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1 The Federal Debt and the Statutory Debt Limit: A Background Report 1 (1965)

handle is hein.tera/fedebslib0001 and id is 1 raw text is: SPECIAL REPORT 1965 - 3 THE FEDERAL DEBT AND THE STATUTORY DEBT LDiIT A Background Report Currently before the Congress is an Administration request for a further increase of $5 billion in the temporary statutory Federal debt limit, bringing the ceiling to $329 billions It appears at this writing that the Congress may hold the increase to $4 billion (or a $328 billion limit). Scme such action will be required in any event to accommodate the needs of fiscal 1966,11 since without ac- tion by the Congress the debt ceiling would revert to its permanent level of $285 billion on July 1, 1965 -- $32.4 billion below the estimated debt subject to the limit on that date. Increasing the statutory debt ceiling has become almost an annual exercise in recent years. Since June 30, 1956, the Federal debt has risen from $272.8 billion to an estimated $316 billion plus as of June 30 this year; the permanent debt limit has been increased from $275 billion to $285 billion, and the temporary ceiling has been increased on more than a dozen occasions, from $278 billion to the present of $324 billion. Table 1 sets forth data on the Federal public debt and the debt ceiling for selected fiscal years in the period 1919-1966. From a practical standpoint the Congress has only a limited range of action on requests for periodic increases in the statutory debt limit. The level of debt at the outset of aly fiscal year is in consequence of budget deficits incurred during previous years; spe- cifically, the higher debt ceiling required for the fiscal year 1966 is essentially due to the deficit incurred in this current (1965) fiscal year -- now estimated at $4.4 billion. Similarly, the fact that another budget deficit in the $4.5 billion range is now fore- cast for fiscal 1966 means that another increase in the debt ceil- ing next year is already in prospect. Additionally, seasonal fluctuations in Federal receipts and expen- ditures during the first six to eight months of any fiscal year also have a substantial effect on Treasury borrowing requirements. For example, during fiscal 1966 the Treasury estimates the public debt limit requirement peak on March 15, 1966, at $328.9 billion -- more than $MO.5 billion above the requirement as of the end of