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1 1 (August 17, 2021)

handle is hein.crs/goveejg0001 and id is 1 raw text is: Congressional * Research Service E E The Debt Limit in 2021 Updated August 17, 2021 Debt limit episodes-which can be defined as starting when the statutory limit on federal debt restricts some of the U.S. Treasury's normal debt operations and ending when new legislation to modify the limit is enacted-have been a recurrent federal fiscal feature in the past two decades. Since 2002, the debt limit has been modified 18 times. The Bipartisan Budget Act of 2019 (BBA 2019; P.L. 116-37), enacted in August 2019, had suspended the debt limit through July 31, 2021. The limit was reset at just over $28.4 trillion at the beginning of August 2021. Recent debt limit episodes share similarities, although the issue in 2021 has a few unique characteristics. First, the COVID-19 pandemic remains a source of economic uncertainty, and the fiscal responses it spurred have accelerated the pace of federal debt accumulation. Second, the U.S. Treasuy sharply increased its cash balances in 2020 to accommodate those fiscal responses. Third, since 2015, Bipartisan Budget Acts that adjusted statutory caps on discretionary spending imposed by the Budget Control Act of 2011 (BCA; P.L. 112-25) also suspended the debt limit. The expiration of those discretionary spending caps at the end of FY2021 rendered moot the need for legislation to modify them. Thus, the legislative vehicle used for the past few debt limit modifications is unavailable in 2021. Federal Debt and the Debt Limit When in force, the debt limit covers over 99% of federal debt. Federal debt grows when outlays exceed revenues and when the federal credit balance sheet expands. Federal debt outstanding in mid-August 2021 totaled about $28.4 trillion. Most of that debt-$22.3 trillion-is held by the public, including $5.1 trillion in Federal Reserve holdings. Another $6.1 trillion is held as intragovernmental debt, mostly in various federal trust funds such as Social Security and federal retirement programs, which hold special Treasury securities that can be redeemed later to pay program expenses. The Treasury Secretary and Extraordinary Measures The debt limit, as noted above, was reset to a level accommodating federal financial commitments since the BBA 2019 suspended it in August 2019. On August 2, 2021, Treasury Secretay Janet Yellen informed Congress that she had invoked authorities to use extraordinary measures and urged legislative action to address the debt limit. In particular, Secretary Yellen declared a debt issuance suspension period that allows the U.S. Treasury to suspend investments in Civil Service and U.S. Postal Service retirement funds Congressional Research Service https://crsreports.congress.gov IN11702 CRS INSIGHT Prepared for Membersand Committeesof Congress

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