Total federal debt can increase in two ways. First, debt increases
when the government sells debt to the public to finance budget
deficits and acquire the financial resources needed to meet its
obligations. This increases debt held by the public. Second, debt
increases when the federal government issues debt to certain
government accounts, such as the Social Security, Medicare, and
Transportation trust funds, in exchange for their reported
surpluses. This increases debt held by government accounts. The sum
of debt held by the public and debt held by government accounts is
the total federal debt. Surpluses reduce debt held by the public,
while deficits raise it. On August 2, 2011, President Obama signed
the Budget Control Act of 2011 (BCA; S. 365; P.L. 112-25), after an
extended debt limit episode. The federal debt had reached its legal
limit on May 16, 2011, prompting Treasury Secretary Timothy
Geithner to declare a debt issuance suspension period, allowing
certain extraordinary measures to extend Treasury's borrowing
capacity. The BCA included provisions aimed at deficit reduction
and allowing the debt limit to rise between $2,100 billion and
$2,400 billion in three stages, the latter two subject to
congressional disapproval. Once the BCA was enacted, a presidential
certification triggered a $400 billion increase, raising the debt
limit to $14,694 billion. That certification also triggered a
second $500 billion increase on September 22, 2011, as a
disapproval measure (H.J.Res. 77) only passed the House. A January
12, 2012, presidential certification will trigger a third, $1.2
trillion, increase after 15 days unless a disapproval measure,
which would be subject to veto, were enacted. On January 18, 2012,
the House passed such a measure (H.J.Res. 98) on a 239-176 vote.
Congress has always placed restrictions on federal debt. The form
of debt restrictions, structured as amendments to the Second
Liberty Bond Act of 1917, evolved into a general debt limit in
1939. Congress has voted to raise the debt limit 11 times since
2001, due to persistent deficits and additions to federal trust
funds. Congress raised the limit in June 2002, and by December 2002
the U.S. Treasury asked Congress for another increase, which passed
in May 2003. In June 2004, the U.S. Treasury asked for another debt
limit increase and again in October 2004. A debt limit increase was
enacted on November 19, 2004. In 2005, reconciliation instructions
in the FY2006 budget resolution (H.Con.Res. 95) included a debt
limit increase. After warnings from the U.S. Treasury, Congress
passed an increase that the President signed on March 20. In 2007,
Congress approved legislation (H.J.Res. 43) to raise the debt limit
by $850 billion to $9,815 billion that the President signed
September 29, 2007. The recent economic slowdown led to sharply
higher deficits in recent years, which led to a series of debt
limit increases. The Housing and Economic Recovery Act of 2008
(H.R. 3221), signed into law (P.L. 110-289) on July 30, 2008,
included a debt limit increase. The Emergency Economic
Stabilization Act of 2008 (H.R. 1424), signed into law on October 3
(P.L. 110-343), raised the debt limit again. The debt limit rose a
third time in less than a year to $12,104 billion with the passage
of the American Recovery and Reinvestment Act of 2009 on February
13, 2009 (ARRA; H.R. 1), which was signed into law on February 17,
2009 (P.L. 111-5). Following this measure, the debt limit was
subsequently increased by $290 billion to $12,394 billion (P.L.
111-123) in a stand-alone debt limit bill on December 28, 2009, and
by $1.9 trillion to $14,294 billion on February 12, 2010 (P.L.
111-139), as part of a package that also contained the Statutory
Pay-As-You-Go Act of 2010.
General
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