutory limit before May 16, 2011. The Treasury Secretary wrote that he would declare a debt issuance suspension period on that date, unless Congress acted beforehand, which would allow certain extraordinary measures to extend Treasury's borrowing capacity until early August 2011. Funding federal operations could soon become complicated without a debt limit increase."

  Library of Congress. Congressional Research Service

  Austin, D. Andrew; Levit, Mindy R.

  2011-05-02
• Reducing the Budget Deficit: The President's Fiscal Commission and Other Initiatives [April 29, 2011]

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  "The federal budget is on an unsustainable path. Though deficit levels are currently elevated, they are expected to fall towards the middle part of the decade as the economic recovery continues. Looking beyond this decade, however, the country's fiscal outlook becomes more bleak as spending on programs like Social Security, Medicare, and Medicaid, and net interest are projected to consume a larger portion of the total federal budget. Budget policy debates thus far in the 112th Congress have centered on how to achieve meaningful deficit reduction and implementation of a plan to stabilize the federal debt. Various views and opinions exist about how to improve the long-term fiscal outlook, specifically centered around which programs should be prioritized or sacrificed. Delays in taking corrective action will exacerbate the size of the changes that need to be made. At the extreme, if no actions are taken, the United States risks a significant economic crisis and the government may be limited in its ability to address these challenges. Any choices that are made to address the budgetary imbalances have important economic, social, and generational impacts in the present and the future. In order to undertake any substantive changes to the federal policies and programs, sacrifices to favored programs and increases in taxes will likely be required. The sacrifices made today are essential to minimizing the size of potential programmatic cuts or tax increases, reducing the probability of a future crisis, and ensuring an improved standard of living for future generations."

  Library of Congress. Congressional Research Service

  Levit, Mindy R.

  2011-04-29
• Reducing the Budget Deficit: The President's Fiscal Commission and Other Initiatives [June 8, 2011]

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  "The federal budget is on an unsustainable path. Though deficit levels are currently elevated, they are expected to fall towards the middle part of the decade as the economic recovery continues. Looking beyond this decade, however, the country's fiscal outlook becomes more bleak as spending on programs like Social Security, Medicare, and Medicaid, and net interest are projected to consume a larger portion of the total federal budget. Budget policy debates thus far in the 112th Congress have centered on how to achieve meaningful deficit reduction and implementation of a plan to stabilize the federal debt. Various views and opinions exist about how to improve the long-term fiscal outlook, specifically centered around which programs should be prioritized or sacrificed. Delays in taking corrective action will exacerbate the size of the changes that need to be made. At the extreme, if no actions are taken, the United States risks a significant economic crisis and the government may be limited in its ability to address these challenges. […] This report discusses why the federal government's fiscal path is unsustainable and provides an overview of proposals of selected groups that have published detailed recommendations on how to return the federal budget to a sustainable course."

  Library of Congress. Congressional Research Service

  Levit, Mindy R.

  2011-06-08
• Debt Limit: History and Recent Increases [September 8, 2010]

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  "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 generally reduce debt held by the public, while deficits raise it. On September 3, 2010, total federal debt outstanding was $13.435 trillion."

  Library of Congress. Congressional Research Service

  Austin, D. Andrew; Levit, Mindy R.

  2010-09-08
• Trends in Discretionary Spending [February 22, 2010]

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  "Discretionary spending is provided and controlled through appropriations acts, which fund many of the activities commonly associated with such federal government functions as running executive branch agencies, congressional offices and agencies, and international operations of the government. Essentially all spending on federal wages and salaries is discretionary. Federal spending in 2009 accounted for just under a quarter (24.7%) of the U.S. economy, as measured by gross domestic product (GDP). Federal spending since 1962 has averaged about a fifth of GDP. (Years denote federal fiscal years unless noted otherwise.) Discretionary spending accounted for 35.2% of total outlays in 2009, as extraordinary federal responses to financial turmoil sharply increased mandatory spending (59.5% of outlays in 2009), reducing discretionary spending's share of total spending. [...] The Obama Administration in its recent budget submission called for a three-year freeze on nonsecurity discretionary spending. Weak economic conditions have depressed federal revenues and may continue to increase government social safety-net expenditures. Some contend that additional stimulus measures are needed to reduce high unemployment levels, while others have called for imposing greater budgetary stringency. Over the long term, projected future growth in entitlement program outlays may put severe pressure on discretionary spending unless policy changes are enacted or federal revenues are increased. This report will be updated as events warrant." This CRS (Congressional Research Service) report also addresses Homeland Security and Defense spending.

