Legislative Procedures for Adjusting the Public Debt Limit: A Brief Overview

Publication Date: February 2005

Publisher: Library of Congress. Congressional Research Service

Author(s):

Research Area: Banking and finance

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Abstract:

Almost all borrowing by the federal government is conducted by the Treasury Department, within the restrictions established by a single, statutory limit on the total amount of debt that may be outstanding at any time. Most adjustments to the debt limit have been increases, but sometimes the change has been a reduction.

The annual budget resolution includes recommended levels of the public debt limit for each fiscal year covered by the resolution. Because a budget resolution does not become law, Congress and the President must enact legislation in order to implement budget resolution policies. The House and Senate may develop legislation adjusting the debt limit in any one of three ways: (1) under regular legislative procedures in both chambers, either as freestanding legislation or as a part of a measure dealing with other topics; (2) pursuant to the House's so-called Gephardt rule; or (3) as part of the budget reconciliation process provided for under the Congressional Budget Act of 1974. During the period from 1940 to the present, a total of 84 debt-limit measures were enacted into law -- 68 under regular legislative procedures in both chambers, 12 under the Gephardt rule, and 4 under reconciliation procedures.

President Bush's budget for FY2006 estimates the debt limit for that fiscal year at $8.673 trillion, nearly $500 billion higher than the current limit. Accordingly, Congress and the President are expected to have to enact an increase in the debt limit by late this session or early next session.

This report will be updated as developments warrant.