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1 1 (January 18, 2002)

handle is hein.crs/crsuntaaghg0001 and id is 1 raw text is: Order Code RS21111 January 18, 2002 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 The statutory debt limit applies to over 98% of all federal debt, whether held by the government itself (by government accounts) or by the public (any individual or entity that is not the federal government). The government's surplus or deficit affects only the change in debt held by the public; changes in debt held by government accounts responds to surpluses or deficits credited to the accounts themselves. Federal debt subject to limit is again closing in on the current statutory debt limit in spite of four years of surpluses. The surpluses reduced federal debt held by the public but had no effect on the ongoing increases in federal debt held by federal government accounts (which are mostly federal trust funds). Because of the continuing rise in government account held debt and the expectation of a government deficit in fiscal year 2002, the Administration requested, in December 2001, that Congress increase the existing $5.95 trillion limit to $6.7 trillion. The Administration indicated that the limit might begin interfering with the Treasury's ability to carry out its financial responsibilities as early as March 2002. The statutory debt limit applies to almost all federal debt.' It applies to federal debt held by the public, that is debt held outside the federal government itself, and to federal debt held by federal government accounts. The government's surpluses or deficits determine the change in debt held by the public. Debt held by government accounts, on the other hand, is unaffected by the government's budget balance. Their holdings of federal debt increase if they report surpluses - which most do - and decrease if they report deficits. Congressional Research Service + The Library of Congress CRS Report for Congress Received through the CRS Web 1 A small amount of federal debt is excluded from debt limit coverage. At the end of fiscal year 2001, total federal debt was $5.834 trillion; debt subject to limit was $5.733 trillion, 98.3% of the total debt.

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