Order Code RL31967
The Debt Limit:
A History of Recent Increases
Updated September 20, 2007
Philip D. Winters
Analyst in Government Finance
Government and Finance Division

The Debt Limit: A History of Recent Increases
Summary
Two actions by the federal government increase total federal debt. The first is
the sale of government debt to the public (increasing debt held by the public) to
finance budget deficits and acquire the financial resources needed to meet its
obligations. The second is the issuance of debt to debt-holding government accounts
(such as the Social Security, Medicare, and Transportation trust funds) in exchange
for their reported surpluses (increasing debt held by government accounts). The
combined change produces the change in total federal debt.
Surpluses generally reduce debt held by the public, while deficits raise it. The
government’s surpluses during FY1998-FY2001 reduced debt held by the public by
$448 billion. The debt holdings of government accounts grew by $853 billion over
the same period. The total net change raised total federal debt by $405 billion.
Congress has raised the debt limit four times since 2001. Deficits each year
since 2001 and the persistent increases in debt held by government accounts
repeatedly raised the debt to or near the then existing limits. Congress raised the
limit in June 2002, and by December 2002, the Administration was asking Congress
for another increase. As the limit was approached in February 2003, the Treasury
resorted to accounting measures at its disposal to avoid exceeding the limit.
Congress passed a debt limit increase in May 2003.
In the spring of 2004, the Treasury had asked for another increase in the debt
limit. Congress recessed in mid-October 2004 without acting. The Secretary of the
Treasury soon notified Congress that he was taking allowed actions to avoid
exceeding the debt limit. He also stated that these actions would suffice only through
mid-November. In an after-election session, Congress passed legislation raising the
debt limit, which the President signed on November 19, 2004.
In 2005, Congress included debt limit raising reconciliation instructions in the
FY2006 budget resolution (H.Con.Res. 95). The adoption of the budget resolution
(April 2005) also triggered the automatic passage in the House of a debt limit
increase. With no action having been taken by December in 2005, the Secretary of
the Treasury sent a series of letters warning Congress that the Treasury would
exhaust its options to avoid default by mid-March 2006. Congress cleared an
increase in mid-March, which the President signed on March 20.
The adoption of the conference report on the FY2008 budget resolution in the
spring of 2007, automatically (in the House) created and deemed passed legislation
(H.J.Res. 43) raising the debt limit by $850 billion. The Senate Finance Committee
approved the resolution on September 12, 2007. The Senate had not considered the
resolution as of September 19.
This report will be updated as events warrant.

Contents
The Debt Limit Issue in 2002 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Resolving the Debt Limit Issue in 2002 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
The Debt Limit Issue and Action Taken in 2003 . . . . . . . . . . . . . . . . . . . . . . . . . . 6
The Debt Limit Issue and Action Taken in 2004 . . . . . . . . . . . . . . . . . . . . . . . . . . 7
The Debt Limit Issue and Action in 2005, 2006, and 2007 . . . . . . . . . . . . . . . . . . 8
Concluding Comments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Appendix . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
List of Figures
Figure 1. Components of Federal Debt, FY1980-FY2006 . . . . . . . . . . . . . . . . . . 3
List of Tables
Table 1. Components of Debt Subject to Limit, FY1996-May 2007 . . . . . . . . . . 2
Table 2. Components of Debt Subject to Limit by Month, FY2002-FY2006 . . 12

