Debt Ceiling:

Analysis of Actions During the 2002 Debt Issuance Suspension Periods

GAO-03-134: Published: Dec 13, 2002. Publicly Released: Dec 13, 2002.

Additional Materials:

Contact:

Gary T. Engel
(202) 512-8815
contact@gao.gov

 

Office of Public Affairs
(202) 512-4800
youngc1@gao.gov

In connection with fulfilling our requirement to audit the financial statements of the U.S. government, we audit the Schedules of Federal Debt Managed by the Bureau of the Public Debt, which includes testing compliance with the debt ceiling. To assist us in this testing and because of the nature of and sensitivity towards actions taken during a debt issuance suspension period, we (1) developed a chronology of significant events, (2) analyzed the financial aspects of Treasury's actions taken during the debt issuance suspension periods and assessed the legal basis of these actions, and (3) analyzed the impact of the policies and procedures used by Treasury to manage the debt during the debt issuance suspension periods.

In April and May 2002, the Department of the Treasury announced two debt issuance suspension periods because certain receipts could not be invested without exceeding the statutory debt ceiling of $5.95 trillion. The first debt issuance suspension period occurred from April 4 to April 16, 2002, and involved use of the Government Securities Investments Fund (G-Fund). The second debt issuance suspension period occurred from May 16 to June 28, 2002, and involved the use of the Civil Service Retirement and Disability Trust Fund (Civil Service fund) and the G-Fund. During both debt issuance suspension periods, Treasury suspended some investments and reinvestments of the G-Fund's receipts and maturing securities. During the second debt issuance suspension period, Treasury also took the following actions related to the Civil Service fund: (1) it redeemed about $4 billion in Treasury securities held by the Civil Service fund before they were needed to pay benefits and expenses, and (2) it suspended the investment of about $2 billion of trust fund receipts. These actions were consistent with legal authorities provided to the Secretary of the Treasury. Although the actions that are allowed during a debt issuance suspension period are well defined in law, the policies and procedures needed to implement such actions are not documented, Our review disclosed some cases where the lack of documented policies and procedures contributed to confusion and errors that had to be corrected.

Recommendation for Executive Action

  1. Status: Closed - Implemented

    Comments: As of March 31, 2003, Treasury had prepared documented policies and procedures that were implemented during the February-May 2003 debt issuance suspension period (DISP). Furthermore, these policies and procedures identified the offices responsible for investment and redemption decisions during a DISP.

    Recommendation: The Secretary of the Treasury should direct the Undersecretary for Domestic Finance to document the necessary policies and procedures that should be used during any future debt issuance suspension period. Further, the document developed should clearly state which office is responsible for approving any modifications to the documented policies and procedures.

    Agency Affected: Department of the Treasury

 

Explore the full database of GAO's Open Recommendations »

Dec 15, 2020

Oct 7, 2020

Sep 23, 2020

Jan 23, 2020

Dec 19, 2019

  • budget icon, source: GAO

    State and Local Governments' Fiscal Outlook:

    2019 Update
    GAO-20-269SP: Published: Dec 19, 2019. Publicly Released: Dec 19, 2019.

Nov 14, 2019

Oct 16, 2019

Jun 26, 2019

Apr 10, 2019

Mar 27, 2019

Looking for more? Browse all our products here