![]() Over the course of the 1990s, it was doubled to nearly $6 trillion, and in the 2000s it was again doubled to over $12 trillion. During the 1980s, the debt ceiling was increased from less than $1 trillion to nearly $3 trillion. Since the end of World War II, Congress and the President have modified the debt ceiling more than 100 times, according to the Congressional Research Service. In 1939, Congress created the first aggregate debt limit covering nearly all government debt and set it at $45 billion, about 10 percent above total debt at the time. The debt ceiling was first enacted in 1917 through the Second Liberty Bond Act and was set at $11.5 billion to simplify the process and enhance borrowing flexibility. Prior to establishing the debt ceiling, Congress was required to approve each issuance of debt in a separate piece of legislation. As a result, the debt continues to rise due to both annual budget deficits financed by borrowing from the public and from trust fund surpluses, which are invested in Treasury bills with the promise to be repaid later with interest. ![]() The limit applies to almost all federal debt, including the roughly $24.6 trillion of debt held by the public and the roughly $6.8 trillion the government owes itself as a result of borrowing from various government accounts, like the Social Security and Medicare trust funds. The debt ceiling is the legal limit on the total amount of federal debt the government can accrue. Appendix: Examples of How the Debt Ceiling Has Been Used in the Past.What are the options for improving the debt ceiling?.Have policymakers used the debt ceiling to pursue deficit reduction in the past?.How does a shutdown differ from a default?.How bad are the consequences of a default?.What happens if the debt ceiling is hit?.Can hitting the debt ceiling be avoided without Congressional action?.At the point of exhaustion of those measures and the Treasury’s existing cash balance, absent a new agreement to either raise or suspend the debt ceiling, the Treasury will be unable to continue paying the nation’s bills and the U.S. At that point, the Treasury Department began using accounting tools at its disposal, called “extraordinary measures,” to avoid defaulting on the government’s obligations, which Secretary Yellen recently indicated will only allow for continued borrowing until early June, possibly as early as June 1. The federal debt ceiling was raised in December of 2021 by $2.5 trillion to $31.381 trillion, which lasted until January 19, 2023, according to a letter from Treasury Secretary Janet Yellen to Congressional leaders.
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