The Debt Limit:
A History of Recent Increases
The statutory debt limit applies to nearly all federal debt.1 It applies to federal
debt held by the public, that is, debt held outside the federal government itself, and
to federal debt held by the government’s own accounts. Most of this internally held
debt is held by federal trust funds such as Social Security, Medicare, Transportation,
and Civil Service Retirement.2 The government’s surpluses or deficits determine
(almost all of) the change in debt held by the public.3 Debt held in government
accounts, on the other hand, is unaffected by the government’s overall budget
balance. The increases or decreases in debt held by government accounts are the
product of legal requirements, government accounting practices, and the reported
surpluses (or deficits) of the accounts holding the debt.4
Nearing or reaching the debt limit interferes with the Treasury’s regular methods
of financing federal activities or meeting government obligations. The government’s
income and outlays vary over the course of the year, producing monthly surpluses
and deficits that affect the level of debt, whether or not the government has a surplus
or deficit for the entire year. The government accounts holding federal debt also can
experience monthly deficits and surpluses, even if most of them currently show
annual surpluses. If the Treasury cannot issue new debt (the effect of reaching the
limit), the government may be unable to obtain the cash needed to pay its bills (either
from a short-term cash flow problem or from an annual deficit) or it may be unable
to invest the surpluses of designated government accounts (the federal trust funds)
in federal debt as generally required by law. In either case, the Treasury is in a bind;
it is required by law to continue meeting the government’s legal obligations, but the
debt limit may prevent it from issuing the debt that would allow it to do so.
During the four-year period of government surpluses, FY1998-FY2001, the
federal debt held by the government’s own accounts grew by $855 billion; debt held
by the public fell by almost $450 billion over the same period. Debt held by
1 Almost 1% of total debt is excluded from debt limit coverage. At the end of August 2007,
total public debt outstanding was $9.006 trillion; debt subject to limit was $8.918 trillion or
99.0% of total public debt outstanding.
2 Although there are hundreds of trust funds, the overwhelming majority are very small.
Most of the federal debt held by government accounts, 98.8%, is held by the 12 largest trust
funds.
3 Other means of financing — including cash balance changes, seigniorage, and
capitalization of financing accounts used to fund federal credit programs — have relatively
little effect on the changes in debt held by the public.
4 Trust fund surpluses by law must be invested in special federal government securities and
thus are held in the form of federal debt.

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government accounts has continued to grow as these accounts record surpluses; debt
held by the public has been growing since FY2001 because of persistent and
substantial budget deficits (see Table 1). Along with their dollar amounts, Table 1
shows these components as percentages of gross domestic product (GDP).
Table 1. Components of Debt Subject to Limit,
FY1996-May 2007
(in billions of current dollars and percentages of GDP)
Debt subject to limit
End of
Held by
fiscal year Debt limit
Total
government
Held by the public
(or month)
accounts
$
%
$
%
$
%
1996
$5,500.0
$5,137.2
67.3%
$1,432.4
18.8%
$3,704.8
48.5%
1997
5,950.0
5,327.6
65.6
1,581.9
19.5
3,745.8
46.1
1998
5,950.0
5,439.4
63.5
1,742.1
20.4
3,697.4
43.1
1999
5,950.0
5,567.7
61.4
1,958.2
21.6
3,609.5
39.8
2000
5,950.0
5,591.6
58.0
2,203.9
22.9
3,387.7
35.1
2001
5,950.0
5,732.8
57.4
2,436.5
24.4
3,296.3
33.0
2002
6,400.0
6,161.4
59.7
2,644.2
25.6
3,517.2
34.1
2003
7,384.0
6,737.6
62.5
2,846.7
26.3
3,890.8
36.2
2004
7,384.0
7,333.4
63.9
3,056.6
26.6
4,276.8
37.3
2005
8,184.0
7,871.0
64.4
3,301.0
27.0
4,570.1
37.4
2006
8,965.0
8,420.3
64.7
3,610.4
27.7
4,809.8
37.0
May 2007
8,965.0
8,918.5

3,854.1

5,064.4

Change During the
Period of Surplus,
FY1998 — FY2001
$405.2
$854.6
$-449.5
Change Since FY2001
(through May 2007)
$3,185.7
$1,417.6
$1,768.1
Source: U.S. Department of the Treasury, Financial Management Service, Treasury Bulletin, June
2001 and December 2006. Bureau of the Public Debt, Monthly Statement of Public Debt, Aug. 2007.
CRS calculations.
Note: For the fiscal years 1996 through 2000, the amounts held by government accounts and held by
the public are approximations. The Treasury began producing the split into holders of debt subject
to limit in its publications in 2001. The numbers in the table showing this split for 1996 through 2000
were calculated by subtracting Federal Financing Bank debt (an arm of the Treasury; its debt is not
subject to limit) from total debt held by government accounts to approximate the amount of that debt
subject to limit (a second subtraction, for unamortized discount, is unavailable, leaving the
approximate amount too large by billions of dollars). This adjusted amount was then subtracted from
total debt subject to limit to produce an approximate measure of debt held by the public subject to
limit. Because the amount held by government accounts is too large, the resulting measure of debt
held by the public subject to limit is too small. Nevertheless, the approximations provide adequate
information to reveal the pattern of change in the two categories over the time shown in the table.

