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The original documents are located in Box 41, folder "1976/03/15 HR11893 Temporary
Increase in Public Debt Ceiling" of the White House Records Office: Legislation Case Files
at the Gerald R. Ford Presidential Library.
Copyright Notice
The copyright law of the United States (Title 17, United States Code) governs the making of
photocopies or other reproductions of copyrighted material. Gerald R. Ford donated to the United
States of America his copyrights in all of his unpublished writings in National Archives collections.
Works prepared by U.S. Government employees as part of their official duties are in the public
domain. The copyrights to materials written by other individuals or organizations are presumed to
remain with them. If you think any of the information displayed in the PDF is subject to a valid
copyright claim, please contact the Gerald R. Ford Presidential Library.
Exact duplicates within this folder were not digitized.
Digitized from Box 41 of the White House Records Office Legislation Case Files at the Gerald R. Ford Presidential Library
92/81/88
THE WHITE HOUSE
ACTION
MAROVED76
WASHINGTON
March 12, 1976
Posted 13/16/76
MEMORANDUM FOR
THE PRESIDENT
FROM:
JIM CANNON
SUBJECT:
H.R. 11893 - Temporary Increase
in Public Debt Ceiling
3/14/76 archives
Attached for your consideration is H.R. 11893, sponsored
by Representative Ullman, which increases the temporary
debt limit from $595 billion to $627 billion through
June 30, 1976 and makes other changes to provide needed
flexibility in Treasury's debt management operations.
A discussion of the enrolled bill is provided in OMB's
enrolled bill report at Tab A.
OMB recommends approval as soon as possible, since the
existing temporary increase in the debt ceiling expires
March 15, 1976 and the ceiling will revert to the
permanent limit of $400 billion. Bill Seidman, Max
Friedersdorf, Counsel's Office (Lazarus) and I concur
in OMB's recommendation.
RECOMMENDATION
That you sign H.R. 11893 at Tab B.
SERVICES R. FORD LIBRAMY
EXECUTIVE OFFICE OF THE PRESIDENT
OFFICE OF MANAGEMENT AND BUDGET
STATE
WASHINGTON, D.C. 20503
MAR 12 1976
MEMORANDUM FOR THE PRESIDENT
Subject:
Enrolled Bill H.R. 11893 - Temporary increase
in public debt limit
Sponsor - Representative Ullman (D), Oregon
Last Day for Action
Recommend action as soon as possible, since the existing
temporary increase in the debt ceiling expires
March 15, 1976 and the ceiling will revert to the permanent
limit of $400 billion.
Purpose
Increase the temporary debt limit from $595 billion to
$627 billion through June 30, 1976 and make other changes
that will provide needed flexibility in Treasury's debt
management operations. (No change is made in the
permanent debt limit of $400 billion.)
Agency recommendation
Office of Management and Budget
Approval
Department of the Treasury
Approval (informally)
Discussion
The Administration requested that the Congress enact a
temporary debt limitation of $645 billion through
September 30, 1976 or not less than $630 billion through
June 30, 1976.
The Administration also requested two changes in legislation
to provide needed flexibility in Treasury's debt management
operations:
-- an increase from $10 billion to $20 billion in the
statutory limitation on the amount of bonds held by
the public with interest rates in excess of 4-1/4 percent;
and
THE WHITE HOUSE
WASHINGTON
3/15/76
Mr. Linder:
Hal Eberle, 964-2037,
would like to be notified when
H. R. 11893 is signed by the
President.
Done 3 3/16/78 (10:15a)
DIM
2
-- an increase from 7 years to 10 years in the
authorized maximum maturity of Treasury notes.
On February 25, 1976, the House passed H.R. 11893 by a vote
of 212 to 189, providing:
-- an increase in the temporary debt limitation to
$627 billion through June 30, 1976;
-- an increase from $10 billion to $12 billion (rather
than the requested $20 billion) in the amount of
Federal long-term debt that may be issued at an
interest rate greater than 4-1/4 percent; and
-- the requested increase from 7 years to 10 years in
the authorized maximum maturity of Treasury notes.
H.R. 11893 also contains a provision (Sec. 4), introduced by
Representative Stark (D.-Calif.) and not supported by the
Administration, requiring that the investment yield on
series E savings bonds held for 60 days or more be no less
than 4 percent per year, compounded semi-annually. This
provision adds nearly $30 million per year to interest costs
on the Federal debt and increases the cost of administering
the savings bond program.
On March 11, 1976, by a voice vote, the Senate approved
H.R. 11893 without amendment.
The enrolled bill contains a little less than the Administra-
tion requested in the debt ceiling, much less in the
exemption of long-term debt from the 4-1/4 percent ceiling,
and the 4 percent flow on the investment yield on series E
savings bonds. On the other hand, an increase in the
temporary debt limitation is absolutely essential now, and
the improvements the bill permits in Treasury's debt
management operations have been sought for some time.
Accordingly, both Treasury and OMB recommend prompt approval
of the enrolled bill.
James M. Jrey James M. Frey m. Trey
Assistant Director for
Legislative Reference
OFFICE STREET WTM THE MANAGER PRESIDENT STATE I 8
EXECUTIVE OFFICE OF THE PRESIDENT
OFFICE OF MANAGEMENT AND BUDGET
DATE: 3-17-76
TO:
Bob Linder
FROM: Jim Frey
Attached is the Treasury views
letter on H.R. 11893, for
inclusion in the enrolled bill
file.
File
RD.
3.17.96
OMB FORM 38
REV AUG 73
OF
THE TREASURY THE
THE DEPUTY SECRETARY OF THE TREASURY
WASHINGTON, D.C. 20220
1789
MAR 16 1976
Director, Office of Management and Budget
Executive Office of the President
Washington, D. C. 20503
Attention: Assistant Director for Legislative
Reference
Sir:
Reference is made to your request for the views of this
Department on the enrolled enactment of H.R. 11893, "To
increase the temporary debt limit, and for other purposes."
The enrolled enactment would (1) authorize an increase
of $227 billion in the temporary debt limit to $627 billion
through June 30, 1976, (2) increase from $10 billion to
$12 billion the authority for the Treasury to issue bonds
outside the 4-1/4 percent limitation, (3) increase to
10 years the maximum maturity of Treasury notes, and
(4) require the Federal Government to provide a return on
savings bonds of not less than 4 percent per annum, compounded
semi-annually, for each full month during which bonds are
held. The current temporary debt limit expires on March 15,
1976.
The Department recommends that the enrolled enactment
be approved by the President.