  Library of Congress. Congressional Research Service

  Austin, D. Andrew; Levit, Mindy R.

  2010-02-22
• Debt Limit: History and Recent Increases [February 16, 2010]

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  "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 ten times since 2001. [...] A debt limit increase was included in the Housing and Economic Recovery Act of 2008 (H.R. 3221) and signed into law (P.L. 110-289) on July 30. 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 was increased for the third time in less than a year with the passage of 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), which raised the debt limit to $12,104 billion. 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 trillion. In August 2009, Treasury reportedly said that the debt limit would be reached in mid-October, although the Treasury later stated that the limit would not be reached until mid or late 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 trillion 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."

  Library of Congress. Congressional Research Service

  Austin, D. Andrew; Levit, Mindy R.

  2010-02-16
• Debt Limit: History and Recent Increases [June 1, 2011]

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  "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 $14,345 billion on May 31, 2011. The U.S. Treasury Secretary Timothy Geithner announced that the federal debt reached its statutory limit on May 16, 2011, and that he had declared a debt issuance suspension period, allowing certain extraordinary measures to extend Treasury's borrowing capacity until early August 2011. […] The recent economic slowdown led to sharply higher deficits in recent years, which led to a series of debt limit increases."

  Library of Congress. Congressional Research Service

  Austin, D. Andrew; Levit, Mindy R.

  2011-06-01
• Debt Limit: History and Recent Increases [August 3, 2011]

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  "Total federal debt 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. […] 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). Following this measure, the debt limit was subsequently increased by $290 billion to $12,394 billion (P.L. 111-123) in a stand-alone debt limit bill on December 28, 2009, and by $1.9 trillion to $14,294 billion on February 12, 2010 (P.L. 111-139) as part of a package that also contained the Statutory Pay-As-You-Go Act of 2010. Following enactment of the Budget Control Act of 2011 (P.L. 112-25) and the submission of a certification letter from President Obama to the Congress, the debt limit was increased on August 2, 2011, by $400 billion, to $14,694 billion."

  Library of Congress. Congressional Research Service

  Levit, Mindy R.; Austin, D. Andrew

  2011-08-03
• Reaching the Debt Limit: Background and Potential Effects on Government Operations [July 27, 2011]

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  "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. 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. […] It is extremely difficult for Congress to effectively influence short-term fiscal and budgetary policy through action on legislation adjusting the debt limit. The need to raise (or lower) the limit during a session of Congress is driven by previous decisions regarding revenues and spending stemming from legislation enacted earlier in the session or in prior years. Nevertheless, the consideration of debt-limit legislation often is viewed as an opportunity to reexamine fiscal and budgetary policy. Consequently, House and Senate action on legislation adjusting the debt limit often is complicated, hindered by policy disagreements, and subject to delay."

  Library of Congress. Congressional Research Service

  Levit, Mindy R.; Brass, Clinton T.; Nicola, Thomas J. . . .

  2011-07-27
• Budget Control Act of 2011: How Do the Discretionary Caps and Automatic Spending Cuts Affect the Budget and the Economy? [November 29, 2011]

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  "The Budget Control Act of 2011 (BCA) was signed into law by President Obama on August 2, 2011 (P.L. 112-25). In addition to increasing the debt limit, the BCA contained a variety of measures intended to reduce the deficit by at least $2.1 trillion over the FY2012-FY2021 period. These included $917 billion in savings from statutory caps on discretionary spending and the establishment of a Joint Select Committee on Deficit Reduction. This report focuses on the individual budgetary effects of these provisions. [...] This report focuses on how the BCA will affect spending and the budget deficit through the 'first round' effects, related to discretionary spending caps and student loan provisions, and the 'second round' effects of additional deficit reduction, related to the work of the Joint Committee. The report also examines short and long run effects of deficit reduction on the economy. The Appendix compares the BCA to past deficit-reduction legislation."

  Library of Congress. Congressional Research Service

  Labonte, Marc; Levit, Mindy R.