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Figure 1 shows the components of federal debt as shares of gross domestic
product (GDP) beginning with FY1980 and running through FY2006.5 Federal debt
held by government accounts has grown steadily since 1980. Debt held by the public
(which changes in response to total surpluses or deficits) grew as a share of GDP
through the mid-1990s. Between FY1996 and FY2001, the smaller deficits and then
four years of surpluses, along with rapid growth in GDP, reduced debt held by the
public as a percentage of GDP. The return of large deficits and slower GDP growth
in the early 2000s again increased debt held by the public as a share of GDP. A
relatively small deficit in FY2006 produced an small increase in debt held by the
public, allowing it to fall slightly as a percentage of GDP (see Table 1).
Figure 1. Components of Federal Debt, FY1980-FY2006
(in percentages of GDP)
Held By Government Accounts
Held by the Public
70%
Total
60%
50%
P
D
40%
f G
t o
n
e
rc
30%
Pe
20%
10%
0%
1980
1985
1990
1995
2000
Fiscal Year
2005
OMB, Budget of the U.S. for FY2008, Historical Tables, Feb. 2007
5 The data show the components of debt compared to the size of the economy, which avoids
possible distortions resulting from changing price levels over time. If debt grows faster than
GDP grows, its percentage increases; if it grows more slowly than GDP grows, its
percentage decreases.

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The Debt Limit Issue in 2002
The ongoing increases in debt held by government accounts produced most of
pressure on the debt limit early in 2002. The re-emergence of deficits in FY2002,
which led to increases in debt held by the public, added to the pressure on the debt
limit in the spring of 2002.6 During the four fiscal years with surpluses (FY1998-
FY2001), the increases in federally held debt and decreases in debt held by the public
produced a net increase of $405 billion in total debt subject to limit. At the
beginning of FY2002 (October 1, 2001), debt subject to limit was within $217 billion
of the then $5.95 trillion debt limit.7 Between then and the end of May 2002, debt
subject to limit increased by another $217 billion, divided between a $117 billion
increase in debt held by government accounts and a $100 billion increase in debt held
by the public, putting the debt very close to the $5.950 trillion limit. Table 2 shows
debt by month for FY2002 (and through August 2007) and the month-to-month
changes.
In the fall of 2001, the Administration recognized that the deterioration in the
budget outlook and continued growth in debt held by government accounts were
likely to lead to the debt limit being reached sooner rather than later. In early
December 2001, it asked Congress to raise the debt limit by $750 billion to $6.7
trillion. As the debt moved closer to and reached the debt limit over the first six
months of FY2002, the Administration repeatedly requested that Congress adopt an
increase in the debt limit and warned Congress of the adverse financial consequences
of not raising the limit.
On April 4, 2002, the Treasury, to avoid exceeding the limit, used authority
provided through existing legislation to suspend reinvestment of government
securities in the G-Fund of the federal employees’ Thrift Savings Plan (TSP). This
action kept the amount of existing debt-subject-to-limit below the limit and allowed
the Treasury to issue new debt and meet the government’s obligations. On April 16,
after the influx of April 15 tax revenues, the Treasury “made whole” the G-Fund by
restoring all of the debt that had not been issued to the TSP over this period and
crediting the fund with interest it would have earned on that debt.8 (As the Treasury
awaited the influx of tax payments due on April 15, the debt subject to limit stood at
$5,949,975; less than $25 million below the limit.) By the end of April, debt subject
6 Until 2001, government publications did not divide debt subject to limit into the portions
held by the public and held by government accounts. This discussion and Table 1 use CRS
calculated amounts that approximate the amounts of debt subject to limit held in these two
categories for fiscal years prior to 2001.
7 The previous increase in the debt limit was on August 5, 1997, as part of the Balanced
Budget Act of 1997 (P.L.105-33, 111 Stat. 251). That increase raised the limit from $5.5
trillion to $5.95 trillion.
8 For a short discussion of the Treasury’s previous uses of its short-term ability to avoid
breaching the debt limit, see CRS Report 98-805, Public Debt Limit Legislation: A Brief
History and Controversies in the 1980s and 1990s
, by Philip Winters; for a comprehensive
report see U.S. General Accounting Office, Debt Ceiling: Analysis of Actions During the
1995-1996 Crisis
, GAO/AIMD-96-130, August 1996.

