About | HeinOnline Law Journal Library | HeinOnline Law Journal Library | HeinOnline
LOG IN
LOG IN

1 Federal Debt and the Statutory Limit, November 2021 1 (November 30, 2021)

handle is hein.congrec/cbofdslm0001 and id is 1 raw text is: he debt limit-commonly called the debt ceiling-is the maximum amount of debt that the Department of the Treasury can issue to the public or to other federal agencies. The amount is set by law and has been increased over the years to finance the government's operations. On October 14, 2021, lawmakers raised the debt limit by $480 billion to a total of $28.9 trillion.1 On October 18, the Treasury announced a continuation of the debt issuance suspen- sion period during which, under current law, it could take extraordinary measures to borrow additional funds without breaching the debt ceiling. (The debt issuance suspension period began on August 1, 2021.) The Treasury has already reached the new debt limit of $28.9 trillion, so it currently has no room to borrow under its standard operating procedures, other than to replace maturing debt. To avoid breaching the limit, the Treasury is using the extraordinary measures that allow it to con- tinue to borrow additional amounts for a limited time. How long those extraordinary measures last will be heavily influenced by transactions scheduled over the coming weeks. For example, the Treasury has announced that it will implement a provision of the Infrastructure Investment and Jobs Act (Public Law 117-58) by transferring $118 bil- lion to the Highway Trust Fund on December 15.2 The Congressional Budget Office projects that, if the debt limit remained unchanged and if the Treasury made that transfer in full, the government's ability to borrow using extraordinary measures would be exhausted soon after it made the transfer. In that case, the Treasury would most likely run out of cash before the end of 1. The increase was enacted in the Promoting Physical Activity for Americans Act, Public Law 117-50. 2. See Department of the Treasury, Secretary Yellen Sends Debt Limit Letter to Congress (November 16, 2021), https://go.usa.gov/xeNqx. December. If that occurred, the government would be unable to pay its obligations fully, and it would delay making payments for some activities, default on its debt obligations, or both. The Secretary of the Treasury may have the authority to defer all or part of the transfer to the Highway Trust Fund. If payments were made to the Highway Trust Fund only in the amounts needed for immediate use, the government would be able to pay its obligations for a few weeks longer than it would if the payments were made in full-until sometime in January. The timing and amount of revenue collections and outlays over the next few weeks are especially uncertain, given the magnitude of outlays related to the 2020-2021 coronavirus pandemic, and could differ from CBO's pro- jections. Therefore, the extraordinary measures could be exhausted, and the Treasury could run out of cash, earlier or later than CBO projects. What Constitutes Debt Subject to the Statutory Limit? Debt subject to the statutory limit (commonly referred to as debt subject to limit) consists of debt held by the pub- lic and debt held by government accounts.3 Debt held by the public is mostly in securities that the Treasury issues to raise cash to fund operations that cannot be covered by federal revenues. Such debt is held by outside inves- tors, including the Federal Reserve System. Debt held by government accounts is issued to the federal government's trust funds and other federal accounts for internal trans- actions; it is not traded in capital markets. Trust funds for Social Security, Medicare, military retirement, and civil service retirement and disability hold most of that debt. The Highway Trust Fund also holds such debt. 3. For more information about different measures of federal debt, see Congressional Budget Office, Federal Debt: A Primer (March 2020), www.cbo.gov/publication/56165.

What Is HeinOnline?

HeinOnline is a subscription-based resource containing thousands of academic and legal journals from inception; complete coverage of government documents such as U.S. Statutes at Large, U.S. Code, Federal Register, Code of Federal Regulations, U.S. Reports, and much more. Documents are image-based, fully searchable PDFs with the authority of print combined with the accessibility of a user-friendly and powerful database. For more information, request a quote or trial for your organization below.



Short-term subscription options include 24 hours, 48 hours, or 1 week to HeinOnline.

Purchase Access

Contact us for annual subscription options:

Contact Us

Already a HeinOnline Subscriber?

Log In

profiles profiles most