Debt Ceiling Limitations and Treasury Actions

Gao ID: AIMD-96-38R January 26, 1996

Pursuant to a congressional request, GAO reviewed the actions the Department of the Treasury has taken to avoid exceeding debt ceiling limitations. GAO noted that: (1) Treasury actions have included not investing or reinvesting trust fund receipts, redeeming trust fund securities before maturity, redeeming securities held by the Exchange Stabilization Fund, and exchanging Civil Service Retirement and Disability Fund securities for Federal Financial Bank (FFB) securities that are not subject to debt ceiling restrictions; (2) the Treasury is required to make the Civil Service fund whole after the debt crisis ends; (3) before exercising authority to redeem certain securities before maturity, the Secretary of the Treasury must determine that a debt issuance suspension period exists and may only redeem securities sufficient to cover authorized benefit payments; (4) the Secretary of the Treasury may invest balances of the Exchange Stabilization Fund that are not needed for program purposes; and (5) FFB is at the maximum limit of its authority to issue securities, so this mechanism has been unavailable to the Secretary of the Treasury since January 23, 1996.

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