Discussion Paper

The Evolution of Federal Debt Ceilings

Abstract: It’s hardly news that Congress sets a statutory limit on aggregate Treasury indebtedness. Since Congress controls the appropriations and tax code that largely determine deficits, some commentators have questioned the need for limiting indebtedness as well. Interestingly, the current regime was not put in place “on purpose,” to solve a problem that stemmed from a regime of no limits, but rather evolved out of a system of very different, and much more stringent, limits on individual categories of debt. This post describes the nature of the earlier limits and how they evolved to the current regime of a single limit on aggregate indebtedness.

Keywords: statutory debt ceilings;

JEL Classification: G1;

Bibliographic Information

Provider: Federal Reserve Bank of New York

Part of Series: Liberty Street Economics

Publication Date: 2011-11-14

Number: 20111114