Clearing the Air on the Debt Limit Page: 4 of 15

Clearing the Air on the Debt Limit
The statutory debt limit, currently suspended through December 8, 2017, provides Congress
a means of controlling federal borrowing. As the date when that suspension will lapse
approaches, discussions about the role of the debt limit among the media, researchers, and
Members of Congress promise to become a more frequent. In recent discussions, misleading or
less than fully accurate claims have at times surfaced. This report provides clarifications on five
common debt limit contentions.
The debt limit represents one way that Congress exerts control over fiscal policy, which stems
from closely related constitutional provisions. Those provisions-the Taxing and Spending
Clause ("Power To lay and collect Taxes, Duties, Imposts and Excises, to pay the Debts and
provide for the common Defence and general Welfare of the United States")' and the Borrowing
Clause ("Power ... To borrow Money on the Credit of the United States")2-establish the basis of
the congressional power of the purse.3 Congress, under its Borrowing Clause powers, has
authorized the Department of the Treasury to borrow through various debt instruments to finance
expenditures not covered by federal receipts.4 The total amount of outstanding federal debt, with
minor exceptions, is constrained by a statutory debt limit.
When that limit is close to binding, the Treasury Secretary can invoke authorities to employ
extraordinary measures to finance federal expenditures.' If expenditures persistently outrun
receipts, and if the debt limit is not modified, at some point Treasury's cash balances and
borrowing capacity would be exhausted, leaving the Treasury without means to meet federal
obligations.6
The latest debt limit episode was resolved on September 8, 2017, when a continuing resolution
measure (PL. 115-56) was enacted that included a suspension of the debt limit through December
8, 2017. Once that debt limit suspension lapses, the Treasury Secretary may again invoke
authorities to use extraordinary measures, which would likely suffice to meet federal obligations
well into 2018.'
Point of Clarification 1: The United States Had Debt
Limits Before 1917
Federal debt has been subject to limits since the beginning of the U.S. government. Before 1917,
Congress typically specified the interest rates, maturities, call options, and other aspects of debt
issuances.8 During wars, however, the U.S. Treasury was often granted more leeway in deciding
1 U.S. CONST. art. 1, 8, cl. 1
2 U.S. CONST. art. 1, 8, cl. 2.
3 Congress also authorizes governmental entities to draw money from the U.S. Treasury to meet various statutory
obligations. See U.S. CONST. art. I, 9, cl. 7 ("No Money shall be drawn from the Treasury, but in Consequence of
Appropriations made by Law").
4 These instruments include bonds (31 U.S.C. 3102); notes (Id. 3103); certificates of indebtedness and Treasury
bills (Id. 3104); as well as savings bonds and savings certificates (Id. 3105).
s 5 U.S.C. 8348(j) et seq.
6 Neil H. Buchanan and Michael C. Dorf, How to Choose the Least Unconstitutional Option: Lessons for the President
(and Others) from the Debt Ceiling Standoff, 112 COLUM. L. REv. 1175 (2011).
7 For details, see CRS Report R43389, The Debt Limit Since 2011, by D. Andrew Austin.
8 For a list of pre-World War I debt issuances, see U.S. Congress, National Monetary Commission , Laws of the United
States Concerning Money, Banking, and Loans, 1778-1909, 61st Cong., 2nd sess., 1910, S.Doc. 580, pp. 766-769;
https://fraser.stlouisfed.org/scribd/?item_id=21954&filepath=/files/docs/historical/nmc/nmc_580_1910-ptl .pdf.

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Austin, D. Andrew & Thomas, Kenneth R. Clearing the Air on the Debt Limit, report, November 2, 2017; Washington D.C.. (https://digital.library.unt.edu/ark:/67531/metadc1043199/m1/4/ocr/: accessed April 23, 2019), University of North Texas Libraries, Digital Library, https://digital.library.unt.edu; crediting UNT Libraries Government Documents Department.

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