THE DEBT LIMIT: HISTORY AND RECENT INCREASES

Debt Limit Reached at the End of December 2012 On December 26, 2012, the U.S. Treasury stated that the debt would reach its limit on December 31 and that the Treasury Secretary would declare a debt issuance suspension period to authorize extraordinary measures (noted above, described below) that cou...

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Bibliographic Details
Published inCurrent politics and economics of the United States, Canada and Mexico Vol. 15; no. 4; p. 527
Main Authors Austin, D Andrew, Levit, Mindy R
Format Journal Article
LanguageEnglish
Published Commack Nova Science Publishers, Inc 01.10.2013
Subjects
Agricultural lending
Budget deficits
Debt management
Economic conditions
Economic crisis
Economic development
Economic indicators
Farm loans
Federal budget
Federal legislation
Government obligations
National debt
Recessions
Social security taxes
Statistical data
Tax revenues
Trust funds
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Summary:Debt Limit Reached at the End of December 2012 On December 26, 2012, the U.S. Treasury stated that the debt would reach its limit on December 31 and that the Treasury Secretary would declare a debt issuance suspension period to authorize extraordinary measures (noted above, described below) that could be used to meet federal payments for approximately two months.9 As predicted, federal debt did reach its limit on December 31 when large biannual interest payments, in the form of Treasury securities, were made to certain trust funds.10 From December 31, 2012, until H.R. 325 was signed on February 4, 2013, total federal debt subject to limit was held just $25 million under its $16,394 billion limit.11 The U.S. Treasury stressed that these extraordinary measures would be exhausted more quickly than in recent debt limit episodes for various technical reasons.12 A January 14, 2013, letter from Treasury Secretary Geithner also estimated that extraordinary measures would be exhausted sometime between mid-February or early March 2013.13 CBO had previously estimated that federal debt would reach its limit near the end of December 2012, and that the extraordinary measures could be used to fund government activities until mid- February or early March 2013.14 One policy research group had projected that the deadline for action would fall in mid-February,15 while other estimates put that date at the beginning of March 2013.16 Changes in economic conditions or financial markets, as well as in federal taxation and expenditure trends, affect Treasury's debt management requirements.
ISSN:1944-1274