Sincerely yours,
George Undian
due this p.M.
EXECUTIVE OFFICE OF THE PRESIDENT
OFFICE OF MANAGEMENT AND BUDGET
WASHINGTON. D.C. 20503
approval
tw5
MAR 12 1976
MEMORANDUM FOR THE PRESIDENT
Subject: Enrolled Bill H.R. 11893 - Temporary increase
in public debt limit
Sponsor - Representative Ullman (D), Oregon
Last Day for Action
Recommend action as soon as possible, since the existing
temporary increase in the debt ceiling expires
March 15, 1976 and the ceiling will revert to the permanent
limit of $400 billion.
Purpose
Increase the temporary debt limit from $595 billion to
$627 billion through June 30, 1976 and make other changes
that will provide needed flexibility in Treasury's debt
management operations. (No change is made in the
permanent debt limit of $400 billion.)
Agency recommendation
Office of Management and Budget
Approval
Department of the Treasury
Approval (informally)
-
Discussion
BERNED
The Administration requested that the Congress enact a
temporary debt limitation of $645 billion through
September 30, 1976 or not less than $630 billion through
June 30, 1976.
The Administration also requested two changes in legislation
to provide needed flexibility in Treasury's debt management
operations:
-- an increase from $10 billion to $20 billion in the
statutory limitation on the amount of bonds held by
the public with interest rates in excess of 4-1/4 percent;
and
EXECUTIVE OFFICE OF THE PRESIDENT
OFFICE OF MANAGEMENT AND budget
WASHINGTON, D.C. 20503
This Judy- is OK with
me.
MAR 12 1976
D.Party
MEMORANDUM FOR THE PRESIDENT
Leach
Subject:
Enrolled Bill H.R. 11893 - Temporary increase
is
in public debt limit
Sponsor - Representative Ullman (D), Oregon
ok
Last Day for Action
Too.
Recommend action as soon as possible, since the existing
temporary increase in the debt ceiling expires
March 15, 1976 and the ceiling will revert to the permanent
limit of $400 billion.
Purpose
Increase the temporary debt limit from $595 billion to
$627 billion through June 30, 1976 and make other changes
that will provide needed flexibility in Treasury's debt
management operations. (No change is made in the
permanent debt limit of $400 billion.)
Agency recommendation
Office of Management and Budget
Approval
Department of the Treasury
Approval (informally)
Discussion
The Administration requested that the Congress enact a
temporary debt limitation of $645 billion through
September 30, 1976 or not less than $630 billion through
June 30, 1976.
The Administration also requested two changes in legislation
to provide needed flexibility in Treasury's debt management
operations:
-- an increase from $10 billion to $20 billion in the
statutory limitation on the amount of bonds held by
the public with interest rates in excess of 4-1/4 percent;
and
To
Johnson
of
3-42-76
Bie + date Red d 3/15/76 3:55
EXECUTIVE OFFICE OF THE PRESIDENT
OFFICE OF MANAGEMENT AND BUDGET
WASHINGTON, D.C. 20503
MAR 12 1976
MEMORANDUM FOR THE PRESIDENT
Subject: Enrolled Bill H.R. 11893 - Temporary increase
in public debt limit
Sponsor - Representative Ullman (D), Oregon
Last Day for Action
Recommend action as soon as possible, since the existing
temporary increase in the debt ceiling expires
March 15, 1976 and the ceiling will revert to the permanent
limit of $400 billion.
Purpose
Increase the temporary debt limit from $595 billion to
$627 billion through June 30, 1976 and make other changes
that will provide needed flexibility in Treasury's debt
1020
management operations. (No change is made in the
permanent debt limit of $400 billion.)
Agency recommendation
Office of Management and Budget
Approval
Department of the Treasury
Approval (informally)
Discussion
The Administration requested that the Congress enact a
temporary debt limitation of $645 billion through
September 30, 1976 or not less than $630 billion through
June 30, 1976.
The Administration also requested two changes in legislation
to provide needed flexibility in Treasury's debt management
operations:
-- an increase from $10 billion to $20 billion in the
statutory limitation on the amount of bonds held by
the public with interest rates in excess of 4-1/4 percent;
and
To
Timey
3-15-7L
HR 11893
not yet rec'd
Bill Report
rec'd 3/12/76
treneasein
public debt
limit
94TH CONGRESS
HOUSE OF REPRESENTATIVES
REPORT
2d Session
No. 94-841
PROVIDING FOR CONSIDERATION OF H.R. 11893
FEBRUARY 24, 1976.-Referred to the House Calendar and ordered to be printed
Mr. Sisk, from the Committee on Rules,
submitted the following
REPORT
[To accompany H. Res. 1053]
The Committee on Rules, having had under consideration House
Resolution 1053, by a nonrecord vote, report the same to the House
with the recommendation that the resolution do pass.
57-008
94TH CONGRESS
HOUSE OF REPRESENTATIVES
REPORT
2d Session
No. 94-837
INCREASE OF TEMPORARY LIMIT ON PUBLIC DEBT
FEBRUARY 23, 1976.-Committed to the Committee of the Whole House on the
State of the Union and ordered to be printed
Mr. ULLMAN, from the Committee on Ways and Means,
submitted the following
REPORT
together with
ADDITIONAL AND MINORITY VIEWS
[To accompany H.R. 11893]
The Committee on Ways and Means, to whom was referred the
bill (H.R. 11893) to increase the temporary debt limit until July 31,
1976, having considered the same, reports favorably thereon with
amendments and recommends that the bill as amended do pass.
The amendments are as follows:
Page 1, line 4, strike out "July 31" and insert in lieu thereof "June
30".
Page 1, line 7, strike out "$231,000,000,000" and insert in lieu
thereof "$227,000,000,000".
Page 1, after line 12, insert the following new section:
SEC. 3. (a) The last sentence of the second paragraph of
the first section of the Second Liberty Bond Act (31 U.S.C.
752) is amended by striking out "$10,000,000,000" and
inserting in lieu thereof "$12,000,000,000".
(b) Section 18(a) of the Second Liberty Bond Act (31
U.S.C. 753) is amended by striking out "seven years" and
inserting in lieu thereof "10 years".
Amend the title SO as to read:
A bill to increase the temporary debt limit, and for other
purposes.
I. SUMMARY
This bill provides that the public debt limitation is to be $627 billion
from the date of enactment through June 30, 1976. This is $32 billion
57-006-76-1
2
3
TABLE 1.-STATUTORY DEBT LIMITATIONS, FISCAL YEARS 1947 TO DATE, AND A PROPOSED LIMITATION IN
above the present debt limitation of $595 billion which is applicable
FISCAL YEAR 1976
through March 15, 1976. The bill also adds two provisions concerning
IIn billions of dollars]
debt management.
