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Summary

Increases in total federal debt are driven by both government deficits (which increase debt held by the public) and by the surpluses credited to (and the accounting for) debt-holding federal accounts, mostly federal trust funds such as the Social Security, Medicare, Transportation, and Civil Service trust funds (which increase debt held by government accounts). Surpluses generally reduce debt held by the public. The surpluses over the four fiscal years 1998-2001 reduced debt held by the public by $448 billion. More than offsetting this debt reduction, the surpluses credited to debt-holding government accounts (which generally must invest the surpluses in federal debt), increased their holdings by $853 billion over the same period. The combination ($853 billion minus $448 billion) raised total federal debt by $405 billion. During 2002, debt subject to limit increased enough to reach the then current statutory debt limit, $5.95 trillion, in early April and again in May 2002. The limit was increased to $6.4 trillion in June 2002. In December 2002, the Administration began warning Congress that the debt limit would need to be increased again, this time in the first half of 2003. As the limit was approached in February 2003, the Administration resorted to measures at its disposal to avoid reaching the limit. The adoption (April 11, 2003) of the conference report (H.Rept. 108-71) on the budget resolution (H.Con.Res. 95) for FY2004 generated legislation (H.J.Res.51) -- deemed passed by the House -- increasing the debt limit by $984 billion to $7.4 trillion. The increase would be the largest dollar increase in the debt limit ever enacted. The Senate received the legislation on April 11, but did not begin its debate on the measure until May 23. The Senate rejected eight proposed amendments before passing the debt limit increase on May 23. The President signed the resolution into law on May 27 (P.L. 108-24). The new limit is expected to provide sufficient borrowing authority for the Treasury into the summer or fall of 2004. This report will be updated as events warrant.

Related Legislation:
• S.1998
• S.95
• S.51

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