INSIGHTi
“Extraordinary Measures” and the Debt Limit
Updated February 27, 2019
Following a period of suspension, the statutory debt limit
is scheduled to bewas reinstated on March
12, 2019,
at a level that precisely accommodates the federal borrowing undertaken to date. When federal borrowing
approaches the debt limit, the Treasury Secretary has the authority to implement “extraordinary measures”
that delay when the debt limit will bind at $21.988 trillion, precisely accommodating the federal borrowing undertaken up to that date. Following the debt limit's reinstatement Treasury Secretary Mnuchin began implementing "extraordinary measures" to delay a binding debt limit. Secretary Mnuchin had informed Congress of his intention to implement these measures in a February 21, 2019, letter to Congress. Extraordinary measures were last implemented from March 2017
through September 2017 and from December 2017 through February 2018, until passage of the Bipartisan
Budget Act of 2018 (BBA 2018; P.L. 115-123
;, February 9, 2018) suspended the statutory debt limit
until
through March 1, 2019. This Insight briefly examines the use of extraordinary measures and its subsequent effects
on federal debt activity.
What Is the Debt Limit?
As part of its
“"power of the purse,
”" Congress uses the statutory debt limit (codified in 31 U.S.C. §3101)
as a means of restricting federal debt. Debt subject to the limit is more than 99% of total federal debt, and
includes debt held by the public (which is used to finance budget deficits) and debt issued to federal
government accounts (which is used to meet federal obligations). The debt limit acts as a congressional
check on recent revenue and expenditure trends, though decisions affecting debt levels may have been
agreed to by Congress and the Administration well in advance of debt limit deliberations. Some past debt
limit legislation has linked debt limit increases with other fiscal policy proposals.
What Are Extraordinary Measures?
Extraordinary measures represent a series of actions that postpone when Congress must act on debt limit
legislation. The authority for using extraordinary measures rests with the Treasury Secretary (codified in
5 5 U.S.C. §8348 and 5 U.S.C. §8909). Invoking extraordinary measures has delayed required action on the
debt limit by periods ranging from a few weeks to several months, depending on when such measures
were enacted (see the
“"How Long Do Extraordinary Measures Last?
”" section). Accounts and members of
the public that are affected by extraordinary measures must be compensated for the delay in payment that
resulted from such actions when the debt limit is subsequently modified.
Before or during a period when extraordinary measures are implemented, Treasury typically provides a
description of the extraordinary measures available and estimates of their effect on federal borrowing
capacity (or how much
“headroom”"headroom" they will add). The most recent description of such measures was
provided by Treasury in
December 2017. March 2019. Table 1
provides a description of the currently available extraordinary measures and the amount of headroom added provides a description of the extraordinary measures
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used when those measures were implemented from March 2017 through September 2017 and from
December 2017 through February 2018.
Table 1.
Table 1. Use of Extraordinary Measures, 2017-2018
Measure
|
Headroom Added from March
2017-September 2017
Headroom Added from
December 2017-February 2018
Headroom Available on March 5, 2019
|
Suspension of reinvestment in
Government Securities Investment
Fund (G Fund) of the Federal
Retirement System
$208 billion
$225 billion
Suspension of invested balance in
Exchange Stabilization Fund
$22 billion
$23 billion
Declaration of a Debt Issuance
Suspension Period
$12.7 billion one-time and $7.3 billion
per month
$87 billion one-time and $7.3 billion
per month
Suspension of State and Local
Government Securities
$0 (prevents further increases in debt
by $3-$13 billion per month)
$0
Measure
Source: U.S. Department of Treasury, “Description of the Extraordinary Measures,” December 12, 2017, available at
$225 billion
|
$208 billion
|
$230 billion
|
|
Suspension of invested balance in Exchange Stabilization Fund
|
$22 billion
|
$22 billion
|
$22 billion
|
|
Declaration of a Debt Issuance Suspension Period
|
$87 billion one-time and $7.3 billion per month
|
$12.7 billion one-time and $7.3 billion per month
|
$86 billion one-time and $7.3 billion per month
|
|
Suspension of State and Local Government Securities
|
$0 (prevents further increases in debt by $3-$13 billion per month)
|
$0 (prevents further increases in debt by $3-$13 billion per month)
|
$0 (prevents further increases in debt by approximately $4 billion per month)
|
Sources: U.S. Department of the Treasury, "Description of the Extraordinary Measures," March 5, 2019, available at https://home.treasury.gov/system/files/136/Description-of-Extraordinary-Measures-03_05_19.pdf; U.S. Department of the Treasury, "Description of the Extraordinary Measures," December 12, 2017, available at https://www.treasury.gov/initiatives/Documents/Description-of-Extraordinary-Measures-2017_12_12_Final.pdf
;
“; "Description of Extraordinary Measures,
”" March 16, 2017, available at https://www.treasury.gov/initiatives/Documents/
Description_of_Extraordinary_Measures_2017_03_16.pdf
.
.
Notes:
In a February 2019In a January 2018 report, the Congressional Budget Office estimated that an additional $
3.54.7 billion of headroom is
available through the Federal Financing Bank. This table only includes available measures reported by
the Treasury.
Treasury.
How Long Do Extraordinary Measures Last?
Short-term fluctuations in federal debt levels provide for substantial uncertainty in how long
extraordinary measures can last. Federal balances fluctuate on a day-to-day basis in response to a number
of factors, including the timing of payments for Social Security, military benefits, and other programs;
interest payments on debt obligations; and the timing of certain receipts. Prior to enactment of BBA 2018,
CBO and the Treasury CBO and Treasury projected that extraordinary measures would
behave been exhausted in March 2018.
Figure 1 shows federal daily balances
around the period when extraordinary measures were
last
implemented (implemented from December 2017 through February 2018
). The reduced variation in daily balances starting in
December 2017 reflects the implementation of extraordinary measures to exactly match outlays and
receipts. The decline in the daily balance on February 9, 2018, reflects the compensation of
intragovernmental creditors whose payments were delayed by the implementation of extraordinary
measures.
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measures.
Figure 1. Changes in the Daily Federal Balances, October 3, 2017-February 15, 2018
Source: U.S. Department of
the Treasury, Daily Treasury Statement (various).
Note: Positive numbers indicate daily surpluses, while negative numbers indicate daily deficits.
Monthly budget outcomes can also fluctuate with the timing of various activities. The federal government
tends to record higher net budget surpluses in April (when many individual tax returns are filed) and
September (as certain payments are due at the end of the fiscal year) while recording lower balances in
other months. Figure 2 presents the average federal monthly account balances from the previous five
fiscal years. The gray regions represent the amount to which average monthly receipts are equal to
average monthly outlays. The red regions represent outlays greater than receipts (indicating an average
monthly deficit), and the blue regions represent receipts greater than outlays (indicating an average
monthly surplus). Figure 3 then shows how monthly fluctuations in federal receipts affect year-to-date
annual federal balances over the FY2014-FY2018 period.
Figure 2. Average Federal Monthly Account Balance, FY2014-FY2018
Source: U.S. Department of
the Treasury, Monthly Treasury Statement (various). CRS calculations.
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Figure 3. Average Change in Year-to-Date Federal Budget by Month, FY2014-FY2018
(In constant January 2019 dollars)
Source: U.S. Department of
the Treasury, Monthly Treasury Statement
(various). CRS calculations.
(various). CRS calculations.
Author Information
Grant A. Driessen
Analyst in Public Finance
Joseph S. Hughes
Research Assistant
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