Debt Limit Suspensions

Debt Limit Suspensions

CRS INSIGHT Prepared for Members and Committees of Congress

INSIGHTi

Debt Limit Suspensions

Updated January 28, 2025

A debt limit suspension defines a minimum interval before Congress is compelled to address the debt limit again. Once the suspension ends, the debt limit is reset to accommodate the increase in federal debt during the suspension period. The U.S. Treasury, with the help of “extraordinary measures,” can pay federal financial obligations for some time after a suspension ends.

Since 2013, Congress has suspended the statutory debt limit eight times, rather than increase the limit by a dollar amount. In October 2021, however, Congress chose to increase the debt limit by the fixed amount of $480 billion, and in December 2021, it increased the debt limit by $2.5 trillion to just under $31.4 trillion. Debt limit suspensions, by contrast, are silent on dollar amounts.

The Fiscal Responsibility Act of 2023 (FRA, P.L. 118-5), enacted on June 3, 2023, suspended the debt limit until January 1, 2025. The FRA also imposed statutory caps on discretionary spending and rescinded unobligated funds from various federal accounts. The debt limit was reinstated on January 2, 2025, at $36.1 trillion.

Then-Treasury Secretary Janet Yellen did not immediately employ extraordinary measures after the latest suspension lapsed because scheduled redemptions from a Medicare-linked trust fund generated some headroom under the new debt limit. She did invoke authorities to use extraordinary measures starting January 21, 2025. Some observers expect extraordinary measures to allow Treasury to pay obligations until sometime in summer 2025.

Treasury Secretary’s Authority to Invoke Extraordinary Measures

Extraordinary measures are special strategies to handle cash and debt management during debt limit episodes. Congress gave the Treasury Secretary statutory authority to declare a “debt issuance suspension period” (DISP) when making deposits in the form of special Treasury securities into the Civil Service Retirement and Disability Fund (CSRDF) would cause the federal debt to exceed its limit. Other smaller resources, such as dollar holdings of the Exchange Stabilization Fund, also can be used. Before 2025, Treasury Secretaries had declared DISPs the business day after a debt limit suspension lapsed. During a DISP, the U.S. Treasury can use financial resources from the CSRDF and postal service retirement funds to pay federal obligations. Once a DISP ends, “the Secretary of the Treasury shall immediately issue” amounts to replenish those funds. The Treasury Secretary also must report to Congress on how extraordinary measures were used.

Congressional Research Service

https://crsreports.congress.gov

IN11829

Congressional Research Service 2

Once a DISP is declared, the length of time Treasury can meet federal financial obligations depends on its cash balances, the extent of funds available via extraordinary measures, and the timing of federal revenues and payments—when taxes are collected and when outlays are paid. The timing of redemption and issuances of special Treasury securities to various federal trust funds also matters.

During the previous debt limit episode, Treasury Secretary Yellen declared a DISP on January 19, 2023. In May 2023, she notified Congress that according to Treasury’s best estimate, it would become unable “to satisfy all of the government’s obligations by early June” absent legislation to modify the debt limit. In April 2023, however, individual income tax receipts fell short of expectations, reducing Treasury’s headroom under the limit. Private projections suggested that Treasury’s resources could have dipped to around $25 billion in early June 2023. CBO warned of a “significant risk” that in the first half of June 2023, Treasury might not be able to meet all obligations on time. Enactment of the FRA, as noted above, resolved the episode by suspending the debt limit through January 1, 2025.

Debt Limit Suspensions

Table 1 lists laws that have suspended the debt limit. The Budget Control Act of 2011 (BCA), which set the fiscal framework for the following decade, is also listed. The BCA also set statutory caps on discretionary spending for FY2012-FY2021. Congress, however, adjusted those caps to accommodate higher defense and nondefense spending levels. A series of Bipartisan Budget Acts, each of which addressed a broad range of budgetary issues, adjusted those caps upward, thus providing a convenient legislative vehicle for debt limit suspensions. The debt limit was also suspended in continuing appropriations acts for FY2014 and FY2018.

