The debt Limit: History and Recent Increases
"Total debt of the federal government can increase in two ways. First, debt increases when the
government sells debt to the public to finance budget deficits and acquire the financial resources
needed to meet its obligations. This increases debt held by the public. Second, debt increases
when the federal government issues debt to certain government accounts, such as the Social
Security, Medicare, and Transportation trust funds, in exchange for their reported surpluses.
This increases debt held by government accounts. The sum of debt held by the public and debt
held by government accounts is the total federal debt. Surpluses generally reduce debt held by
the public, while deficits raise it.

A statutory limit has restricted total federal debt since 1917 when Congress passed the Second
Liberty Bond Act. Congress has raised the debt limit eight times since 2001. Deficits each year
since 2001 and the persistent increases in debt held by government accounts repeatedly raised
the debt to or near the limit in place at the time. Congress raised the limit in June 2002,
and by December 2002 the U.S. Department of the Treasury asked Congress for another increase, which was passed in May 2003. In June 2004, the Treasury asked for another debt limit increase. After Congress recessed in mid-October 2004 without acting, the Secretary of the Treasury told
Congress that the actions he was taking to avoid exceeding the debt limit would suffice only
through mid-November. Congress approved a debt limit increase in a post-election session, which
the President signed on November 19, 2004..."