  2011-11-29
• Federal Budget: Issues for FY2013 and Beyond [May 1, 2012]

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  "The federal budget is central to Congress's ability to exercise its 'power of the purse.' Federal budget decisions also express Congress's priorities and reinforce Congress's influence on federal policies. Making budgetary decisions for the federal government is a complex process and requires balancing competing goals. Recent economic turmoil has strained the federal budget as a result of declining revenues and increasing spending levels. As the economic recovery continues, the budget process will allow the President and Congress to negotiate priorities and refine spending plans. The federal government faces very large budget deficits, rising costs of entitlement programs, significant spending on overseas military operations, and low revenue levels. The enactment of financial intervention and fiscal stimulus legislation in FY2008 and FY2009 may have helped to bolster the economy, though they increased the budget deficit. While the economy is growing again, unemployment remains elevated and government spending on 'automatic stabilizers,' such as unemployment insurance and income security programs, remains higher than historical averages. This suggests that the recession's effects on the budget will likely remain for several more fiscal years. In addition to the current challenges, concerns remain about the federal government's long-term fiscal situation. Work on improving the budget outlook resulted in the enactment of the Budget Control Act of 2011 (BCA; P.L. 112-25), which contained provisions to reduce the budget deficit by about $2 trillion over the next decade. However, the rising costs of federal health care programs and the effects of the baby boom generation's retirement, which present serious challenges to future fiscal stability, have yet to be addressed."

  Library of Congress. Congressional Research Service

  Levit, Mindy R.

  2012-05-01
• Budget Control Act of 2011: The Effects on Spending and the Budget Deficit When the Automatic Spending Cuts Are Implemented [May 4, 2012]

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  "Following a lengthy debate over raising the debt limit, the Budget Control Act of 2011 (BCA; P.L. 112-25) was signed into law by President Obama on August 2, 2011. In addition to including a mechanism to increase the debt limit, the BCA contained a variety of measures intended to reduce the budget deficit through spending reductions. Combined, these measures are projected to reduce the deficit by roughly $2 trillion over the FY2012-FY2021 period. There are two main groups of spending reductions in the BCA: (1) discretionary spending caps that came into effect in FY2012; and (2) a $1.2 trillion automatic spending reduction process (sometimes referred to as the 'trigger') that will come into effect on January 2, 2013, unless new legislation is enacted to prevent it. H.R. 4966, the Sequester Replacement Act of 2012, and the President's FY2013 Budget both propose eliminating the trigger and replacing it with alternative measures to reduce the deficit. To provide context for this debate, this report discusses the effects of the BCA on spending and the deficit, assuming that the January 2013 automatic spending reductions proceed as scheduled. The BCA spending cuts mainly apply to discretionary spending--$0.8 trillion in cuts to defense programs and $0.7 trillion in cuts to non-defense programs over 10 years. Mandatory spending is cut by less than $0.2 trillion over 10 years, with most of the savings from Medicare."

  Library of Congress. Congressional Research Service

  Levit, Mindy R.; Labonte, Marc

  2012-05-04
• Budget Control Act of 2011: The Effects on Spending and the Budget Deficit When the Automatic Spending Cuts Are Implemented [April 23, 2012]

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  "Following a lengthy debate over raising the debt limit, the Budget Control Act of 2011 (BCA; P.L. 112-25) was signed into law by President Obama on August 2, 2011. In addition to including a mechanism to increase the debt limit, the BCA contained a variety of measures intended to reduce the budget deficit through spending reductions. Combined, these measures are projected to reduce the deficit by roughly $2 trillion over the FY2012-FY2021 period. There are two main groups of spending reductions in the BCA: (1) discretionary spending caps that came into effect in FY2012; and (2) a $1.2 trillion automatic spending reduction process (sometimes referred to as the 'trigger') that will come into effect on January 2, 2013, unless new legislation is enacted to prevent it. The House FY2013 Budget Resolution (H.Con.Res. 112), which passed the House on March 29, 2012, and the President's FY2013 Budget both propose eliminating the trigger and replacing it with alternative measures to reduce the deficit."

