98-453 GOV
Updated February 25, 1999
CRS Report for Congress
Received through the CRS Web
Debt-Limit Legislation in
the Congressional Budget Process
Bill Heniff Jr.
Consultant in American National Government
Government and Finance Division
The gross federal debt consists of the debt held by the public plus the debt held by
government accounts. Almost all of the gross federal debt is subject to a public debt limit,
as set forth in statute (31 U.S.C. 3101). With a few exceptions, the Treasury Department
is able to borrow funds only as the statutory debt limit permits.
As of FY1997, 70% of the gross federal debt was held by the public. The debt held
by the public represents the total net amount borrowed from the public to cover the federal
government's budget deficits. By contrast, the debt held by government accounts (about
30% of the gross federal debt in FY1997) represents the total net amount of federal debt
issued to specialized federal accounts, primarily trust funds (e.g., Social Security). Trust
fund surpluses by law must be invested in special federal government securities and thus
are held in the form of federal debt.
Since the statutory limit applies to the combination of both types of debt, budget
deficits or trust fund surpluses may contribute to the federal government reaching the
existing debt limit. Budget deficits increase the federal debt by requiring the federal
government to borrow additional funds to fulfill its commitments. Trust fund surpluses
contribute to the federal debt by requiring the federal government to issue securities to the
trust funds. Consequently, the federal debt may reach the existing statutory limit even
when the federal budget is balanced.
Changing the Debt Limit
So long as federal budget policy results in an increase in the federal debt, Congress
must periodically enact increases to the debt limit. Legislation to raise (or lower) the debt
limit is considered in the context of the congressional budget process. The annual
congressional budget resolution specifies the appropriate level of the public debt for each
fiscal year covered by the resolution. While the budget resolution does not become law
itself, the specified debt limits serve as a guide for any necessary debt-limit legislation.
In order to change the public debt limit, legislation must be passed by both houses of
Congress and signed by the President. The House Ways and Means Committee and the
Senate Finance Committee have jurisdiction over such legislation. Section 303 of the
Congressional Budget Act (CBA) of 1974 (P.L. 93-344) prohibits consideration of debt
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limit measures for the upcoming fiscal year before a budget resolution for that year has
been adopted. This provision can be waived in the House or Senate by majority vote.
The House and Senate may consider debt-limit legislation in any of three ways: (1)
under regular legislative procedures; (2) as part of reconciliation legislation; or (3) under
House Rule XXIII (formerly Rule XLIX, referred to as the "Gephardt rule" after its
author, Representative Richard Gephardt). In some cases, debt-limit legislation has been
used as a vehicle for other legislation. For example, the Balanced Budget and Emergency
Deficit Control Act of 1985 (P.L. 99-177), referred to as Gramm-Rudman-Hollings, was
attached to legislation increasing the public debt. Since 1978, 20 of the 39 debt-limit
extensions were enacted as independent measures. The remaining 19 included or were
part of other legislation (see CRS Report 98-805 E, Public Debt Limit Legislation: A
Brief History and Recent Controversies).
Because raising the debt limit has been a contentious subject in Congress over the
years, the House in 1979 amended its rules to engross automatically a joint resolution
increasing the debt limit once a budget resolution conference report is adopted. House
Rule XXIII stipulates that a joint resolution specifying the amount of the debt limit agreed
to in a budget resolution is automatically deemed to have passed by the House by the same
vote as the budget resolution conference report. The Senate has no comparable procedure
and may consider this joint resolution under the regular legislative process. If the Senate
modifies it, then the differences must be resolved with the House-passed resolution,
usually in a conference committee, before being sent to the President. This automatic
enrolling process has been suspended in each year since 1995. House Rule XLIX was
rendered inapplicable to a conference report on the budget resolution for FY1996 (sec. 3,
H.Res. 149). Further, the budget resolution for FY1996 (H.Con.Res. 67) included a sense
of the House statement (sec. 313) calling for repeal of Rule XLIX. The FY1997 and
FY1998 budget resolutions also were considered under special rules that rendered Rule
XLIX inapplicable (see H.Res. 435 and H.Res. 152, respectively).
The most recent increase in the debt limit was included in one of the two budget
reconciliation measures enacted last year, the Balanced Budget Act of 1997 (P.L. 105-33).
This was the fourth time an increase in the debt limit was embedded in reconciliation
legislation since the reconciliation process was established by the 1974 CBA. Debt-limit
increases also were included in the reconciliation acts of 1986, 1990, and 1993.
Although the implications of increasing the debt limit may be controversial, the
content of debt limit legislation itself is straightforward. The most recent increase in the
debt limit, included in the Balanced Budget Act of 1997, read as follows:
SEC. 5701. Increase in Public Debt Limit.
Subsection (b) of section 3101 of title 31, United States Code, is amended by
striking the dollar amount contained therein and inserting "$5,950,000,000,000".
At the time of passage, this public debt limit was considered sufficient to meet the federal
government's financial needs through mid-December 1999.
A list of changes in the debt limit since 1940 can be found in the Historical Tables
volume of the President's budget documents (Table 7.3 in the FY2000 Historical Tables).

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