In the fall of , the Administration recognized that a deteriorating budget outlook and continued growth in debt held by government accounts were likely to lead to the debt limit soon being reached.
As the debt moved closer to and reached the debt limit over the first six months of FY, the Administration asked Congress repeatedly to increase the debt limit, warning of adverse financial consequences were the limit not raised. On April 4, , the Treasury held debt below the limit by invoking its legislatively mandated authority to suspend reinvestment of government securities in the G-Fund of the federal employees' Thrift Savings Plan TSP.
This allowed the Treasury to issue new debt and meet the government's obligations. Once April 15 tax revenues flowed in, 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. The Treasury, for the second time in , used its statutory authority to avoid a default. The Treasury's financing problems, however, would persist without an increase in the debt limit.
On May 14, the Treasury asked Congress to raise the debt limit or enact other statutory changes allowing the Treasury to issue new debt. A Treasury news release stated "absent extraordinary actions, the government will exceed the statutory debt ceiling no later than May 16," and that. The Treasury reduced federal debt held by these government accounts by replacing it with non-interest-bearing, non-debt instruments, which enabled it to issue new debt to meet the government's obligations.
The Treasury claimed these extraordinary actions would suffice, at the latest, through June 28, Without a debt limit increase by that date, the Treasury indicated it would need to take other actions to avoid breaching the ceiling. By June 21, the Treasury had postponed a regular securities auction, but took no other actions. With large payments and other obligations due at the end of June and at the beginning of July, the Treasury stated it would soon exhaust all options to issue debt and fulfill government obligations, putting the government on the verge of a default.
During May and June , Congress took steps to increase the debt limit. The FY supplemental appropriations bill H. However, the Senate's supplemental appropriations bill S. The Senate leadership expressed strong reluctance to include a debt limit increase in the supplemental appropriation bill. Instead, on June 11, the Senate adopted a bill S.
The President signed the bill into law on June 28 P. Through the winter and into the spring, the Treasury repeatedly requested that the debt limit be raised to avoid serious financial problems. By February 20, , the Treasury, as in , used legislatively mandated measures to manage 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 needed to pay for the government's commitments or to issue new debt to other federal accounts. The Senate received the debt-limit legislation on April 11, but did not act until May 23, after receiving further Treasury warnings of imminent default. The Senate adopted the legislation, after rejecting eight amendments and sent it to the President, who signed it on May The Treasury employed methods used in the previous two years to keep debt under the legal limit.
On October 14, Secretary of the Treasury John Snow informed Congress, just before the election recess, that available measures to avoid breaching the debt limit would be exhausted by mid-November. Although the House passed a budget resolution for FY in the spring of , it did not reach final agreement with the Senate on the measure. Without a budget resolution passed by Congress, no resolution to raise the debt limit could be deemed passed by the House automatically under the Gephardt rule.
Consequently, no measure was available to send 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. 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 the Senate did not act on it. After the elections, Senator Frist, on November 16, , introduced legislation S. The Senate approved the increase on November 17, The House considered and approved the increase on November The President signed the legislation into law P. Estimates made at that time anticipated the new limit would be reached between August and December Shortly before the increase in the debt limit, the Treasury delayed a debt auction and 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. Debt limit increases in , , and took a less dramatic path than those in President Bush's first term. In , Congress included three reconciliation instructions in the FY budget resolution H.
Neither committee reported a bill to raise the debt limit. 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 th Congress, the Senate had not considered H. At the end of December , Secretary of the Treasury Snow wrote Congress that the debt limit would probably be reached in mid-February , although the Treasury could take actions that maintain the debt below its limit until mid-March.
He therefore requested an increase in the debt limit. Secretary Snow authorized actions used previously by the Treasury, including declaring a debt issuance suspension period. As March began, the government was again close to becoming unable to meet its obligations. During the week of March 13 the Senate took up H. On March 16, the Senate passed a debt limit increase after rejecting several amendments.
The President's signature on March 20, , then raised the debt limit P. In mid-May , Congress passed the conference report H. The House's Gephardt rule, triggered by the adoption of the conference report on the budget resolution, resulted in the automatic engrossment of a joint resolution in this case, H.
At the end of July , the Treasury asked Congress to raise the debt limit, stating the limit would be reached in early October Without an increase, the Treasury indicated that it would take steps within its legal authority to avoid exceeding the debt limit. The Senate then passed the measure on September 27, which the President signed on September 29, P. Financial markets started showing signs of turmoil in mid and experienced a serious crisis in By late , a serious recession had begun, which lasted until The economic slowdown began with a rapid deceleration of housing prices and a rise in interest rate spreads between private lending rates and benchmark Federal Reserve rates, indicating an increasing reluctance of major financial institutions to lend to each other as well as to firms and individuals.
