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1 1 (November 16, 2022)

handle is hein.crs/govejkb0001 and id is 1 raw text is: Congressional ____ ~ Research Service Federal Debt and the Debt Limit in 2022 November 16, 2022 Federal debt is again nearing its statutory limit. The policy questions raised by federal debt and its limit in 2022 are colored by the aftereffects of the 2007-2009 financial crisis and ensuing Great Recession, as well as COVID-19 and fiscal response to the pandemic. The persistent gap between federal revenues and outlays over the past two decades has also pushed up public debt levels. That fiscal gap is projected to widen under current policies, which would push debt to historic levels. Federal Debt Public debt allows governments to spread costs over time, especially for major infrastructure investments or responses to natural disasters or geopolitical challenges. Higher debt levels, however, can crowd out private investment and push the fiscal burdens onto future generations. The statutory debt limit constrains nearly all federal debt. Both debt held by the public (mostly Treasury securities sold via auctions) and intragovernmental debt (mostly held in federal trust funds) are subject to the debt limit. The gap between federal outlays and revenues is financed by issuing federal debt. In other terms, the U.S. Treasury funds the federal deficit and expansions of federal credit programs by selling various kinds of debt securities. Federal debt has risen considerably since FY2001, the last fiscal year in which the U. S. government ran a surplus. At the end of FY2001, gross federal debt stood at $5.8 trillion, about 55% of gross domestic product (GDP). As of mid-November 2022, federal debt totaled about $31.3 trillion, about 122% of GDP, and debt held by the public-the more relevant macroeconomic measure-was 95% of GDP. Debt service costs, however, had been mitigated by a long-term decline in interest rates since the mid- 1980s. How long recent interest rate increases-which added an estimated $2.5 trillion in debt service costs over the next decade-will persist is an important macroeconomic question. The Debt Limit After July 31, 2021, a debt limit suspension that had been enacted as part of the August 2019 Bipartisan Budget Act (BBA 2019) lapsed. Treasury Secretary Yellen then invoked authorities to use extraordinary measures to help fund federal operations. As Treasury's headroom under the debt limit began to dwindle in October 2021, Congress passed and the President signed P.L. 117-50, which raised the debt limit by $480 billion. Congressional Research Service https://crsreports.congress.gov IN12045 CRS INSIGHT Prepared for Membersand Committeesof Congress

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