  Library of Congress. Congressional Research Service

  Levit, Mindy R.; Labonte, Marc

  2012-04-23
• Reaching the Debt Limit: Background and Potential Effects on Government Operations [May 31, 2012]

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  "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 $16,394 billion. 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, Treasury can make use of 'extraordinary measures.' Some of these measures require the Treasury Secretary to authorize a debt issuance suspension period. After a lengthy debate over the debt limit in the summer of 2011, the enactment of the Budget Control Act of 2011 (P.L. 112-25) on August 2, 2011, provided for an increase in the debt limit to its current level. Secretary Geithner has stated that the current debt limit will likely be reached before the end of the year and the use of extraordinary measures could likely stave off an increase in the debt limit until early 2013."

  Library of Congress. Congressional Research Service

  Levit, Mindy R.; Brass, Clinton T.; Nicola, Thomas J. . . .

  2012-05-31
• Budget Control Act of 2011: Budgetary Effects of Proposals to Replace the FY2013 Sequester [August 24, 2012]

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  "The Budget Control Act of 2011 (BCA; P.L. 112-25) provided for an increase in the statutory limit on the public debt in conjunction with a variety of measures to reduce the budget deficit. Included in these measures was the creation of a Joint Select Committee on Deficit Reduction, which was tasked to develop and submit a plan to Congress containing deficit reduction to total at least $1.2 trillion over the FY2012-FY2021 period. However, because the committee did not report out recommendations, the BCA's automatic spending reduction process was triggered. This process, set to begin on January 2, 2013, would reduce federal outlays over the next decade unless legislation is enacted to prevent it. Both President Obama and some Members of Congress have offered proposals for repealing or modifying the automatic spending reductions. The President's FY2013 Budget Proposal eliminates the automatic spending reductions for all nine years and replaces them with alternative measures to reduce the deficit. The House FY2013 Budget Resolution (H.Con.Res. 112), accompanying budget reconciliation procedures, and the resulting Sequester Replacement Reconciliation Act (H.R. 5652), and the Van Hollen Amendment to H.R. 5652 propose eliminating different elements of the automatic spending reductions in FY2013 only and replacing them with alternative measures to reduce the deficit."

  Library of Congress. Congressional Research Service

  Levit, Mindy R.

  2012-08-24
• Major Fiscal Issues Before Congress in FY2013 [August 10, 2012]

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  From the Document: "The federal budget deficit has exceeded $1 trillion in each of the last three fiscal years and is expected to exceed that level in FY2012. Concern over these large deficits, as well as the long-term trajectory of the federal budget, has resulted in significant debate during the 112th Congress over how to achieve meaningful deficit reduction and how to implement a plan to stabilize the federal debt. At the same time, the economy is recovering from its largest downturn since the Great Depression, and concerns have been expressed that growth in the United States may falter to the point where the U.S. economy again experiences recession. This has resulted in some renewed debate over whether additional stimulus may be needed. Over the next few months through the early part of calendar year 2013, Congress will be facing choices on how to deal with numerous expiring provisions, across-the-board spending cuts, and other short-term considerations that will have major effects on the federal budget. Some have referred to this as the 'fiscal cliff.' Choosing how to address these issues will have a significant impact on the size of the budget deficit and the pace of economic recovery going forward. Further changes to other spending and revenue policies could also address some of the longer-term drivers of projected budgetary imbalance, while simultaneously impacting the economy. This report provides a brief overview of the major tax and spending policy changes set to take effect under current law at the end of 2012 or early in 2013. Collectively, these policies have been referred to by some as the 'fiscal cliff.' The report also includes links to other CRS [Congressional Research Service] reports which provide more information and analysis of the individual provisions discussed below."

  Library of Congress. Congressional Research Service

  Levit, Mindy R.; Sherlock, Molly F.; Hahn, Jim

  2012-08-10
• Budget Control Act of 2011: Effects on Spending Levels and the Budget Deficit [October 5, 2011]