The present debt limitation consists of a permanent limitation of
Statutory debt limitation
$400 billion and a temporary limitation effective through March 15,
Temporary
1976, of $227 billion. This bill makes no change in the permanent debt
Fiscal year
Permanent
additional
Total
limitation. However, it increases the temporary limitation from $195
billion to $227 billion, and extends this temporary limitation through
1947-54
275
275.0
1955 through Aug. 27
275
275. 0
June 30, 1976.
1955: Aug. 28 through June 30.
275
6
281. 0
The committee provided an increase in the debt limit sufficient to
1956
275
6
281. 0
1957
275
3
278.0
meet the government's debt requirements through June 30, 1976. The
1958 through Feb. 25
275
275.0
1958: Feb. 26 through June 30
275
5
amount set in this bill is consistent with the revenue, expenditure and
280.0
1959 through Sept.
1
275
5
280.0
debt figures presented in the last congressional budget resolution. The
1959: Sept. 2 through June 29
283
5
288.0
1959: June 30
288
5
290.0
committee believes that establishment of a debt limit beyond June 30,
1960
285
10
295, 0
1961
285
8
293.0
1976, should be deferred until after May 15, 1976, when the first
1962 through Mar. 12.
285
13
298. 0
budget concurrent resolution of this session will express the views of
1962: Mar. 13 through June 30
285
15
300.0
1963 through Mar. 31
285
23
308,0
Congress with respect to revenue and outlay policies affecting the
1963: Apr. 1 through May 28
285
20
305.0
1963: May 29 through June 30
285
22
307. 0
period after June 30, 1976.
1964 through Nov. 30
285
24
309. 0
One of the committee debt management amendments increases the
1964: Dec. 1 through June 28
285
30
315. 0
1964: June 29 and 30
285
39
324. 0
limitation from $10 billion to $12 billion on the amount of long-term
1965
285
39
324. 0
1966
285
bonds that may be issued bearing interest above the 4½ percent stat-
43
328. 0
1967 through Mar. 1
285
45
330. 0
utory ceiling. The committee believes that the $2 billion increase is
1967: Mar. 2 through June 30
285
51
336. 0
1968
358
358.0
sufficient to enable the administration to plan now for the next two or
1969 through Apr. 6 1
358
7
365.1 0
three long-term bond issues during the course of the next 12 to 15
1969 after Apr. 6 1
358
358. 0
1970 through June 30 1
365
12
377.0
months. The committee also amended the bill to revise the definition
1971 through June 30 1
380
15
395. 0
1972 through June 30 1
400
50
450.0
of notes to include debt obligations issued with maturities of up to 10
1973 through Oct. 31 1
400
50
450. 0
years. Under present law, the definition of a note establishes a limit
1973 through June 30 1
400
65
465, 0
1974 through Nov. 30 1
400
65
465. 0
of 7 years from date of issue to maturity. These two amendments will
1974: Dec. 3 through June 30 1
400
75.7
475.7
1975 through Feb. 18 1
400
95
495. 0
enable the administration to slow the pace at which the average
1975: Feb. 19 through June 30 1
400
131
531. 0
maturity of the outstanding debt is being reduced.
1976: through Nov. 15 1
400
177
577.0
1976: through Mar. 15 1
400
195
595. 0
Proposed:
From enactment through June 30, 1976 1
400
227
627. 0
After June 30, 1976
1
400
400. 0
1 Includes FNMA participation certificates issued in fiscal year 1968.
5
4
II. INCREASE IN THE TEMPORARY LIMIT ON THE
Percent
change at
annual rate
+6.5
+7.2
+7.4
+8.8
+9.8
+10.0
+12.5
+13.4
+7.8
+4.3
+7.1
+6.8
PUBLIC DEBT
A. PRESENT LAW
The combined permanent and temporary debt limitation on the
Implicit price deflator
Difference
(Index:
1972=100)
+1.6
+2.6
+2.7
+3.4
+3.7
+2.3
+2.2
+2.1
public debt is $595 billion through March 15, 1976. When the present
limitation was enacted last year, Congress had not completed its
deliberations on the second concurrent budget resolution, but the
previous statutory limitation wouki have expired on November 15,
Total
(Index:
1972=100)
103.0
104.8 00
106.7
109.0
111.6
114.3
117.7
121.4
123.7
125.0
127.2
129.3
1975. The then pending budget esolution was to determine levels of
outlays and receipts for the remainder of the fiscal year. At the time
action was taken on the debt limitation last November it was con-
sidered prudent to provide a limitation for a period long enough for
Percent
change at
annual rate
+8.8
+.2
+2.7
+1.4
-3.9
-3.7
-2.3
-7.5
-9.2
+3.3
+12.0
+4.9
Congress to have some time after the start of the current session before
returning to this matter.
B. CURRENT ECONOMIC AND BUDGET OUTLOOK
TABLE 2.-GROSS NATIONAL PRODUCT IN CURRENT AND CONSTANT PRICES AND GNP IMPLICIT PRICE DEFLATOR, QUARTERLY, 1973-75
Gross national product
Constant (1972) dollars
Difference
+25.5
+.7
+8.1
+4.4
-12.2
-11.5
-7.0
-23.4
-28.2
+9.5
+33.4
+14.4
The recovery from the longest recession since World War II began
in the Spring of 1975. Recovery continued through the rest of 1975 and
appears to be continuing so far in 1976. By the fourth quarter of 1975,
Total
the real gross national product increased at an annual rate of 4.9
1,227.7
1,228.4
1,236.5
1,240.9
1,228.7
1,217.2
1,210.2
1,186.8
1,158.6
1,168.1
1,201.5
1,215.9
percent, in contrast with a decline at an annual rate of 9.2 percent in
the first quarter of 1975. These figures are shown in table 2.
[Billions of dollars; seasonally adjusted annual rates]
3
Percent
change at
annual rate
+15.8
+7.4
+10.3
+10.4
+5.5
-2.1
+7.7
+19.9
+12.0
8
6
Current dollars
Difference
+45.6
+22.8
+31.9
+33.0
+18.2
+20.1
+33.4
+16.9
-7.7
+27.0
+67.9
+44.0
Total
1,265.0
1,287.7
1,319.7
1,352.7
1,370.9
1,391.0
1,424.4
1,441.3
1,433.6
6 1,460.6
1,528.5
1,572.5
Source: U.S. Department of Commerce, "Business Conditions Digets," January 1976, p. 69, and Department of Commerce release of February 19, 1976, for fourth quarter of 1975.
