Debt-Limit Legislation in the Congressional Budget Process
Prepared for Members and Committees of Congress
he amount of money the federal government is allowed to borrow generally is subject to a
statutory limit (31 U.S.C. 3101). From time to time, Congress considers and adopts
legislation to change this limit. This report provides a brief overview of debt-limit T
legislation within the congressional budget process.
The gross federal debt, which represents the federal government’s total outstanding debt, consists
of two types of debt: (1) the debt held by the public; and (2) the debt held by government
accounts. The debt held by the public represents the total net amount borrowed from the public to
cover the federal government’s accumulated budget deficits. By contrast, the debt held by
government accounts represents the total net amount of federal debt issued to specialized federal
accounts, primarily trust funds (e.g., Social Security). Trust fund surpluses by law must be
invested in special federal government securities and thus are held in the form of federal debt.
At the end of FY2007, about 56%, or about $45,035.1 billion, of the gross federal debt, which
equaled $8,950.47 billion, was held by the public. Almost 44%, or $3,915.6 billion, of the gross
federal debt is debt held by government accounts.
Since the statutory limit applies to the combination of both types of debt, budget deficits or trust
fund surpluses may contribute to the federal government reaching the existing debt limit. Budget
deficits increase the federal debt by requiring the federal government to borrow additional funds
to fulfill its commitments. Trust fund surpluses contribute to the federal debt by requiring the
federal government to issue securities to the trust funds. Consequently, the federal debt may
reach the existing statutory limit even when the federal budget is balanced. For more information
on current federal debt limit issues, see CRS Report RL31967, The Debt Limit: History and
So long as the federal government incurs annual deficits and trust funds incur annual surpluses,
Congress and the President from time to time must enact legislation to raise the statutory limit on
the debt. Legislation to raise (or lower) the debt limit is considered in the context of the
congressional budget process. The annual congressional budget resolution specifies the
appropriate level of the public debt for each fiscal year covered by the resolution. Although the
budget resolution does not become law itself, the specified debt limits serve as a guide for any
necessary debt-limit legislation.
Section 303 of the Congressional Budget Act of 1974 (Titles I-IX of P.L. 93-344, 2 U.S.C. 601-
688), as amended, prohibits consideration of debt-limit measures for the upcoming fiscal year
before a budget resolution for that year has been adopted. This provision, however, can be
waived in the House or Senate by majority vote.
Congress may develop debt-limit legislation in any of three ways: (1) under regular legislative
procedures; (2) under House Rule XXVII; or (3) as part of reconciliation legislation. Regardless
of the process by which debt-limit legislation is developed, the House Ways and Means
Committee and the Senate Finance Committee maintain exclusive jurisdiction over debt-limit
Under House Rule XXVII (commonly referred to as the Gephardt rule after its author, former
Representative Richard Gephardt), a joint resolution specifying the amount of the debt limit
contained in the budget resolution automatically is engrossed and deemed to have passed the
House by the same vote as the conference report on the budget resolution, thereby avoiding a
separate vote on the debt-limit legislation. The Senate has no comparable procedure and may
consider such a joint resolution under the regular legislative process. For further information, see
CRS Report RL31913, Developing Debt-Limit Legislation: The House’s “Gephardt Rule”.
Finally, Congress may include reconciliation directives in a budget resolution directing the House
Ways and Means Committee and the Senate Finance Committee to report, or submit to the budget
committee of its respective chamber, legislation changing the statutory limit on the public debt.
The resulting reconciliation legislation is considered under special procedures. For a brief
summary of these procedures, see CRS Report 98-814, Budget Reconciliation Legislation:
Development and Consideration.
The most recent increase in the public-debt limit was enacted as an independent measure (P.L.
Although the implications of increasing the debt limit may be controversial, the content of debt-
limit legislation itself is straightforward. The most recent act increasing the public debt limit read
Resolved by the Senate and House of Representatives of the United States of
America in Congress assembled, That subsection (b) of section 3101 of title 31,
United States Code, is amended by striking the dollar limitation contained in such
subsection and inserting in lieu thereof $9,815,000,000,000.
For more information on the development and consideration of debt-limit legislation, see CRS
Report RS21519, Legislative Procedures for Adjusting the Public Debt Limit: A Brief Overview.
Bill Heniff Jr.
Analyst on the Congress and Legislative Process