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  "The Budget Control Act of 2011 (BCA) was signed into law by President Obama on August 2, 2011 (P.L. 112-25). In addition to increasing the debt limit, the BCA contained a variety of measures intended to reduce the deficit by at least $2.1 trillion over the FY2012-FY2021 period. These included $917 billion in savings from statutory caps on discretionary spending and the establishment of a Joint Select Committee on Deficit Reduction to identify further budgetary savings of at least $1.2 trillion over 10 years. The BCA discretionary spending caps are projected to result in $917 billion in deficit reduction over the FY2012-FY2021 period. Several adjustments to the caps are permitted, including for spending on Overseas Contingency Operations and emergencies. The precise programmatic impact of these reductions in discretionary spending will be determined in the annual appropriations process. Under the Congressional Budget Office's (CBO's) August 2011 baseline, which incorporates the effects of the BCA, the discretionary spending caps result in a decline in spending in nominal dollar terms in FY2012 and FY2013. In nominal terms, discretionary spending does not regain its FY2011 level until FY2018. Discretionary spending has fallen in nominal terms only three times since FY1962, most recently in FY1996. […] Since the debt cannot perpetually rise faster than GDP, additional spending cuts or revenue increases would eventually be needed. Since deficit reduction under the BCA's discretionary caps is relatively small in FY2012, the short-term effects on the economy should be limited. Were Congress to enact a Joint Committee plan that reduced the deficit significantly in FY2012, this would increase the BCA's contractionary effects on the economy. In the long run, economic theory suggests that large deficits would have negative effects on interest rates, investment spending, trade deficits, and GDP [gross domestic product]."

  Library of Congress. Congressional Research Service

  Levit, Mindy R.; Labonte, Marc

  2011-10-05
• Debt Limit: History and Recent Increases [January 31, 2013]

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  "Total federal debt 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. […] Congress has always placed restrictions on federal debt. The form of debt restrictions, structured as amendments to the Second Liberty Bond Act of 1917, evolved into a general debt limit in 1939. Congress has voted to raise the debt limit 11 times since 2001, due to persistent deficits and additions to federal trust funds. Congress raised the limit in June 2002, and by December 2002 the U.S. Treasury asked Congress for another increase, which passed in May 2003. In June 2004, the U.S. Treasury asked for another debt limit increase and again in October 2004, which was enacted on November 19, 2004. In 2005, reconciliation instructions in the FY2006 budget resolution (H.Con.Res. 95) included a debt limit increase. After warnings from the U.S. Treasury, Congress passed an increase that the President signed on March 20. In 2007, Congress approved legislation (H.J.Res. 43) to raise the debt limit by $850 billion to $9,815 billion that the President signed September 29, 2007."

  Library of Congress. Congressional Research Service

  Austin, D. Andrew; Levit, Mindy R.

  2013-01-31
• Reaching the Debt Limit: Background and Potential Effects on Government Operations [February 11, 2011]

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  "The federal government's statutory debt limit is currently $14,294 billion (P.L. 111-139).1 On January 6, 2011, Secretary of the Treasury Timothy Geithner issued a letter to Congress stating that the debt limit would be reached sometime between March 31 and May 16, 2011. Treasury has subsequently revised these estimates saying they now expect to reach the debt limit sometime between April 5, 2011, and May 31, 2011, due to an upward revision to projected receipts and a downward revision in projected debt to be issued to government trust funds. […] This report examines the possibility of the federal government reaching its statutory debt limit and not raising it, with a particular focus on government operations. First, the report explains the nature of the federal government's debt, the processes associated with federal borrowing, and historical events that may influence prospective actions. It also includes an analysis of what could happen if the federal government may no longer issue debt, has exhausted alternative sources of cash, and, therefore, depends on incoming receipts or other sources of funds to provide any cash needed to liquidate federal obligations.3 Finally this report lays out considerations for increasing the debt limit under current policy and what impact fiscal policy could have on the debt limit going forward."

  Library of Congress. Congressional Research Service

  Nicola, Thomas J.; Nuschler, Dawn; Shelton, Alison M. . . .

  2011-02-11
• Debt Limit: History and Recent Increases [July 20, 2011]

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  "The recent 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 will be updated as events warrant."

  Library of Congress. Congressional Research Service

  Austin, D. Andrew; Levit, Mindy R.