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to limit had fallen $35 billion below the limit. By the end of May, debt subject to
limit had risen within $15 million of the statutory limit (see Table 2).
Resolving the Debt Limit Issue in 2002
By mid-May 2002, federal debt subject to limit effectively reached the statutory
limit of $5,950 billion (it was approximately $15 million below the limit at that
time). The previous brush with the debt limit took place from early to mid-April.
That earlier episode was short-term and resolved itself with the large tax payments
received on and after April 15. When the debt limit was again reached in mid-May
2002, the Treasury, for the second time in 2002, used its available statutory authority
to temporarily avoid a default on the government’s obligations.
The situation that began in mid-May was more serious than the earlier episode.
The Treasury’s financing problems could not be relieved for very long without an
increase in the debt limit. On May 14, the Treasury issued another request to
Congress to raise the debt limit or produce some other statutory change that would
allow the Treasury to issue new debt. The Treasury (in a news release) stated,
“absent extraordinary actions, the government will exceed the statutory debt ceiling
no later than May 16.”9 The release went on to state:
a “debt issuance suspension period” will begin no later than May 16 [2002]....
[This] allows the Treasury to suspend or redeem investments in two trust funds,
which will provide flexibility to fund the operations of the government during
this period.10
By reducing the amount of federal debt held by these government accounts (and
replacing it with non-interest bearing, non-debt instruments), the Treasury was again
able to issue debt to meet the government’s obligations. The Treasury also stated that
these “extraordinary” actions would suffice only, at the longest, through June 28,
2002. Without an increase in the debt limit by that date, the Treasury indicated it
would need to take other actions available to it to avoid breaching the ceiling.11 By
the end of June and into the first days of July, with large payments and other
obligations due, the Treasury stated it would be out of all available options to issue
debt and fulfill government obligations. Such circumstances would put the
government on the verge of a default.
Over the May/June 2002 period, Congress took action, that eventually led to an
increase in the debt limit. The House-passed supplemental appropriations for
FY2002 (H.R. 4775; May 24, 2002) included, after extended debate, language
allowing any eventual House-Senate conference on the legislation to add an increase
in the debt limit. The Senate did not add debt-limit-increasing language to its version
of the supplemental appropriations bill, S. 2551 (incorporated as an amendment to
9 U.S. Department of the Treasury, Treasury News, Treasury Statement on the Debt
Ceiling
, May 14, 2002.
10 Ibid.
11 By June 21, 2002, the Treasury had postponed a regular auction of securities but had not
announced any other actions.

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H.R. 4775, June 3, 2002). The Senate leadership indicated a strong reluctance to
include a debt limit increase in the supplemental appropriation bill. Instead, without
debate (on June 11), the Senate adopted a bill, S. 2578, raising the debt limit by $450
billion (to $6.4 trillion). At that time, a $450 billion increase in the debt limit was
thought to provide enough borrowing authority for government operations through
at least the rest of calendar year 2002, and possibly into the summer of 2003. With
the warning of possible imminent default looming over it, the House passed the $450
billion increase in the debt limit (by one vote) on June 27. The President signed the
bill into law on June 28 (P.L. 107-19, 116 Stat. 734), ending the 2002 debt limit
crisis.12
The Debt Limit Issue and Action Taken in 2003
On Christmas Eve, 2002, the Secretary of the Treasury sent a letter to Congress
requesting an unspecified increase in the debt limit by late February 2003, indicating
that the $6.4 trillion debt limit would be reached about then. The 108th Congress, just
getting organized early in 2003, did not act on the request to raise the limit. Through
the winter and into the spring, the Treasury repeatedly requested that the debt limit
be raised to avoid a serious financial problem. By February 20, 2003, the Treasury
(as it had in 2002) had resorted to its allowed management of the debt holdings of
certain government accounts to avoid reaching the debt limit. These actions included
the replacement of internally held government debt with non-debt instruments in
certain government accounts and not issuing new debt to these accounts. These
actions allowed the Treasury to issue additional debt to the public to acquire the cash
it needed to pay for the government’s commitments or to issue new debt to other
federal accounts.
Through the rest of February and extending into May, the Treasury held debt
subject to limit $15 million below the limit.13 The adoption of the conference report
on the FY2004 budget resolution (H.Con.Res. 95; H.Rept. 108-71) on April 11,
2003, in the House triggered the “Gephardt rule” (House Rule XXVII) that deems
passed legislation (H.J.Res. 51) raising the debt limit enough to accommodate the
spending and revenue levels approved in the adopted budget resolution.14
The Senate received the debt-limit legislation on the same day (April 11), but
did not consider the legislation until May 23, after receiving further warnings of
imminent default from the Treasury. After rejecting eight proposed amendments
12 For additional details, see U.S. GAO report, Debt Ceiling: Analysis of Actions During the
2002 Debt Issuance Suspension Period
, GAO-03-134, December 2002.
13 The Treasury reduced the amount of debt held by selected federal accounts while it sold
an equal (or smaller) amount of debt to the public. This raised cash needed to pay for
ongoing obligations and kept the debt below the limit.
14 The House Budget Committee has some discretion in setting the debt limit level in the
House Joint resolution generated by the Gephardt rule. See CRS Report 98-453, Debt-Limit
Legislation in the Congressional Budget Process
; and CRS Report RL31913, Developing
Debt-Limit Legislation: The House’s ‘Gephardt Rule’
, both by Bill Heniff Jr.

