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1 1 (September 30, 2021)

handle is hein.crs/govefzg0001 and id is 1 raw text is: Congressional ____ ~ Research Service The Debt Limit in 2021 Updated September 30, 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. On September 28, 2021, Treasury Secretary Janet Yellen notified Congress that Treasury is likely to exhaust its extraordinary measures if Congress has not acted to raise or suspend the debt limit by October 18. At that point, we expect Treasury would be left with very limited resources that would be depleted quickly. Projections from other sources, discussed below, are mostly similar. Secretary Yellen called on Congress to act in a September 19, 2021, commentary, warning of dire consequences if the debt limit were not raised. Recent debt limit episodes share similarities, although the issue in 2021 has a few unique characteristics. First, the COVID-19 pandemic and the emergence of the Delta variant remain a source of economic uncertainty. In addition, fiscal responses spurred by the pandemic have accelerated the pace of federal debt accumulation. Second, the U.S. Treasury 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. A debt limit suspension was also included in the FY2018 continuing appropriations act (P.L. 115-56). The expiration of those discretionary spending caps at the end of FY2021 rendered moot the need for legislation to modify them. Thus, the most frequently used legislative vehicle for the past few debt limit modifications is unavailable in 2021. On September 21, 2021, the House on a 220-211 vote passed H.R. 5305, which would suspend the debt limit through December 16, 2022, and would also provide funding for federal operations until December 3, 2021. On September 27, 2021, the Senate declined by a 48-50 vote to close further debate on the bill. 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 since the debt limit Congressional Research Service https://crsreports.congress.gov IN11702 CRS INSIGHT Prepared for Members and Committees of Congress

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