  2011-07-20
• Federal Budget: Issues for FY2011, FY2012, and Beyond [March 11, 2011]

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  "The federal budget is central to Congress's ability to exercise its 'power of the purse.' Over the last several fiscal years the imbalance between spending and revenues has grown as a result of the economic downturn and policies enacted in response to financial turmoil. In FY2010, the last completed fiscal year, the U.S. government spent $3,456 billion (23.8% of GDP) and collected $2,162 billion in revenue (14.9% of GDP), resulting in a budget deficit of $1,294 billion (8.9% of GDP). The CBO baseline estimates the FY2011 budget deficit at $1,480 billion or 9.8% of GDP and deficits throughout the 10-year budget window. The deficit is projected to be higher than that of FY2010 due to increases in mandatory spending and restrained growth in revenues as a result of the temporary payroll tax reduction. Under the President's Budget, deficit estimates for FY2011 amount to $1,645 billion or 10.9% of GDP. This is larger than CBO's [Congressional Budget Office] baseline deficit estimate, primarily due to differences in assumptions used relating to funding levels for the remainder of the fiscal year. Congress and the President have yet to complete action on any of the 12 FY2011 regular appropriations acts. As a result, the federal government has been operating on a series of five continuing resolutions since the beginning of the fiscal year. If further budget authority is not provided either through another continuing resolution or regular appropriations acts, a funding gap will occur for those projects and activities that are funded through annual appropriations acts."

  Library of Congress. Congressional Research Service

  Levit, Mindy R.

  2011-03-11
• Budget Control Act of 2011: Budgetary Effects of Proposals to Replace the FY2013 Sequester [November 9, 2012]

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  "The Budget Control Act of 2011 (BCA; P.L. 112-25) provided for an increase in the statutory limit on the public debt in conjunction with a variety of measures to reduce the budget deficit. Included in these measures was the creation of a Joint Select Committee on Deficit Reduction, which was tasked to develop and submit a plan to Congress containing deficit reduction to total at least $1.2 trillion over the FY2012-FY2021 period. However, because the committee did not report out recommendations, the BCA's automatic spending reduction process was triggered. This process, set to begin on January 2, 2013, would reduce federal outlays over the next decade unless legislation is enacted to prevent it. [] On September 13, the House passed the National Security and Job Protection Act (H.R. 6365), introduced by Representative Allen West, by a vote of 223-196. The act cancels the FY2013 sequester on discretionary defense, discretionary non-defense, and mandatory defense contingent upon enactment of H.R. 5652, or an alternative measure that would achieve outlay reductions equal to those to be achieved by the FY2013 sequester in those categories. This legislation was determined by CBO [Congressional Budget Office] to not have a budgetary impact. In addition to the measures proposed above to replace the BCA's automatic spending cuts, President Obama signed into law the Sequestration Transparency Act of 2012 (H.R. 5872) on August 7, 2012. This legislation requires OMB [Office of Management and Budget], in consultation with the House and Senate Appropriations Committees, to submit a detailed report within 30 days of enactment containing information on how the BCA's FY2013 automatic spending reductions will affect each nonexempt program, project, and activity. The STA report was released on September 14, 2012."

  Library of Congress. Congressional Research Service

  Levit, Mindy R.

  2012-11-09
• Debt Limit: History and Recent Increases [January 10, 2013]

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  "Total federal debt 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. […] Congress has always placed restrictions on federal debt. The form of debt restrictions, structured as amendments to the Second Liberty Bond Act of 1917, evolved into a general debt limit in 1939. Congress has voted to raise the debt limit 11 times since 2001, due to persistent deficits and additions to federal trust funds. Congress raised the limit in June 2002, and by December 2002 the U.S. Treasury asked Congress for another increase, which passed in May 2003. In June 2004, the U.S. Treasury asked for another debt limit increase and again in October 2004, which was enacted on November 19, 2004. In 2005, reconciliation instructions in the FY2006 budget resolution (H.Con.Res. 95) included a debt limit increase. After warnings from the U.S. Treasury, Congress passed an increase that the President signed on March 20. In 2007, Congress approved legislation (H.J.Res. 43) to raise the debt limit by $850 billion to $9,815 billion that the President signed September 29, 2007."

  Library of Congress. Congressional Research Service

  Austin, D. Andrew; Levit, Mindy R.

  2013-01-10
• Reaching the Debt Limit: Background and Potential Effects on Government Operations [January 4, 2013]

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  "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 $16,394 billion. 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, Treasury can make use of 'extraordinary measures.' Some of these measures require the Treasury Secretary to authorize a debt issuance suspension period."

  Library of Congress. Congressional Research Service

  Levit, Mindy R.; Brass, Clinton T.; Nicola, Thomas J.

  2013-01-04