Federal Debt and the Statutory Limit,
March 2017
The debt limit—commonly referred to as the debt
ceiling—is the maximum amount of debt that the
Department of the Treasury can issue to the public and
to other federal agencies. That amount is set by law
and has been increased over the years in order to finance
the government’s operations. Currently, there is no statutory
limit on the issuance of new federal debt because the
Bipartisan Budget Act of 2015 (Public Law 114-74),
enacted in November 2015, suspended the debt ceiling
through March 15, 2017. On March 16, the limit will be
reset to reflect cumulative borrowing through the period
of suspension.
Absent additional legislation that further suspended or
increased the debt limit, existing statutes allow the Treasury
to declare a “debt issuance suspension period” on
March 16, 2017, and take a number of “extraordinary
measures” to borrow additional funds without breaching
the new debt ceiling. The Congressional Budget Office
projects that if the debt limit remains unchanged, those
measures will probably be exhausted and the Treasury will
probably run out of cash sometime in the fall of 2017.
(The timing and magnitude of revenues and outlays over
the next several months could vary noticeably from
CBO’s projections, so those measures could be exhausted
and the Treasury could run out of cash earlier or later.) At
such time, the government would be unable to fully pay
its obligations, a development that would lead to delays
of payments for government activities, a default on the
government’s debt obligations, or both.
What Is the Current Situation?
The Bipartisan Budget Act of 2015 specifies that the
amount of borrowing that occurs while the limit is suspended
be added to the previous debt limit of $18.1 trillion.
As of February 28, an additional $1.8 trillion had
been borrowed, bringing the amount of outstanding debt
subject to limit up to $19.9 trillion. On March 16, a new
limit will be established, reflecting the additional borrowing
through March 15.
If the current suspension is not extended or a higher debt
limit is not legislated before March 16, the Treasury will,
from that date forward, have no room to borrow under
standard operating procedures. Therefore, to avoid
breaching the ceiling, the Treasury would begin taking
the extraordinary measures that would allow it to continue
to borrow for a limited time. Continued use of
those measures, along with regular cash inflows, should
allow the Treasury to finance the government’s activities
for the next several months without an increase in the
debt ceiling.
What Makes Up the Debt Subject to Limit?
Debt subject to the statutory limit comprises two main
components: debt held by the public and debt held by
government accounts.1
Debt held by the public consists
mainly of securities that the Treasury issues to raise cash
to fund the federal government’s operations that revenues
are insufficient to cover. Such debt is held by outside
investors, including the Federal Reserve System. Debt
held by government accounts is debt issued to the federal
government’s trust funds and other federal accounts
for internal transactions of the government; it is not
traded in capital markets. Trust funds for Social Security,
Medicare, military retirement, and civil service retirement
and disability hold most of that debt.
Of the $19.9 trillion in outstanding debt subject to limit,
$14.4 trillion is held by the public and $5.5 trillion is
held by government accounts.
1. For more information on federal debt, see Congressional Budget
Office, Federal Debt and Interest Costs (December 2010),
www.cbo.gov/publication/21960.
2 FEDERAL DEBT AND THE STATUTORY LIMIT, MARCH 2017 MARCH 2017
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What Measures Will Be Available to the
Treasury in March?
Without further legislation, the Treasury will have to take
the extraordinary measures available to it to continue
funding government activities after March 15, 2017, and
even then, it will be able to continue borrowing for only a
limited time.
The following measures will be available to the Treasury:
B Suspend the investments of the Thrift Savings Plan’s
G Fund. (Otherwise rolled over or reinvested daily,
such investments totaled $224 billion in Treasury
securities as of January 31, 2017.)2
B Suspend investments of the Exchange Stabilization
Fund. (Otherwise rolled over daily, such investments
totaled $22 billion as of January 31, 2017.)3
B For the Civil Service Retirement and Disability Fund
(CSRDF) and Postal Service Retiree Health Benefits
Fund (PSRHBF), suspend the issuance of new
securities (which total about $3 billion each month),
the reinvestment of maturing securities (expected
to amount to about $75 billion on June 30, 2017),
semiannual interest payments (expected to total
$14 billion on June 30, 2017), and amortization
payments (expected to total $38 billion on
September 30, 2017).
B Redeem, in advance, securities held by the CSRDF
and the PSRHBF in amounts equal in value to benefit
payments due in the near future. (Such payments are
valued at about $8 billion per month.)
B Suspend the issuance of new State and Local
Government Series (SLGS) securities and savings
bonds. (Between $5 billion and $12 billion in SLGS
securities and savings bonds are generally issued each
month.)4
B Exchange Federal Financing Bank securities, which
do not count against the debt limit, for an equal
amount of Treasury securities held by the CSRDF.
(Approximately $2 billion in securities could be
exchanged as of January 31, 2017.)5
Those measures provide the Treasury with additional
room to borrow by limiting the amount of debt held by
the public or debt held by government accounts that
would otherwise be outstanding. By statute, the CSRDF,
the PSRHBF, and the G Fund would eventually be made
whole (with interest) after the debt limit was raised.6
If current laws governing federal taxes and spending
remain in place and if full-year appropriations equal
the annualized funding provided in the Further
Continuing and Security Assistance Appropriations Act,
2017 (P.L. 114-254, the current continuing resolution),
the federal government will run a deficit of $559 billion
in fiscal year 2017, CBO estimates.7
However, the government
normally runs a large surplus in April, when
final payments of individual income taxes for the preceding
calendar year are due. Those inflows and other tax
receipts due later this year—combined with the measures
listed above—should allow the Treasury to finance the
government’s normal operations for several months
without an increase in the debt ceiling.