Table 1. Debt Limit Suspensions and the Budget Control Act of 2011

Act Measure Public Law Enactment Date

Debt Limit

Suspended Through

Fiscal Responsibility Act of 2023 H.R. 3746 P.L. 118-5 June 3, 2023 January 1, 2025

Bipartisan Budget Act of 2019 (BBA 2019) H.R. 3877 P.L. 116-37 August 2, 2019 July 31, 2021

Bipartisan Budget Act of 2018 (BBA 2018) H.R. 1892 P.L. 115-123 February 9, 2018 March 1, 2019

Continuing Appropriations Act, 2018 H.R. 601 P.L. 115-56 September 8, 2017 December 8, 2017

Bipartisan Budget Act of 2015 (BBA 2015) H.R. 1314 P.L. 114-74 November 2, 2015 March 15, 2017

Temporary Debt Limit Extension Act S. 540 P.L. 113-83 February 15, 2014 March 15, 2015

Continuing Appropriations Act, 2014 H.R. 2775 P.L. 113-46 October 17, 2013 February 7, 2014

No Budget, No Pay Act of 2013 (NBNPA) H.R. 325 P.L. 113-3 February 4, 2013 May 18, 2013

Budget Control Act of 2011 (BCA) S. 365 P.L. 112-25 August 2, 2011 Allowed three increases

of set amounts

Source: Information compiled by CRS from Office of Management and Budget, Historical Table 7.3. Notes: The BCA did not suspend the debt limit. The debt limit was increased three times under its provisions. The amount of the third increase was subject to certain requirements.

Table 2 shows the duration of debt limit suspensions and DISPs. The use of suspensions results in a two- step change in the debt limit. First, the debt limit is reset after each suspension lapse. Second, once Treasury’s capacity to meet federal obligations has neared exhaustion, Congress then has acted either to suspend the debt limit or, as in October and December 2021, to increase it.

Table 2 also shows the substantial variation over the past decade in the length of DISPs, which ranged from 5 days to 231 days.

Congressional Research Service 3

IN11829 · VERSION 7 · UPDATED

Table 2. Analysis of Debt Limit Suspensions and Debt Issuance Suspension Periods

Act Raising or

Suspending Debt Limit

Debt Limit Suspended

Through

New Debt

Limit After Suspension

$Billions

Date

Extraordinary

Measures

Invoked (DISP)

New Debt

Limit After

New Act

$Billions

DISP

Calendar

Days

Debt

Change

During

DISP

$Billions

FRA of 2023 January 1, 2025 $36,104 January 21, 2025 — — —

BBA 2019 July 31, 2021 $28,401 August 2, 2021 $29,193* 136* $2,980*

BBA 2018 March 1, 2019 $21,988 March 4, 2019 $22,286 151 $299

Continuing Appropriations Act, 2018

December 8, 2017 $20,456 December 11,

2017

$20,636 60 $180

BBA 2015 March 15, 2017 $19,809 March 16, 2017 $20,130 176 $321

Temporary Debt Limit Extension Act

March 15, 2015 $18,113 March 16, 2015 $18,492 231 $379

Continuing Appropriations Act, 2014

February 7, 2014 $17,212 February 10,

2014

$17,337 5 $126

NBNPA 2013 May 18, 2013 $16,699 May 20, 2013 $17,026 150 $327

BCA — — December 31,

2012

$16,441 35 $47

Source: Information compiled by CRS from U.S. Treasury and legislative data. *DISP length following the lapse of the BBA 2019 suspension is taken to end with enactment of P.L. 117-73 on December 16, 2021, although extraordinary measures were reset after enactment of P.L. 117-50 on October 14, 2021. The change in debt in 2021 is the sum of the October increase ($480 billion; P.L. 117-50) and the December increase ($2.5 trillion; P.L. 117-73).

Author Information

D. Andrew Austin Analyst in Economic Policy

Disclaimer

This document was prepared by the Congressional Research Service (CRS). CRS serves as nonpartisan shared staff to congressional committees and Members of Congress. It operates solely at the behest of and under the direction of Congress. Information in a CRS Report should not be relied upon for purposes other than public understanding of information that has been provided by CRS to Members of Congress in connection with CRS’s institutional role. CRS Reports, as a work of the United States Government, are not subject to copyright protection in the United States. Any CRS Report may be reproduced and distributed in its entirety without permission from CRS. However, as a CRS Report may include copyrighted images or material from a third party, you may need to obtain the permission of the copyright holder if you wish to copy or otherwise use copyrighted material.