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CRS – The Debt Limit: History and Recent Increases

The Debt Limit: History and Recent Increases -  D. Andrew Austin  Analyst in Economic Policy; Mindy R. Levit, Analyst in Public Finance. September 25, 2013

“The statutory debt limit applies to almost all federal debt. The limit applies to federal debt held by the public (that is, debt held outside the federal government itself) and to federal debt held by  the government’s own accounts. Federal trust funds, such as Social Security, Medicare,  Transportation, and Civil Service Retirement accounts, hold most of this internally held debt. The government’s surpluses or deficits determine essentially all of the change in debt held by the public. The government’s on-budget fiscal balance, which excludes a U.S. Postal Service net surplus or deficit and a large Social Security surplus of payroll taxes net of paid benefits, does not  directly affect debt held in government accounts. Increases or decreases in debt held by government accounts result from net financial flows into accounts holding the debt, such as the Social Security Trust Fund. Legal requirements and government accounting practices also affect levels of debt held by government accounts.”

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