What Is the Upcoming Schedule for
Cash Flows and Debt Issuance?
The amount of debt accumulated over the next several
months depends on the size of the deficit during that
period (which largely determines how much additional
cash the government needs) and on transactions between
the Treasury and other parts of the federal government.
2. The Thrift Savings Plan is a retirement program for federal
employees and members of the uniformed services similar to a
401(k) plan; the G Fund is one component of the plan and is
invested solely in Treasury securities.
3. The Exchange Stabilization Fund is operated by the Department
of the Treasury for the purpose of stabilizing exchange rates.
4. The Treasury offers SLGS securities to state and local
governments as part of its regulation of their issuance of
tax-exempt securities.
5. The Federal Financing Bank (FFB) has the authority to issue up to
$15 billion of its own debt securities; that amount does not count
against the debt limit. As of January 31, outstanding FFB debt
securities totaled approximately $13 billion. The remaining
$2 billion that the FFB is authorized to use can be exchanged with
Treasury securities held by the CSRDF.
6. For more information on extraordinary measures and actions
taken after a debt limit increase, see Government Accountability
Office, Debt Limit: Analysis of 2011–2012 Actions Taken and
Effect of Delayed Increase on Borrowing Costs, GAO-12-701
(July 2012), www.gao.gov/products/GAO-12-701.
7. For more information on CBO’s most recent baseline projections,
see Congressional Budget Office, The Budget and Economic
Outlook: 2017 to 2027 (January 2017), www.cbo.gov/publication/
52370. As of the end of January, the deficit for fiscal year 2017
was $157 billion.
MARCH 2017 FEDERAL DEBT AND THE STATUTORY LIMIT, MARCH 2017 3
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The amounts of cash flowing to and from the government
will determine how much needs to be borrowed
from the public and when that borrowing must occur.
Transactions between the Treasury and other parts of the
federal government, described below, will establish
the amount of debt held by government accounts.
Federal Cash Flows
Certain large inflows and outflows of cash from the
Treasury follow a regular schedule. That schedule directly
affects the amount of borrowing from the public, the
largest component of debt subject to limit. The following
are typical payment dates and amounts for large government
expenditures (although the actual date of a disbursement
may shift by a day or two in either direction
if the normal payment date falls on a weekend or federal
holiday):
B Payments to Medicare Advantage and Medicare
Part D plans: the first day of the month (about
$23 billion);
B Social Security benefits: the third day of the month
(about $23 billion), with subsequent smaller payments
on three Wednesdays per month (about $15 billion
each);
B Pay for active-duty members of the military and
benefit payments for civil service and military retirees,
veterans, and recipients of Supplemental Security
Income: the first day of the month (about
$25 billion);
B Interest payments: around the 15th and the last day of
the month (amounts vary); and
B Individual income tax refunds: daily (amounts vary
but are especially large from February to April),
though many refunds will have already been paid out
before the end of the current suspension period on
March 15.
Deposits (mostly tax revenues) are relatively steady
throughout each month except for a few dates on which
tax receipts are particularly significant. The largest tax
receipts are collected in April, when individual and corporate
income tax returns and quarterly estimated tax
payments are due. Tax receipts from corporations and
individuals are also collected at other times, including
June and September. The Treasury will collect the
following receipts in those months:
B Individuals’ tax payments submitted with income tax
returns and for quarterly estimated income taxes in
April (about $260 billion last April);
B Corporations’ tax payments submitted with income
tax returns in mid-April (about $25 billion in
mid-March 2016);8
B Corporations’ quarterly estimated tax payments in
April, June, and September (about $35 billion in
mid-April 2016 and $60 billion in both mid-June and
mid-September 2016); and
B Individuals’ quarterly estimated tax payments in June
and September (about $70 billion, on average, in
those months last year).
Debt Issuance: Treasury Auctions
The Treasury issues numerous securities to obtain funds
to pay off maturing securities and to finance government
activities. Those securities, which have various maturities,
are normally issued in regularly scheduled auctions
(although the date of issuance may shift by a day or two
in either direction if the normal issuance date falls on a
weekend or federal holiday):
B Treasury bills (with maturities of up to 52 weeks) are
issued every Thursday. (Sales in recent auctions have
ranged from a total of $97 billion to $163 billion.)
B Treasury notes (which currently have maturities of
2 to 10 years and which include inflation-protected
securities) are issued on the 15th and on the last day of
the month. (Sales in recent auctions on the 15th have
totaled about $48 billion, and those on the last day of
the month have totaled as much as $127 billion.)
B Treasury bonds (with 30-year maturities) are issued
in the middle of each month. (Sales in recent auctions
have ranged from $12 billion to $18 billion.)
Inflation-protected securities (with 30-year maturities)
are issued at the end of the month in February, June,
and October. (Sales in recent auctions have ranged
from $5 billion to $8 billion.)
8. The Surface Transportation and Veterans Health Care Choice
Improvement Act of 2015 (P.L. 114-41) changed the due dates for
certain tax returns. Most corporations’ income tax returns were
due in mid-March in the past but are due in mid-April starting
this year.
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