1973
1974
1975
Year and quarter
1st quarter
2d quarter
3d quarter
4th quarter
1st quarter
2d quarter
3d quarter
4th quarter
1st quarter
2d quarter
3d quarter
4th quarter
6
7
TABLE 3.-ACTUAL AND POTENTIAL REAL GROSS NATIONAL PRODUCT AND RATIO OF OUTPUT TO CAPACITY
IN MANUFACTURING, 1973-75
Given the administration's budget estimates, the Treasury Depart-
(in billions of dollars; seasonally adjusted annual rates)
ment estimates that a public debt limitation of $627 billion will be
necessary to meet its peak debt needs in mid-June while maintaining
Gross national product in constant (1972)
a $6 billion cash balance but.without the $3 billion allowance for con-
dollars
tingencies. As shown in table 5, the project debt will be $621 billion
GNP gap
Ratio of output
at the end of the fiscal year, reflecting the $6 billion decline from the
(potential less
to capacity in
Year and quarter
Actual GNP Potential GNP
actual)
manufacturing
peak debt level as a result of individual and corporation income tax
payments sent in on June 15.
1973
1st quarter
1,227.7
1,246.8
+19.1
NA
TABLE 4.-ESTIMATED UNIFIED BUDGET TOTALS FOR FISCAL YEAR 1976
2nd quarter
1,228.4
1,259.1
+30.7
NA
3rd quarter
1,236.5
1,271.5
+35.0
NA
[in billions of dollars]
4th_quarter
1,240.9
1,284.0
+43.1
NA
1974
1st quarter
1,228.7
1,296.6
+67.9
80.5
Administration
Budget
2nd quarter
1,217.2
1,309.4
+92.2
80.1
estimate
resolution
3rd quarter
1,210.2
1,322.3
+112.1
79.4
4th quarter
1,186.8
1,335.3
+148.5
75.7
Outlays
Receipts
373.5
374.9
1975
297.5
300.8
1st quarter
1,158.6
1,348.5
+189.9
68.2
Deficit (-)
2nd quarter
1,168.1
1,361.8
+193.7
67.0
-76.0
-74.1
3rd quarter
1,201.5
1,375.2
+173.7
69.0
4th quarter
1,217.4
1,388.8
+171.4
70.8
TABLE 5.-PUBLIC DEBT SUBJECT TO LIMITATION, FISCAL YEAR 1976
Note: NA equals not available.
[In billions of dollars]
Source: Department of Commerce, "Business Conditions Digest," January 1976, pp. 95-6.
With
In addition, the unemployment rate in January was 7.8 percent of
Operating
Public debt
$3 billion
cash
subject to
the civilian labor force after averaging 8.3 percent throughout the
balance
margin for
limit
contingencies
second half of 1975. Moreover, both the consumer and wholesale price
1975 actual:
indexes continue to reflect diminishing pressure on prices as their rates
June 30
of increase become smaller.
July 31
7.6
534.2
Aug. 31
4.2
539.2
Nevertheless, the unused productive capacity remains substantial.
Sept. 30
3.6
548.7
Oct. 31
10.5
554.3
The gap between potential and actual real gross national product was
Nov. 30
10.3
563.1
Dec. 31
6.5
567.9
estimated at $171 billion in 1972 prices for the fourth quarter of 1975.
1976:
8.5
577.8
Although large, this is appreciably smaller than the $194 billion gap
Jan. 31
Estimated:
12.0
585.5
estimated for the second quarter of last year (see table 3). The table
Feb. 29
Mar. 15
6.0
592.0
also shows improvement in the ratio of output to capacity in manu-
595
Mar. 31
6,0
601.0
604
facturing. The high point in 1975 was 70.8 percent in the fourth
Apr. 15
6.0
607.0
610
Apr. 30
6.0
615.0
618
quarter. However, this is still below 1974 levels.
May 31
6.0
606.0
609
An evaluation of the strengths and weaknesses of these economic
June 15 (peak)
6.0
621.0
624
June 30
6.0
627.0
630
factors will play an important role in the determination by the House
6.0
621.0
624
of the expenditure and tax policies presented to it by the Budget Com-
Source: Treasury Department, Feb. 9, 1976.
mittee in the first concurrent resolution on the budget for fiscal year
1977. It will, for example, at that time have to decide whether to con-
$9,000,000,000. Note: Based on budget receipts of $298,000,000,000, budget outlays of $374,000,000,000, off-budget outlays of
tinue the tax reductions presently in effect through June 30, 1976, or
possibly to increase the tax reductions as proposed by the admin-
D. BASIS FOR COMMITTEE ACTION
istration.
C. TREASURY DEPARTMENT ESTIMATES
In establishing a debt limit, your committee first decided to cover
The administration estimates that the deficit in the unified budget
effective budget resolution. Moreover, for this period, staff and ad-
the period to June 30, 1976. This is the period covered by the currently
for fiscal year 1976 will be $76.0 billion. This is based on estimated
ministration estimates are in close agreement. Requirements as to
outlays of $373.5 billion and receipts of $297.5 billion. These estimates
are presented in table 4 with the budget figures approved by Congress
May 15, 1976, establishes receipts, outlays and debt levels for the
debt levels beyond that date will remain uncertain until Congress by
in December in the budget resolution. The Congressional figures gave
transition quarter and for the fiscal year 1977. With as little agreement
rise to a deficit of $74.1 billion as a result of outlays of $374.9 billion
as there is as to tax and expenditure levels beyond June 30, 1976 (and
and receipts of $300.8 billion.
even the underlying economic assumptions), your committee con-
cluded that no purpose would be served in attempting to estimate the
statutory debt level beyond June 30, 1976.
8
9
Through June 30, 1976, however, the committee found little differ-
$10 billion of bonds at interest rates in excess of the ceiling (Public
ence as to statutory debt requirements. On June 30, 1976, the ad-
Law 93-53; July 1, 1973). As a result of the high interest rates pre-
ministration estimates that the statutory debt level will be $621.0
vailing in the long-term market, the only long-term bonds it has been
billion, although the tables presented by the administration suggest
possible to issue in recent years are the $10 billion not subject to the
that the limit assumed at that date be $624 billion in order to provide
4½ percent interest rate ceiling.
an allowance for contingencies. The congressional budget resolution
agreed to last December sets a deficit $1.9 billion lower than the
B. ADMINISTRATION PROPOSAL
administration's current figures. However, last December when the
congressional budget resolution was approved, the administration and
In the public hearings before the committee this year, the ad-
the budget committees estimated that the trust funds would show a
ministration requested amendments to the Second Liberty Bond
small deficit.