CRS-7
offered by its own members, the Senate adopted the legislation unchanged, sending
it on to the President. The President signed the legislation on May 27, raising the
debt limit to $7.384 trillion (P.L. 108-24, 117 Stat. 710). On the day the Senate
cleared the increase in the debt limit, debt subject to limit was $25 million (or
0.0004%) below the existing $6.4 trillion limit.
The Debt Limit Issue and Action Taken in 2004
In its January 2004 report, The Budget and Economic Outlook: Fiscal Years
2005 to 2014, CBO estimated that the then current debt limit, $7.384 trillion, would
be reached sometime between July and September of 2004. By the spring of 2004,
the Treasury was asking Congress to raise the debt limit to avoid a repetition of the
disruptions in government financing that had occurred in the previous two years. In
August and again in September, the Treasury indicated that the debt limit would be
reached in early to mid-October. On October 14, debt subject to limit reached
$7,383.975 billion, $25 million below the existing limit. The Treasury, using the
same methods employed in the past to avoid exceeding the debt limit, kept the debt
subject to limit at that same level, $25 million below the limit. The Secretary of the
Treasury informed Congress on October 14, before the break for the election, that the
accounting actions he was taking to avoid exceeding the debt limit would be
exhausted by mid-November. Without an increase in the debt limit, the Treasury
would be unable to meet all of the government’s existing obligations, and the
government could find itself in default.15
Although the House passed a budget resolution for FY2005 in the spring of
2004, it did not reach final agreement with the Senate on the measure. Without a
congressionally passed budget resolution, no debt limit raising resolution (under the
Gephardt rule) was automatically deemed passed by the House and sent to the Senate.
As the debt approached the limit through the summer and into the fall, no legislation
was moved to raise the debt limit.
Earlier, in September 2004, the House had added an amendment to the FY2005
Transportation-Treasury appropriations (H.R. 5025) in an effort to remove the
Treasury’s flexibility in financing the government as federal debt approached and
reached the existing limit. Without that flexibility, the government would be unable
to meet its financial obligations as the amount of debt neared the limit. The
legislation cleared the House, but was not acted on by the Senate.
After the elections, Senator Frist introduced legislation (S. 2986) on November
16, 2004, to raise the debt by $800 billion, from $7,384 billion to $8,184 billion.
The Senate approved the increase on November 17, 2004. The House considered and
approved the increase on November 18. The President signed the legislation into law
15 Although not all the possible consequences of a government default are known, it would
mean that the government could no longer meet all of its legal obligations. Not only the
default, but the efforts to resolve it would arguably have negative repercussions on both
domestic and international financial markets and economies.

CRS-8
(P.L.108-415, 118 Stat. 2337) on November 19, 2004. Estimates made at that time
anticipated the new limit would be reached between August and December 2005.
Shortly before the increase in the debt limit, the Treasury had delayed a debt
auction and had informed Congress that it would invoke a “debt limit suspension
period” as it had in previous years. The increase in the debt limit in mid-November
allowed the Treasury to reschedule the debt auction and cancel, before it began, the
“debt limit suspension period.”
The Debt Limit Issue and Action in 2005,
2006, and 2007
The path to debt limit increases in 2005, 2006, and so far in 2007 were less
dramatic than in other recent years. In 2005, Congress included three reconciliation
instructions in the FY2006 budget resolution (H.Con.Res. 95, 109th Congress; April
28, 2005), the third of which directed the House Committee on Ways and Means and
the Senate Finance Committee to report bills raising the debt limit. The instructions
set the debt limit increase at $781 billion (to $8.965 trillion) with a reporting date of
no later than September 30, 2005. Neither committee reported a bill to raise the debt
limit.
The adoption of the conference report on the FY2006 budget resolution in late
April 2005, also triggered the Gephardt rule (House Rule XXVII), producing a House
Joint Resolution (H.J.Res. 47) that also would raise the debt limit by the same $781
billion (to $8.965 trillion). Under the rule, the resolution was automatically deemed
passed by the House and sent to the Senate. Through the end of the first session of
the 109th Congress, the Senate had not considered H.J.Res. 47, nor had Congress
considered a reconciliation bill raising the debt limit (as called for in the budget
resolution).
At the end of December 2005, the Secretary of the Treasury sent a letter to
Congress stating that the debt limit would (probably) be reached in mid-February
2006 and asked Congress to raise the limit. He sent two more letters to Congress (on
February 19 and March 6) stating that he was taking the legal actions allowed the
Treasury to avoid reaching the limit and warning that these actions would only work
until mid-March 2006.16 As mid-March approached, the government was again in
jeopardy of not being able to meet its obligations. The Senate took up H.J.Res. 47
during the week of March 13. After it rejected several amendments, the Senate
adopted the debt limit increase on March 16. The President signed it into law
(P.L.109-182) on March 20, 2006. The act raised the debt limit to $8.965 trillion.
In mid-May 2007, Congress passed the conference report (H.Rept. 110-153) on
the FY2008 budget resolution. The House Gephardt rule, triggered by the adoption
of the conference report on the budget resolution, resulted in the automatic
16 The Secretary took actions that the Treasury has taken in the past, including declaring a
debt issuance suspension period.

