Section 3101 of Title 31 of the United States Code sets the dollar limit on the public debt.
The debt limit is also sometimes referred to as the “debt ceiling.” The two expressions are entirely synonymous.
For comparison, deficits averaged about $213 billion a year from 2002 to 2008.
GDP is the gross domestic product of the United States and measures the total output of the economy in goods and services.
These tax provisions were recently renewed for two years by Public Law 111-312, December 17, 2010.
The SFP is an account at the Treasury created to assist the Federal Reserve in its operations in support of the financial system. See Federal Reserve Bank of New York, “Statement Regarding Supplementary Financing Program,” September 17, 2010, at http://www.ny.frb.org/markets/statement_091708.html.
See Congressional Research Service memorandum, “Reaching the Debt Limit,” December 28, 2010.
While federal spending is generally fairly well distributed over the course of the year, federal receipts demonstrate a very uneven monthly pattern. Whereas receipt levels in February and March are traditionally relatively low, receipts are traditionally exceptionally high in April with the tax filing season and again in June with quarterly tax filings. Thus, the timing of when the debt limit is reached is very important to policy.
Section 9 of Article I of the Constitution provides that “No Money shall be drawn from the Treasury, but in Consequence of Appropriations made by Law….”
See Section 3123 of Title 31 of the United States Code, which says that “[t]he Secretary of the Treasury shall pay interest due or accrued on the public debt.” Section 3123 does not provide guidance, however, on how to implement Section 3123 and other statutes directing expenditures when there is not enough cash on hand at the Treasury to cover all of the directed expenditures.
For a discussion of why publicly held debt is the meaningful quantity, see Alex Brill, “Reform, Don’t Raise, the Debt Limit,” American Enterprise Institute, January 20, 2011, at http://www.aei.org/article/103031.