Act to provide greater flexibility in debt management and to make
The administration's present estimates, however, reflect a trust fund
the long-term market more accessible to Federal issues. Three recom-
surplus of $2.5 billion, an estimate it is believed is now agreed to by the
mendations were presented: (1) repeal of the 6-percent interest
budget committees. While this surplus reduces the unified budget def-
rate ceiling on savings bonds; (2) extension of the maximum maturity
icit, under the statutory debt limitation any surplus in these trust
of Treasury notes from the present 7 years to 10 years; and (3) an
funds does not reduce statutory debt requirements since this still rep-
increase in the exception to the 4½ percent ceiling on bond issues from
the present $10 billion level to a level of $20 billion.
resents obligations of the Federal Government (although the debt is
not held by the general public). Therefore, the statutory debt limita-
Under the statutory authority previously granted, the Treasury has
tion is $2.5 billion more than the congressional budget resolution indi-
exhausted the authority to issue $10 billion in long-term bonds at
cated. This more than offsets the $1.9 billion difference between the
interest rates above the 4½ percent ceiling. In the course of issuing
estimates of the deficit in the unified budget.
these bonds, it has developed a market for them which it believes
could be developed further.
Were the committee to be setting a debt limitation for June 30,
1976, without regard to any higher level of debt expected before that
the Treasury Department favors the ability to finance long-term issues
In addition to its desire to retain a position in the long-term market,
date, the level of $621 billion would appear appropriate. However,
because the collection of receipts for a fiscal year tends to lag behind
because they help to slow the pace at which the average maturity of
the payment of expenditures, a peak in the debt limit is expected to be
total Federal debt is being reduced. So the proportion of the debt
reached on June 15, 1976. Thereafter, during the last 15 days of the
which is short-term debt increases, the amount of money Treasury
fiscal year, receipts are expected to be larger than expenditures. This
increasing. must raise, or roll over, each time it goes to the market is constantly
is a pattern which occurs each year and is attributable to the fact that
large tax payments from corporations and also payments accompany-
The Treasury Department also maintains that the heavy reliance on
ing declarations of estimated tax from some individuals fall due on
short-term debt in the long run could increase the interest costs to the
June 15 and are recorded as such in the last fifteen days of June. The
Treasury, even though the interest rates on short-term issues are
administration on this basis shows a statutory debt requirement of
usually lower than on long-term issues. Short-term rates are subject to
$630 billion to cover this need. This is on the basis of a $6 billion cash
more frequent and larger fluctuations than long-term rates. At times,
balance and a $3 billion allowance for contingencies. Your committee
in deciding on the level provided through June 30, 1976, decided in the
of short-term debt has taken place at interest rates higher than the
the short-term rates have risen above long-term rates, and refinancing
interest of maintaining a tight control on the debt to reduce-this by $3
long-term rates prevailing when the initial obligation was issued.
billion. This can be viewed as not providing any allowance for contin-
bonds at interest rates above 4½ percent, the Treasury Department
In the course of studying the effects of the restriction on issuing
gencies or as requiring a reduction in the cash balance for a limited
period of time by $3 billion.
estimated what the Federal Government's interest outlays on the
public debt would have been if the Treasury had been given authority
III. EXCEPTION TO INTEREST CEILING ON BONDS
to issue debt without statutory limitations. The study covered the
11 fiscal years from 1966 through 1976. The study estimated that
A. PRESENT LAW
there would have been a slight additional interest cost (less than
$50 thousand) in 1966, but in each subsequent fiscal year (as shown
Under the Second Liberty Bond Act, the Secretary of the Treasury
has the general authority to issue bonds at a rate of interest not to
interest savings according to this study would have been 1972 (a
in table 6), a reduction in interest outlays. The years of the largest
exceed 4½ percent per year. In 1973, however, an exception to the
interest ceiling was enacted which permits the Secretary to issue up to
saving of $79 million).
saving of $52 million), 1975 (a saving of $61 million), and 1976 (a
H.R. 837-2
10
11
TABLE 6.-HYPOTHETICAL INTEREST SAVINGS FROM ISSUING BONDS INSTEAD OF SHORT-TERM DEBT
outstanding debt are as persuasive in the case of the maturity of notes
[In millions of dollars]
as in the case of approving an additional exception from the limitation
on bonds issued with interest rates above 4½ percent. At the same
Gross interest
Net interest cost
cost on
Less interest
time increased government debt in the seven- to ten-year period will
Total budget
Interest on
of hypothetical
hypothetical
savings on
have little effect on long-term interest rates.
Fiscal year
outlays
public debt
bonds
bonds
reduced notes
IV. APPENDIX
1966
134,652
12,014
(1)
14.8
14. 8
1967
158,254
13,391
-.2
85. 8
86. 0
TABLE I.-Debt limitation under sec. 21 of the Second Liberty Bond Act as
1968
178,833
14,573
-.9
182.9
183. 8
1969
183,548
16,588
-9.6
302.
311.6
amended-History of Legislation
1970
196,588
19,304
-30.2
413.4
443.6
Sept. 24, 1917:
1971
211,425
20,959
-52.1
605.9
658.1
40 Stat. 288, sec. 1, authorized bonds in the amount of
1 $7, 538, 945, 400
1972
231,876
21,849
-19.5
691.3
710.7
1973
246,526
24,167
-7.7
711. 3
718. 9
40 Stat. 290, sec. 5, authorized certificates of indebted-
1974
268,392
29,319
-20.1
731.6
751. 7
ness outstanding revolving authority
2 4, 000, 000, 000
1975
324,601
32,165
-61.5
731.
793. i
Apr. 4, 1918:
1976
2 373,535
37,700
-79.5
731.6
811. 1
40 Stat. 502, amending sec. 1, increased bond authority
Total
2,508,230
242,029
-281.2
5,202.1
5, 483.3
to
1 12, 000, 000, 000
40 Stat. 504, amending sec. 5, increased authority for
1 Less than $50,000.
certificates outstanding to
2 8, 000, 000, 000
2 Estimated.
July 9, 1918: 40 Stat. 844, amending sec. 1, increased bond
Source: Office of the Secretary of the Treasury, Office of Debt Analysis, Feb. 15, 1976.
authority to
2 20, 000, 000, 000
Mar. 3, 1919:
Note: Details may not add to totals because of rounding.
