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1 1 (January 16, 2025)

handle is hein.crs/govesck0001 and id is 1 raw text is: Federal Debt and the Debt Limit in 2025 Updated January 16, 2025 The federal debt limit was reinstated on January 2, 2025, at $36.1 trillion. That total comprised $28.8 trillion in debt held by the public and $7.3 trillion in intergovernmental accounts. The statutory debt limit constrains nearly all federal debt, including both debt held by the public (mostly Treasury securities sold via auctions) and intragovemmental debt (mainly federal trust funds, such as those for Social Security, Medicare, and federal retirement systems). The Fiscal Responsibility Act of 2023 (FRA; P.L. 118-5), enacted on June 3, 2023, had suspended the debt limit until January 1, 2025. The FRA also reimposed statutory caps on discretionary spending and rescinded unobligated funds from various federal accounts. The reestablished limit was set at a level to accommodate debt issued during the suspension period to fund federal operations. Since 2013, Congress has mostly resolved debt limit episodes by suspending the limit for a set period of time. In 2021, however, the limit was raised twice by specific dollar amounts. The persistent gap between federal revenues and outlays over the past two decades has pushed up public debt to historic levels. Some of that gap stems from external shocks, especially the 2007-2009 financial crisis and ensuing Great Recession and the COVID-19 pandemic. Such shocks reduce revenues and lead to increased spending as household incomes fall. A fiscal gap, to a lesser extent, preceded those shocks and continued after them. Under current policies, that gap is projected to widen, pushing debt to historic levels. Extraordinary Measures Anticipated to Begin Later in January 2025 After previous debt limit suspensions ended, Treasury Secretaries immediately invoked authorities to use extraordinary measures. The Treasury Secretary has authority to declare a debt issuance suspension period (DISP) when deposits in the form of special Treasury securities into the Civil Service Retirement and Disability Fund (CSRDF) cannot be issued without exceeding the debt limit. During a DISP, the U.S. Treasury can use financial resources from civil service and postal service retirement funds to meet federal obligations. Delaying deposits into those funds or redeeming the Treasury securities they hold comprises the bulk of extraordinary measures. Other extraordinary measures include dollar holdings of the Exchange Stabilization Fund and the Thrift Savings Plan's (TSP's) holdings of Treasury securities. Treasury's cash balances (see below) may also be used to delay a binding debt limit. In late December 2024, Treasury Secretary Janet Yellen wrote Congress that she expected extraordinary measures would become necessary sometime between January 14 and January 23, 2025, because Congressional Research Service https://crsreports.congress.gov IN12045 CRS INSIGHT Prepared for Members and Committees of Congress

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