Long-Term Budget Outlook
Current Debt Level:
Link to Treasury's Debt to the Penny
Additional Resources on Deficits and Debt
Impact of Major Legislation on Budget Deficits: 2001-10
Overview and History of the Federal Debt
CRS: Sovereign Debt in Advanced Economies
Issue Analysis: Does Raising the Debt Ceiling increase government spending?
Answer: The debt ceiling does not increase spending; it is a legal restraint on Treasury's ability to honor U.S. obligations that have already been entered into.
Background: The nation's public debt -- which is the accumulated debt of the nation -- increases when Congress enacts total spending for a fiscal (budget) year that exceeds total revenues, in other words, an annual deficit.
When Congress passes spending and tax laws that result in an annual deficit, the U.S. Treasury has no choice but to borrow sufficient funds to cover the deficit, and the accumulated public debt goes up.
The statutory limit on the public debt, often called the "debt ceiling," is an artificial legal limit on the Treasury's ability to borrow the funds necessary to finance annual budget deficits.
If Congress passes spending measures that exceed incoming revenues, but prevents the Treasury from borrowing funds to cover the deficit, the nation would default on its legal obligations to lenders (both foreign and domestic), contractors, Social Security beneficiaries, veterans, Medicare providers and any others to whom payments are legally owed.
A default has never occurred and would have catastrophic effects on the ability of the U.S. Treasury to issue bonds in the future and the stability of global financial markets.
Note: The debt ceiling roughly approximates Gross Federal Debt--which includes:
(1) Debt Held by the Public (money borrowed by selling Treasury securities to various buyers including foreign investors, mutual funds, state and local governments, commercial banks, insurance companies and individuals); plus (2) Debt Held by Federal Government Accounts, such as the Social Security Trust Funds and various federal retirement trust funds.
While a lot of political attention is paid to the debt ceiling due to its symbolism, most economists view Debt Held by the Public as more significant economically than Gross Federal Debt, because Debt Held by the Public reflects the total amount the Federal Government is borrowing from private credit markets--with all the implications that has for available credit.