40 Stat. 13, amending sec. 5, increased authority for
certificates outstanding to
2 10, 000, 000, 000
The expansion of the definition of notes to include maturities of up
40 Stat. 1309, new sec. 18 added, authorizing notes in the
to 10 years is favored by the Treasury to provide more flexibility in
amount of
1 7, 000, 000, 000
the intermediate maturity range for much the same reasons as indi-
Nov. 23, 1921: 42 Stat. 321, amending sec. 18, increased
cated above in the case of the increase in the $10 billion exception to
note authority outstanding (established revolving author-
ity) to
2 7, 500, 000, 000
the 4½ percent interest ceiling.
June 17, 1929: 46 Stat. 19, amending sec. 5, authorized bills
The purpose of the proposal to remove the interest rate ceiling on
in lieu of certificates of indebtedness; no change in limita-
savings bonds is to enable the Treasury to adjust the yield as financial
tion for the outstanding
2 10, 000, 000, 000
Mar. 3, 1931: 46 Stat. 1506, amending sec. 1, increased bond
circumstances warrant.
authority to
1 28, 000, 000, 000
Jan. 30, 1934: 49 Stat. 343, amending sec. 18, increased
C. BASIS FOR COMMITTEE ACTION
authority for notes outstanding to
2 10, 000, 000, 000
Feb. 4, 1935:
The committee believes that there are dangers in encouraging a sub-
49 Stat. 20, amending sec. 1, limited bonds outstanding
(establishing revolving authority) to
stantial shift to longer maturities in the public debt structure at the
2 25, 000, 000, 000
49 Stat. 21, new sec. 21 added, consolidating authority
present time. Long-term interest rates have not been as responsive as
for certificates and bills (sec. 5) and authority for
short-term rates of interest to the recent decrease in economic activity.
notes (sec. 18); same aggregate amount outstanding-
2 20, 000, 000, 000
While greater Federal participation in the longer maturity market
49 Stat. 21, new sec. 22 added, authorizing U.S. savings
bonds within authority of sec. 1.
would tend to lengthen the average maturity of the public debt in
May 26, 1938: 52 Stat. 447, amending sec. 1 and 21, consoli-
the hands of the public, it could also retard a decline in higher long-
dating in sec. 21 authority for bonds, certificates of indebt-
term interest rates.
edness, Treasury bills, and notes (outstanding bonds
At the same time, the committee does not want the Treasury
limited to $30,000,000,000). Same aggregate total out-
standing
Department debt management process to lose the long-term market it
2 45, 000, 000, 000
July 20, 1939: 53 Stat. 1071, amending sec. 21, removed limi-
has developed. In addition, the committee believes that it is desirable
tation on bonds without changing total authorized out-
to take steps now that will slow the rate at which the average maturity
standing of bonds, certificates of indebtedness, bills, and
of the total Federal debt is reduced. As a compromise between the
notes
2 45, 000, 000, 000
two sets of conflicting considerations, the committee provided an
June 25, 1940: 54 Stat. 526, amending sec. 31, adding new
paragraph:
additional $2 billion for the exception from the 4½ percent interest
(b) In addition to the amount authorized by the
rate ceiling. This should be sufficient for a substantial period ahead
preceding paragraph of this section, any obligation
while at the same time having little effect on long-term interest rates.
authorized by secs. 5 and 18 of this Act, as amended,
not to exceed in the aggregate $4,000,000,000 out-
Whether this amount should be further enlarged can be reconsidered
standing at any one time, less any retirements made
at some subsequent time when the debt limit is under consideration.
from the special fund made available under sec. 301 of the
The committee also agreed to revise the definition of notes to include
Revenue Act of 1940, may be issued under said sections
debt obligations with maturities up to 10 years. This is an increase
to provide the Treasury with funds to meet any expendi-
tures made, after June 30, 1940, for the national defense,
from the 7-year limit on the maturity of notes under present law. The
or to reimburse the general fund of the Treasury there-
committee believes that the potential saving in interest outlays and
for. Any such obligations SO issued shall be designated
the opportunity to slow the reduction in the average maturity of the
'National Defense Series' "
2,49,000,000,000
See footnotes at end of table.
12
13
TABLE I.-Debt limitation under sec. 21 of the Second Liberty Bond Act as
TABLE I.-Debt limitation under sec. 21 of the Second Liberty Bond Act as
amended-History of legislation-Continued
amended-History of legislation-Continued
Feb. 19, 1941: 55 Stat. 7, amending sec. 21, limiting face
May 29, 1963: 77 Stat. 50, amending sec. 21, for period-
amount of obligations issued under authority of act out-
standing at any one time to
2 65, 000, 000, 000
1. Beginning May 29, 1963, and ending June 30, 1963
2 307, 000, 000, 000
2. Beginning July 1, 1963, and ending Aug. 31, 1963
Eliminated separate authority for $4,000,000,000 of
2 309, 000, 000, 000
Aug. 27, 1963: 77 Stat. 131, amending sec. 21, for the period
national defense series obligations.
beginning on Sept. 1, 1963, and ending on Nov. 30, 1963
2 309, 000, 000, 000
Mar. 28, 1942: 56 Stat. 189, amending sec. 21, increased
2 125, 000, 000, 000
Nov. 26, 1963: 77 Stat. 342, amending sec. 21 for the period-
limitation to
1. Beginning on Dec. 1, 1963, and ending June 29, 1964_
2 315, 000, 000, 000
Apr. 11, 1943: 57 Stat. 63, amending sec. 21, increased limi-
2. On June 30, 1964
2 210, 000, 000, 000
2 309, 000, 000, 000
tation to
June 29, 1964: 78 Stat. 225, amending sec. 21, for the period
June 9, 1944: 58 Stat. 272, amending sec. 21, increased limi-
tation to
2 260, 000, 000, 000
beginning June 29, 1964, and ending June 30, 1965, tempo-
rarily increasing the debt limit to
April 3, 1945: 59 Stat. 47, amending sec. 21 to read: "The face
324,000,000,000
June 24, 1965: 79 Stat. 172, amending sec. 21 for the period
amount of obligations issued under authority of this act,
beginning July 1, 1965, and ending on June 30, 1966, tem-
and the face amount of obligations guaranteed as to princi-
porarily increasing the debt limit to
2 328, 000, 000, 000
pal and interest by the United States (except such guar-
June 24, 1966: 80 Stat. 21, amending sec. 21, for the period
anteed obligations as may be held by the Secretary of
beginning July 1, 1966, and ending on June 30, 1967, tem-
the Treasury), shall not exceed in the aggregate $300,-
2 300, 000, 000, 000
porarily increasing the debt limit to
2 330, 000, 000, 000
000,000,000 outstanding at one time"
June 26, 1946: 60 Stat. 316, amending sec. 21, adding: "The
Mar. 2, 1967: 81 Stat. 4, amending sec. 21, for the period
beginning Mar. 2, 1967, and ending on June 30, 1967, tem-
current redemption value of any obligation issued on a
porarily increasing the debt limit to
discount basis which is redeemable to maturity at the
2 336, 000, 000, 000
June 30, 1967: 81 Stat. 99-
option of the holder thereof, shall be considered, for the
1. Amending sec. 21, effective June 30, 1967, increasing
purposes of this section to be the face amount of such obli-
limitation to
2 278, 000, 000, 000
358,000,000,000
gation," and decreasing limitation of
2. Temporarily increasing the debt limit by $7,000,000,-
Aug. 28, 1954: 68 Stat. 895, amending sec. 21, effective Aug.