CRS-9
engrossment of a joint resolution (in this case, H.J.Res. 43, 109th Congress) raising
the debt limit by $850 billion (to $9,815 billion) and sending it to the Senate. At the
end of July 2007, the Treasury asked Congress to raise the debt limit, stating the limit
would be reached in early October 2007 (CBO’s director said in August that CBO
projected that the limit would be reached in late October or early November).
Without an increase, the Treasury indicated that it would resort to its available
authority to avoid exceeding the debt limit. The Senate Finance Committee approved
the House resolution (H.J.Res. 43), without changes, on September 12, 2007. The
Senate (as of September 19, 2007) has not scheduled action on the resolution.
Concluding Comments
Between the increase in the debt limit in August 1997 (to $5,950 billion) and the
beginning of FY2002, the surpluses in the budget resulted in reductions in debt held
by the public. Since the end of FY2001 (the last year with a surplus), debt held by
the public has grown by $1,768 billion. Debt held by government accounts has
grown steadily throughout the period, rising by $1,418 billion since the beginning of
FY2002.
In early 2001, the 10-year budget forecasts expected large and growing
surpluses, indicating rapid reduction in debt held by the public.17 The same 2001
forecasts however, also projected continuous growth in debt held by government
accounts. The combination of the shrinkage in debt held by the public and growth
in debt held by government accounts moderated the forecast growth in total debt.
The projections indicated that the moderate growth in total debt would delay the need
to increase the debt limit late into the decade (the continued increases in debt held by
government accounts would eventually overcome the reductions in debt held by the
public, triggering the need to increase the debt limit). When the expectations of
large, persistent surpluses collapsed as new budget estimates and projections became
available early in 2002, so did the expectations of reductions in debt held by the
public. The return to substantial deficits meant that total debt began another period
of fairly rapid growth. That meant that an increase in the debt limit would be
necessary much sooner than previously expected.
The persistence of deficits over most of the last half century requiring the
government to borrow from the public, plus the almost constant growth in
government-held debt, particularly after 1983, increased debt subject to limit. The
growth has periodically obliged Congress to raise the debt limit. The need to raise
the debt limit in FY2002, the year following four years of surpluses, was driven
primarily by the continuous increases in debt held by government accounts and
secondarily by the return of government budget deficits.
The debt financing of the deficit in FY2003, plus the persistent rise in debt held
by government accounts drove the debt against the then existing $6.4 trillion debt
limit early in 2003. The Treasury was able to avoid actually breaching the limit into
17 There were even discussion about what would happen if all of the debt held by the public
was retired over the following 10 to 15 years.