This spurred several major actions to unfreeze credit markets, boost consumption, and increase spending. The recession also reduced federal revenues and increased federal spending, which led to large deficits and a series of debt limit increases. The federal deficit spending spiked to 9.
While federal deficits have been declining since FY, the economic recovery has been weak compared to recoveries following other post-World War II recessions. Economic recession affects the federal deficit in several ways.
First, falling prices of many assets and equities can sharply reduce federal revenues from capital gains taxes and from the corporate tax. Second, individual income taxes, the largest component of federal revenues, may also fall if jobs are cut and unemployment increases due to economic conditions.
Third, "automatic stabilizers" such as unemployment insurance and income support programs pay out more money as unemployment rises and the number of households eligible for means-tested benefits rises, thus increasing federal spending. Boosting the economy through deficit spending provides a fiscal stimulus if the output levels of goods and services produced in the nation are below their potential levels.
Deficit spending, however, can help accelerate inflation if output levels are near or at potential levels, and in addition, exacerbates long-term fiscal challenges.
The conference agreement H. The budget conference report passed the Senate on a vote on June 4, The House passed the measure on the next day by a vote. Agreement on the FY budget resolution automatically created and deemed passed in the House legislation H. Because the Senate did not take up H.
The Senate then passed the measure on July 26 on a vote. The President signed the bill on July 30 P. In addition to increasing the debt limit, the act also contained provisions that would temporarily authorize the Secretary of the Treasury to extend a line of credit to mortgage guarantee agencies Freddie Mac and Fannie Mae. Since the deprivatization of Fannie Mae and Freddie Mac, the federal government has acted to provide stability to financial markets.
Treasury submitted a proposal to Congress to authorize the Treasury Secretary to buy mortgage-related assets in order to stabilize financial markets.
Current economic conditions led Congress to consider another economic stimulus measure. This measure contains both tax cuts and spending increases, which will increase the deficit by reducing revenues and increasing outlays. The version of this legislation originally passed by the House omitted this provision. In August , according to media reports, Secretary of the Treasury Timothy Geithner notified Congress that the debt limit would be reached in mid-October.
Treasury announced that it could postpone the time when federal debt would reach its statutory limit until the middle or the end of December. Repayments of TARP funds by major financial institutions could also lower the amount of debt subject to limit. Treasury's ability to operate within the debt limit. On the other hand, the U. In mid-December, according to media reports, senior Members of the House chose to forgo a larger increase in the debt limit in favor of a smaller increase in the debt limit that would allow the U.
Department of the Treasury to continue normal debt management operations for two months or so. The Senate passed it on December 24 by a vote, and the President signed the measure on December On January 28, the Senate passed an amended version of H.
Some Members of Congress have called for the creation of a national commission to address federal debt and the government's fiscal situation, which could be enabled through a measure linked to an increase in the debt limit. President Obama then charged a National Commission on Fiscal Responsibility and Reform Fiscal Commission with identifying "policies to improve the fiscal situation in the medium term and to achieve fiscal sustainability over the long run.
The House approved H. The Obama Administration had previously voiced its strong support for a debt limit increase. The debt limit episode was longer and more contentious compared to those that preceded it.
The episode was resolved by passage of the Budget Control Act of , which reinstated statutory caps on discretionary spending and created other means of constraining federal spending. On May 16, , U. Treasury Secretary Timothy Geithner announced that the federal debt had reached its statutory limit and declared a debt issuance suspension period, which would allow certain extraordinary measures to extend Treasury's borrowing capacity until about August 2, Treasury confirmed its view that its borrowing authority would be exhausted on that day.
While many of the extraordinary measures have been used by previous Treasury Secretaries, the funding provided by those measures may buy much less time than in previous debt limit episodes. The national debt has increased under every presidential administration since Herbert Hoover. The United States has raised its debt ceiling at least 90 times in the 20th century.
It has never been reduced. Since until , the debt ceiling was raised 74 times, including 18 times under former President Ronald Reagan, eight times under former President Bill Clinton, seven times under former President George W.
Bush, and five times under former President Barack Obama. Data journalism and data visualisations from the Guardian. Turn autoplay off Turn autoplay on. Jump to content [s] Jump to comments [c] Jump to site navigation [0] Jump to search [4] Terms and conditions [8]. News Datablog. What is the US debt ceiling and how has it changed over time?
US President Barack Obama during a press conference on the debt ceiling last year. The debt ceiling was raised on four occasions during President George H. Under Reagan the debt ceiling was raised to:. Actively scan device characteristics for identification.
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