000 for the period from July 1 to June 29 of each
28, 1954, and ending June 30, 1955, temporarily increasing
2 281, 000, 000, 000
year, to make the limit for such period
2 365, 000, 000, 000
limitation by $6,000,000,000 to
Apr. 7, 1969: 83 Stat. 7-
June 30, 1955: 69 Stat. 241, amending Aug. 28, 1954, act by ex-
tending until June 30, 1956, increase in limitation to
2 281, 000, 000, 000
1. Amending sec. 21, effective Apr. 7, 1969, increasing
debt limitation to
2 365, 000, 000, 000
July 9, 1956: 70 Stat. 519, amending act of Aug. 28, 1954, tem-
2. Temporarily increasing the debt limit by $12,000,000,-
porarily increasing limitation by $3,000,000,000 for period,
beginning July 1, 1956, and ending June 30, 1957, to
2 278, 000, 000, 000
000 for the period from Apr. 7, 1969 through June
30, 1970, to make the limit for such period
277,000,000,000
Effective July 1, 1957, temporary increase terminates
June 30, 1970: 84 Stat. 368—
and limitation reverts, under act of June 26, 1956, to
2 275, 000, 000, 000
1. Amending sec. 21, effective July 1, 1970, increasing
Feb. 26, 1958: 72 Stat. 27, amending sec. 21, effective Feb. 26,
debt limitation to
380,000,000,000
1958, and ending June 30, 1959, temporarily increasing lim-
2. Temporarily increasing the debt limit by $15,000,000,-
itation by $5,000,000,000.
2 280, 000, 000, 000
000 for the period from July 1, 1970, through June
Sept. 2, 1958: 72 Stat. 1758, amending sec. 21, increasing lim-
2 280, 000, 000, 000
30, 1971, to make the limit for such period
2 395, 000, 000, 000
itation by $5,000,000,000.
Mar. 17, 1971: 85 Stat. 5—
Sept. 2, 1958: 72 Stat. 1758, amending sec. 21, increasing lim-
1. Amending sec. 21, effective Mar. 17, 1971, increasing
itation to $283,000,000,000, which with temporary increase
debt limitation to
2 400,000,000,000
of Feb. 26, 1958, makes limitation
2 288, 000, 000, 000
2. Temporarily increasing the debt limit by $30,000,000,-
June 30, 1959: 73 Stat. 156, amending sec. 21, effective June
000 for the period from Mar. 17, 1971, through June
30, 1959, increasing limitation to $285,000,000,000, which
30, 1972, to make the limit for such period
2 400, 000, 000, 000
with temporary increase of Feb. 26, 1958, make limitation
on June 30, 1959
2 290, 000, 000, 000
Mar. 15, 1972: 86 Stat 63, temporarily increasing the debt
limit by an additional $20,000,000,000 for the period from
Amending sec. 21, temporarily increasing limitation by
Mar. 15, 1972, through June 30, 1972, to make the limit for
$10,000,000,000 for period beginning July 1, 1959, and
such period
2 450, 000, 000, 000
ending June 30, 1960, which makes limitation beginning
July 1, 1972: 86 Stat. 406, temporarily extending the tem-
July 1, 1959
2 295, 000, 000, 000
porary debt limit of $50,000,000,000 for the period from
June 30, 1960: 74 Stat. 290, amending sec. 21 for period begin-
July 1 through Oct. 31, 1972, to make the limit for such
ning on July 1, 1960, and ending June 30, 1961, temporarily
period
2 450, 000, 000, 000
increasing limitation by $8,000,000,000
2 293, 000, 000, 000
Oct. 27, 1972: 86 Stat. 1324, temporarily increasing the public
June 30, 1961, 75 Stat. 148, amending sec. 21, for period begin-
debt limit by $65,000,000,000 for the period from Nov. 1,
ning on July 1, 1961, and ending June 3, 1972, temporarily
1972, through June 30, 1973, to make the limit for such
increasing limitation by $13,000,000,000 to
2 298, 000, 000, 000
period
2 465, 000, 000, 000
Mar. 13, 1962: 76 Stat. 23, amending sec. 21, for period begin-
July 1, 1973: 87 Stat. 134, temporarily extending the tem-
ning on Mar. 13, 1962, and ending June 3, 1962, temporar-
porary debt limit of $65,000,000,000 for the period from
ily further increasing limitation by $2,000,000,000
2 300, 000, 000, 000
June 30, 1973, through Nov. 30, 1973, to make the limit for
July 1, 1962: 76 Stat. 124 as amended by 77 Stat. 50, amend-
such period
2 465, 000, 000, 000
ing sec. 21, for period-
Dec. 3, 1973: 87 Stat. 691, temporarily increasing the tem-
1. Beginning July 1, 1962, and ending Mar. 31, 1963
2 308, 000, 000, 000
porary debt limit by $75,700,000,000 for the period from
2. Beginning Apr. 1, 1963, and ending June 24, 1963
2 305, 000, 000, 000
Dec. 3, 1973, through June 30, 1974, to make the limit for
3. Beginning June 25, 1963, and ending June 30, 1963
2 300, 000, 000, 000
such period
2 475, 700, 000, 000
See footnotes at end of table.
See footnotes at end of table.
