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INSIGHTi
“Extraordinary Measures” and the Debt Limit
Updated July 29, 2021
The Bipartisan Budget Act of 2019 (P.L. 116-37) suspended the statutory debt limit from August 2, 2019,
through July 31, 2021. Upon reinstatement, the statutory debt limit wil be set at a level precisely
accommodating federal borrowing (matching the federal debt subject to limit on August 2, 2021).
Treasury Secretary Janet Yel en informed Congress in a July 23, 2021, letter that she would implement
“extraordinary measures” starting on August 2, 2021, to prevent the debt limit from binding.
Extraordinary measures were most recently implemented from March 2019 to August 2019, following the
expiration of the statutory debt limit suspension in the Bipartisan Budget Act of 2018 (P.L. 115-123). This
Insight briefly examines the use of extraordinary measures and the 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 at 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 was created to act as a
congressional check on recent revenue and expenditure trends, though the budgetary decisions affecting
debt levels may have been the result, at least partly, of policies enacted wel in the past. 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 used to extend the date by which debt limit
legislation must be enacted. The authority for using extraordinary measures rests with the Treasury
Secretary (codified at 5 U.S.C. §8348 and 5 U.S.C. §8909). Invoking extraordinary measures has been
used regularly in recent years, and 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). Ultimately, accounts and members of the public that are affected
by extraordinary measures must be compensated for the delay in payment that results from such actions
when the debt limit is subsequently modified.
Before or during a period when extraordinary measures are implemented, Treasury typical y provides a
description of the extraordinary measures available and estimates of their effect on federal borrowing
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capacity (or how much “headroom” they wil add). The most recent description of such measures was
provided by Treasury in March 2019. Table 1 provides a description of the currently available
extraordinary measures and the amount of headroom added when those measures were implemented from
2017 through 2019.
Table 1. Use of Extraordinary Measures 2017-2019
Headroom Added from
Headroom Added from
Headroom Added from
March 2017 to
December 2017 to
March 2019
Measure
September 2017
February 2018
to August 2019
Suspension of reinvestment
$225 bil ion
$208 bil ion
$230 bil ion
in Government Securities
Investment Fund (G Fund) of
the Federal Employees
Retirement System
Suspension of invested
$22 bil ion
$22 bil ion
$22 bil ion
balance in Exchange
Stabilization Fund
Declaration of a Debt
$87 bil ion one-time and
$12.7 bil ion one-time and
$86 bil ion one-time and
Issuance Suspension Period
$7.3 bil ion per month
$7.3 bil ion per month
$7.3 bil ion per month
Suspension of State and
$0 (prevents further
$0 (prevents further
$0 (prevents further
Local Government
increases in debt by $3-$13
increases in debt by $3-$13
increases in debt by
Securities
bil ion per month)
bil ion per month)
approximately $4 bil ion 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; U.S. Department of the Treasury,
“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 2019 report, the Congressional Budget Office estimated that an additional $4.7 bil ion of headroom
is available through the Federal Financing Bank. This table only includes available measures reported by 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. CBO’s July 2021 projections
indicate that extraordinary measures imposed in August 2021 would be exhausted in October or
November 2021, though it cautions that such estimates are subject to considerable uncertainty.
Daily federal budget outcomes can vary significantly with the timing of payments and collections, and are
altered considerably by the imposition of extraordinary measures. Figure 1 highlights this process
through daily federal balance outcomes surrounding and during the imposition of extraordinary measures
in FY2018. 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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Figure 1. Changes in the Daily Federal Balances, October 3, 2017-February 15, 2018
(in bil ions of nominal dol ars)
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. April 2020, however, recorded a significant federal deficit, due in part to increased outlays
from the CARES Act (P.L. 116-136) and reduced receipts from the individual income tax deadline being
postponed. This activity highlights the need for context in projecting near-term federal budget activity.
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 green regions represent receipts greater than outlays (indicating an average monthly surplus). For
example, on average in October of the past five fiscal years, the federal account balance has been about
$350 bil ion, of which about $100 bil ion has been deficit spending.
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Figure 2. Average Federal Monthly Account Balance, FY2016-FY2020
(In constant January-March 2021 dol ars)
Source: U.S. Department of the Treasury, Monthly Treasury Statement (various). CRS calculations.
Author Information
Grant A. Driessen
Specialist in Public Finance
Disclaimer
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