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May. Congress adopted a debt limit increase of $934 billion on May 23, 2003, that
was expected to provide enough room for the estimated growth in total federal debt
through the summer or fall of 2004 (which it did). The debt limit increase passed by
Congress late in 2004 was expected, at the time, to accommodate the government’s
debt growth well into 2005, if not into early 2006. In late December 2005, and early
in 2006, the Treasury informed Congress that the limit would be reached sometime
between mid-February and mid-March 2006. On March 16, 2006, the Senate passed
the House-initiated debt limit increase, raising the debt limit to $8,965 billion (when
signed by the President on March 20), and resolving that debt limit crisis. The
smaller than expected deficits in FY2006 and expected in FY2007 have slowed the
need for a new, higher debt limit, but have not ended the need for an increase (which
is arriving soon). Legislation to raise the debt limit that emerged from the House in
mid-May 2007 (H.J.Res. 43) is awaiting Senate consideration.
Over the next decade (under existing federal policies), persistent and possibly
growing deficits along with the ongoing growth in the debt holdings of government
accounts will increase the amount of federal debt subject to limit. Without changes
to federal policies to alter this path, Congress will repeatedly face raising the debt
limit to accommodate the continuing growth in federal debt. The increases will be
necessary to provide the government with the means to meet its existing obligations.

CRS-11
Appendix
The table on the following pages provides data on the dollar amount, in current
dollars, of federal debt and change in these amounts by month between the end of
September 2001 (the end of FY2001) and the end of August 2007. The table shows
outstanding monthly balances of total federal debt, debt held by government
accounts, and debt held by the public. The final row shows the change for each
category for the entire period, September 2001 to August 2007.
For the period covered, all three measures of debt subject to limit increased,
total federal debt increased by $3,216 billion, debt held in government accounts
increased by $1,418 billion, and debt held by the public increased by $1,768 billion.
All three measures experienced periodic reductions in their reported monthly
holdings. For debt held by the public this reflects the uneven flow of receipts and
outlays to and from the federal government, and for debt held by government
accounts it reflects the periodic deposits to and withdrawals from these accounts.

CRS-12
Table 2. Components of Debt Subject to Limit
by Month, FY2002-FY2006
(in millions of dollars)
Change
Change
Change
Held by
End of
from
from
Held by the
from
Total
government
month
previous
previous
public
previous
accounts
period
period
period
Sept. 2001
$5,732,802

$2,436,521

$3,296,281

Oct. 2001
5,744,523
$11,721
2,451,815
$15,294
3,292,709
$-3,572
Nov. 2001
5,816,823
72,300
2,469,647
17,832
3,347,176
54,467
Dec. 2001
5,871,413
54,590
2,516,012
46,365
3,355,401
8,225
Jan. 2002
5,865,892
-5,521
2,525,755
9,743
3,340,138
-15,263
Feb. 2002
5,933,154
67,262
2,528,494
2,739
3,404,659
64,521
Mar. 2002
5,935,108
1,954
2,528,318
-176
3,406,789
2,130
April 2002
5,914,816
-20,292
2,549,438
21,120
3,365,378
-41,411
May 2002
5,949,975
35,159
2,553,350
3,912
3,396,625
31,247
June 2002
6,058,313
108,338
2,630,646
77,296
3,427,667
31,042
July 2002
6,092,050
33,737
2,627,980
-2,666
3,464,070
36,403
Aug. 2002
6,142,835
50,785
2,620,946
-7,034
3,521,890
57,820
Sept. 2002
6,161,431
18,596
2,644,244
23,298
3,517,187
-4,703
Oct. 2002
6,231,284
69,853
2,680,812
36,568
3,550,472
33,285
Nov. 2002
6,294,480
63,196
2,680,788
-24
3,613,692
63,220
Dec. 2002
6,359,412
64,932
2,745,787
64,999
3,613,625
-67
Jan. 2003
6,355,812
-3,600
2,753,301
7,514
3,602,511
-11,114
Feb. 2003
6,399,975
44,163
2,750,471
-2,830
3,649,504
46,993
Mar. 2003
6,399,975
0
2,722,812
-27,659
3,677,163
27,659
Apr. 2003
6,399,975
0
2,731,042
8,230
3,668,933
-8,230
May 2003
6,498,658
98,683
2,755,895
24,853
3,742,763
73,830
June 2003
6,625,519
126,861
2,842,361
86,466
3,783,158
40,395
July 2003
6,704,814
79,295
2,835,566
-6,795
3,869,247
86,089
Aug. 2003
6,743,775
38,961
2,829,387
-6,179
3,914,388
45,141
Sept. 2003
6,737,553
-6,222
2,846,730
17,343
3,890,823
-23,565
Oct. 2003
6,826,668
89,115
2,869,493
22,763
3,957,175
66,352
Nov. 2003
6,879,626
52,958
2,879,117
9,624
4,000,509
43,334
Dec. 2003
6,952,893
73,267
2,940,736
61,619
4,012,157
11,648
Jan. 2004
6,966,851
13,958
2,951,219
10,483
4,015,633
3,476
Feb. 2004
7,049,163
82,312
2,953,123
1,904
4,096,040
80,407
Mar. 2004
7,088,648
39,485
2,941,195
-11,928
4,147,453
51,413
Apr. 2004
7,089,700
1,052
2,960,151
18,956
4,129,549
-17,904
May 2004
7,151,523
61,823
2,973,869
13,718
4,177,653
48,104
June 2004
7,229,320
77,797
3,039,987
66,118
4,189,334
11,681
July 2004
7,271,328
42,008
3,033,396
-6,591
4,237,933
48,599
Aug. 2004
7,305,531
34,203
3,037,149
3,753
4,268,382
30,449
Sept. 2004
7,333,350
27,819
3,056,590
19,441
4,276,760
8,378
Oct. 2004
7,383,975
50,625
3,096,207
39,617
4,287,768
11,008
Nov. 2004
7,464,740
80,765
3,087,834
-8,373
4,376,906
89,138
Dec. 2004
7,535,644
70,904
3,158,531
70,697
4,377,114
208

