Structure of Federal Debt and Extraordinary Measures

Structure of Federal Debt and Extraordinary Measures

INSIGHTi

Structure of Federal Debt and Extraordinary
Measures
Updated May 2, 2023
Structure of Federal Debt
Federal debt is the accumulated sum of unrepaid borrowing by the federal government over time, and to a
lesser extent, the value of federal loan disbursements net of repayments. The total federal debt consists of
debt held by the public and intragovernmental debt. Debt owed to the public represents borrowing from
entities other than the federal government, and includes borrowing from state and local governments,
foreign governments and investors, the Federal Reserve System, and foreign central banks, as well as
private investors in the United States.
Figure 1 provides a breakdown of publicly held debt. As of December 31, 2022, total federal debt
outstanding was $31,420 billion, debt held by the public was $24,528 billion, and intragovernmental debt
was $6,902 billion.
Data were drawn from the U.S. Department of the Treasury’s Monthly Statement of the Public Debt for
December 2022. On January 19, 2023, Treasury Secretary Janet Yellen invoked authorities to employ
extraordinary measures that allow using resources of certain intragovernmental accounts to meet federal
obligations to avoid exceeding the statutory limit on federal debt. That Monthly Statement is, therefore,
the last issue before the use of extraordinary measures. On May 1, 2023, Secretary Yellen notified
Congress that those measures and cash balances would likely run out in early June 2023.
Federal debt has risen considerably since FY2001, the last fiscal year in which the U.S. government ran a
surplus. At the end of FY2001, gross federal debt stood at $5.8 trillion, about 55% of gross domestic
product (GDP). Since mid-January 2023, when extraordinary measures were deployed, federal debt has
been held just below its statutory limit of $31.381 trillion, about 120% of GDP. Debt held by the public,
the more relevant macroeconomic measure, was 94% of GDP.
Congressional Research Service
https://crsreports.congress.gov
IN12149
CRS INSIGHT
Prepared for Members and
Committees of Congress

Figure 1. Federal Debt at the End of December 2022, $Billions

Source: Areas are proportionate to amounts of debt outstanding. Blue/green areas have increased since December 2019; tan/brown areas have decreased. Treasury
bil s mature in one year or less. Notes have maturities of 1 to 10 years. Bonds have maturities over 10 years. Savings Bonds item includes other savings securities.
Notes: CRS calculations based on U.S. Treasury data, https://fiscaldata.treasury.gov/static-data/published-reports/mspd-entire/
MonthlyStatementPublicDebt_Entire_202212.xls.

Congressional Research Service
3
Debt service costs, however, had been mitigated by a long-term decline in interest rates since the mid-
1980s. How long recent interest rate increases—which added an estimated $2.5 trillion in debt service
costs over the next decade—will persist is an important macroeconomic question.
The bulk of debt held by the public is in the form of marketable securities, including Treasury bills, notes,
and bonds, that can be freely traded in capital markets. U.S. savings bonds are an example of
nonmarketable federal debt held by the public.
Nearly all intragovernmental debt is nonmarketable and held in various federal trust funds or special
funds. In general, those funds hold special Treasury securities issued in exchange for revenues earmarked
for those accounts and which can be redeemed for cash to cover outlays for programs associated with
those funds. Debt held by the Federal Financing Bank (FFB), which had served as a liaison between the
U.S. Treasury and government-sponsored enterprises, is an example of the small proportion of marketable
intragovernmental debt.
Federal Funds and Extraordinary Measures
The Treasury Secretary can invoke authorities to use resources of certain federal civilian and postal
service retirement funds to meet federal obligations when necessary to avoid exceeding the statutory debt
limit. As noted above, Treasury Secretary Yellen invoked statutory authorities by declaring a debt
issuance suspension period (DISP) in mid-January 2023. The Treasury Secretary also has authorities or
discretion to use resources from certain other funds. Figure 2 highlights the funds that may be used in
extraordinary measures during a debt limit episode.
Once the Treasury Secretary declares a DISP, she may defer investments in the Civil Service Retirement
and Disability Fund (CSRDF) Federal Employees’ Retirement System and need not roll over maturing
securities held by the fund (5 U.S.C. §8348(j)). CSRDF supports both an older retirement scheme (Civil
Service Retirement System; CSRS) and the retirement system that now covers most federal civilian
employees (Federal Employees’ Retirement System; FERS). The Thrift Savings Plan (TSP), one
component of FERS, includes a G-Fund that holds Treasury securities. The Treasury Secretary can use G-
Fund resources to meet federal obligations during a DISP. The Treasury Secretary can also redeem some
CSRDF securities before maturity, but that is limited by the length of the DISP and by the pace of benefits
payments (5 U.S.C. §8348(k)).
Parallel authorities exist for the newer and smaller Postal Service Retiree Health Benefits Fund
(PSRHBF; 5 U.S.C. §8909a(c)). PSRHBF was created in 2006 in order to prefund retirement costs of the
U.S. Postal Service. Once a debt limit episode is resolved, the Treasury Secretary is mandated to make
those funds whole (5 U.S.C. §8348(j)(3)) and must report to Congress on how extraordinary measures
were employed (5 U.S.C. §8348(k)). No authorities are provided to tap Social Security or military
retirement funds for extraordinary measures during debt limit episodes.
The Treasury Secretary has broad authorities over the Exchange Stabilization Fund (ESF) and can
therefore use U.S. dollar balances of the ESF to meet federal obligations. The State and Local
Government Series (SLGS) are securities issued to subnational governments as one means of complying
with a federal prohibition on gaining arbitrage profits from proceeds of tax-exempt municipal securities.
Treasury Secretaries have typically halted issuance of SLGS a few days before a DISP is declared. In
some previous debt limit episodes, swaps of assets with the FFB have been used to increase Treasury’s
headroom under the main debt limit.

Figure 2. Funds Associated with Extraordinary Measures, December 2022, $Billions

Source: CRS calculations based on U.S. Treasury data.
Notes: Areas are proportionate to amounts of debt outstanding. Areas in red indicate funds that may be used in extraordinary measures during debt limit episodes.

link to page 5
Congressional Research Service
5
Extraordinary measures extend Treasury’s ability to meet federal obligations. Secretary Yellen stated
Treasury’s cash balances and extraordinary measures would likely be exhausted by early June 2023,
absent legislation to modify the debt limit. Individual tax receipts before the April 18, 2023, tax filing
deadline lagged behind previous years’ pace, perhaps in part due to extensions granted to filers in disaster
areas. Receipts from checks attached to last-minute individual tax filings were higher than expected and
helped push Treasury’s cash balances to over $300 billion (Figure 3). Estimates from CBO and Goldman
Sachs (May 1, 2023, brief available to congressional clients upon request) suggested that Treasury’s cash
balances could dip to minimal levels before a mid-June corporate income tax deadline.
Figure 3. Treasury Cash Balances Since 2018, $Billions

Source: CRS calculations of weekly averages based on Daily Treasury Statement data.

Author Information

D. Andrew Austin

Analyst in Economic Policy

Disclaimer

Congressional Research Service
6
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.

IN12149 · VERSION 2 · UPDATED