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1 1 (January 23, 2003)

handle is hein.crs/crsuntaaawh0001 and id is 1 raw text is: Order Code RS21 111 Updated January 23, 2003 The Debt Limit: The Need to Raise It After Four Years of Surpluses Philip D. Winters Analyst in Government Finance Government and Finance Division Summary Increases in total federal debt are driven by government deficits (which increase debt held by the public) and by the surpluses credited to (and federal accounting for) debt-holding federal accounts, mostly federal trust funds such as the Social Security, Medicare, Transportation, and Civil Service trust funds, which increase debt held by government accounts. Surpluses generally reduce debt held by the public. The surpluses over the four fiscal years (1998-2001) reduced debt held by the public by $448 billion. The surpluses credited to debt-holding government accounts (which generally must invest the surpluses in federal debt), increased their holdings by $853 billion over the same period. The combination raised total federal debt by $405 billion. During the first half of FY2002, debt subject to limit increased enough to reach the then current statutory debt limit, $5.95 trillion, in both early April and again in May 2002. Beginning in December 2001, the Administration repeatedly asked Congress to increase the $5.95 trillion debt ceiling, initially by $750 billion. Not until June 11, 2002 did the Senate pass a $450 billion permanent increase (S. 2578 in the 107'h Congress); the House approved the bill on June 27 (by one vote). The President signed the legislation on June 28 (P.L. 107-199) raising the limit to $6.4 trillion, ending that debt limit crisis. The deficit in FY2002 ($158 billion) and the ongoing increases in debt held by government accounts, led the Administration, in late December 2002, to request that Congress again raise the debt limit, this time, with no amount specified and to raise it before late February 2003. (This report will be updated as events warrant.) The statutory debt limit applies to almost all federal debt.1 It applies to federal debt held by the public, that is debt held outside the federal government itself, and to federal 1 Less than one percent of total the debt is excluded from debt limit coverage. On January 24, 2003, total debt was $6.392 trillion; debt subject to limit was $6.347 trillion, 999.3% of the total debt. Congressional Research Service ** The Library of Congress CRS Report for Congress Received through the CRS Web

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