CRS-13
Change
Change
Change
Held by
End of
from
from
Held by the
from
Total
government
month
previous
previous
public
previous
accounts
period
period
period
Jan. 2005
7,567,702
32,058
3,171,089
12,558
4,396,615
19,501
Feb. 2005
7,652,726
85,024
3,176,406
5,317
4,476,320
79,705
Mar. 2005
7,715,503
62,777
3,175,460
-946
4,540,042
63,722
Apr. 2005
7,704,041
-11,462
3,185,364
9,904
4,518,677
-21,365
May 2005
7,717,574
13,533
3,207,232
21,868
4,510,342
-8,335
June 2005
7,778,128
60,554
3,280,914
73,682
4,497,214
-13,128
July 2005
7,829,029
50,901
3,278,725
-2,189
4,550,304
53,090
Aug. 2005
7,868,395
39,366
3,284,696
5,971
4,583,699
33,395
Sept. 2005
7,871,040
2,645
3,300,969
16,273
4,570,071
-13,628
Oct. 2005
7,964,782
93,742
3,345,589
44,620
4,619,193
49,122
Nov. 2005
8,028,918
64,136
3,351,093
5,504
4,677,826
58,633
Dec. 2005
8,107,019
78,101
3,424,304
73,211
4,682,715
4,889
Jan. 2006
8,132,290
25,271
3,442,543
18,239
4,689,747
7,032
Feb. 2006
8,183,975
51,685
3,457,409
14,866
4,726,567
36,820
Mar. 2006
8,281,451
97,476
3,443,602
-13,807
4,837,849
111,282
Apr. 2006
8,262,718
-18,733
3,479,623
36,021
4,783,095
-54,754
May 2006
8,263,812
1,094
3,492,648
13,025
4,771,165
-11,930
June 2006
8,330,646
66,834
3,566,186
73,538
4,764,460
-6,705
July 2006
8,352,614
21,968
3,569,550
3,364
4,783,064
18,604
Aug. 2006
8,423,321
70,707
3,576,166
6,616
4,847,155
64,091
Sept. 2006
8,420,278
-3,043
3,610,443
34,277
4,809,835
-37,320
Oct. 2006
8,498,016
77,738
3,650,241
39,798
4,847,775
37,940
Nov. 2006
8,545,715
47,699
3,649,736
-505
4,895,979
48,204
Dec. 2006
8,592,513
46,798
3,724,450
74,714
4,868,063
-27,916
Jan. 2007
8,619,499
26,986
3,737,894
13,444
4,881,605
13,542
Feb. 2007
8,690,921
71,422
3,744,299
6,405
4,946,622
65,017
Mar. 2007
8,760,735
69,814
3,740,127
-4,172
5,020,608
73,986
Apr. 2007
8,753,070
-7,665
3,778,255
38,128
4,974,815
-45,793
May 2007
8,740,892
-12,178
3,792,201
13,946
4,948,691
-26,124
June 2007
8,779,168
38,276
3,867,819
75,618
4,911,348
-37,343
July 2007
8,845,417
66,249
3,873,239
5,420
4,972,178
60,830
Aug. 2007
8,948,493
103,076
3,854,115
-19,124
5,064,377
92,199
Change,
3,215,691
1,417,594
1,768,096
Sept. 2001-Aug. 2007
Source: U.S. Treasury, Bureau of the Public Debt, Monthly Statement of the Public Debt, Sept. 2001-
Aug. 2007. CRS calculations.
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