14
15
TABLE I.-Debt limitation under sec. 21 of the Second Liberty Bond Act as
VI. CHANGES IN EXISTING LAW MADE BY THE BILL,
amended-History of legislation-Continued
AS REPORTED
June 30, 1974: 88 Stat. 285, temporarily increasing the tem-
porary debt limit by $95,000,000,000 for the period from
In compliance with clause 3 of Rule XIII of the Rules of the House
June 3, 1974, through Mar. 31, 1975, to make the limit for
of Representatives, changes in existing law made by the bill, as
such period
2 495, 000, 000, 000
Feb. 19, 1975: 89 Stat. 5, temporarily increasing the tem-
reported, are shown as follows (existing law proposed to be omitted is
porary debt limit by $131,000,000,000 for the period from
enclosed in black brackets, new matter is printed in italics, existing
Feb. 19, 1975, through June 30, 1975, to make the limit for
law in which no change is proposed is shown in roman):
such period
2 531, 000, 000, 000
June 30, 1975: 89 Stat. 246, temporarily increasing the tem-
porary debt limit by $177,000,000,000 for the period from
SECOND LIBERTY BOND ACT
June 30, 1975, through November 15, 1975, to make the
limit for such period
2 577, 000, 000, 000
AN ACT TO authorize an additional issue of bonds to meet expenditures for the
November 14, 1975: 89 Stat. 693, temporarily increasing the
national security and defense, and, for the purpose of assisting in the prosecu-
temporary debt limit by $195,000,000,000 for the period
tion of the war, to extend additional credit to foreign Governments, and for
from November 14, 1975, through March 15, 1976, to make
other purposes
the limit for such period
2 595, 000, 000, 000
Be it enacted by the Senate and House of Representatives of the United
1 Limitation on issue.
a Limitation on outstanding.
States of America in Congress assembled, That the Secretary of the
Treasury, with the approval of the President, is hereby authorized
TABLE II.-PUBLIC DEBT SUBJECT TO LIMITATION AT END OF FISCAL YEARS 1945-75 AND ON FEB. 17, 1976
to borrow, from time to time, on the credit of the United States for
[In millions of dollars]
the purposes of this Act, to provide for the purchase, redemption,
or refunding, at or before maturity, of any outstanding bonds, notes,
Public debt
Public debt
certificates of indebtedness, or Treasury bills of the United States,
subject to
subject to
limitation at
limitation at
and to meet expenditures authorized for the national security and
Fiscal year
end of year
Fiscal year
end of year
defense and other public purposes authorized by law, such sum or
1945
268,670
1961
286,308
sums as in his judgment may be necessary, and to issue therefor bonds
1946
268,932
1962
296,374
of the United States.
1947
255,767
1963
302,922
1948
250,380
1964
308,582
The bonds herein authorized shall be in such form or forms and
1949
250,964
1965
314,125
1950
denomination or denominations and subject to such terms and
255,382
1966
316,292
1951
253,283
1967
323,143
conditions of issue, conversion, redemption, maturities, payment, and
1952
257,232
1968
1348,534
1953
264,219
1969
1356,106
rate or rates of interest, not exceeding four and one-quarter per
1954
269,379
1970
1372,599
1955
1971
centum per annum, and time or times of payment of interest, as the
272,347
1398,649
1956
270,619
1972
1427,751
Secretary of the Treasury from time to time at or before the issue
1957
269,120
1973
1458,263
1958
275,395
1974
1475,180
thereof may prescribe. Bonds authorized by this section may be
1959
282,419
1975
1534,206
1960
issued from time to time to the public and to Government accounts
283,826
1976
' 591,083
at a rate or rates of interest exceeding 4½ per centum per annum;
1 Includes FNMA participation certificates issued in fiscal year 1958 in debt of fiscal years 1968-75.
except that bonds may not be issued under this section to the public,
2 Debt at close of business, February 17, 1976.
or sold by a Government account to the public, with a rate of interest
Source: Annual report of the Secretary of the Treasury on the State of the Finances, Statistical Appendix, table 2 1,p. 66
exceeding 4½ per centum per annum in an amount which would cause
through 1975, and Daily Treasury Statement for Feb. 17, 1976.
the face amount of bonds issued under this section then held by the
V. COSTS OF CARRYING OUT THE BILL AND VOTE OF
public with rates of interest exceeding 4½ per centum per annum to
THE COMMITTEE IN REPORTING THE BILL
exceed [$10,000,000,000] $12,000,000,000.
In compliance with clause 7 of Rule XIII of the Rules of the House
SEC. 18. (a) In addition to the bonds and certificates of indebtedness
of Representatives, the following statement is made relative to the
and war-savings certificates authorized by this Act and amendments
effect on the revenues of this bill.
thereto, the Secretary of the Treasury, with the approval of the
Your committee does not believe that the changes made by this bill
President, is authorized subject to the limitation imposed by section
in the debt limit will result in any costs either in the current fiscal
21 of this Act, to borrow from time to time on the credit of the United
year or in any of the 5 fiscal years following that year. The Treasury
States for the purposes of this Act, to provide for the purchase,
Department agrees with this statement.
redemption, or refunding, at or before maturity, of any outstanding
In compliance with clause 2(1) (2) (B) of Rule XI of the Rules
bonds, notes, certificates of indebtedness, or Treasury bills of the
of the House of Representatives, the following statement is made rela-
United States, and to meet public expenditures authorized by law,
tive to the record vote by the committee on the motion to report the
such sum or sums as in his judgment may be necessary and to issue
bill. The bill was ordered reported by a voice vote.
therefor notes of the United States at not less than par (except as
provided in section 20 of this Act, as amended) in such form or forms
16
17
and denomination or denominations, containing such terms and con-
With respect to subdivisions (C) and (D) of Clause 3, the Com-
ditions, and at such rate or rates of interest, as the Secretary of the
mittee advises that no estimate or comparison has been prepared by
Treasury may prescribe, and each series of notes SO issued shall be
the Director of the Congressional Budget Office relative to any of the
payable at such time not less than one year nor more than [seven] 10
provisions of H.R. 11893, nor have any oversight findings or recom-
years from the date of its issue as he may prescribe, and may be
mendations been made by the Committee on Government Operations
redeemable before maturity (at the option of the United States) in
with respect to the subject matter contained in H.R. 11893.
whole or in part, upon not more than one year's nor less than four
In compliance with clause 2(1)(4) of Rule XI, the Committee
months' notice, and under such rules and regulations and during such
states that the debt limitation change of itself is not expected to have
period as he may prescribe.
an inflationary impact on prices and in costs in the operation of the
national economy.
SEC. 21. The face amount of obligations issued under authority of
this Act, and the face amount of obligations guaranteed as to principal
VIII. ADDITIONAL VIEWS ON H.R. 11893 OF REPRESENT-
and interest by the United States (except such guaranteed obligations
ATIVES STARK AND STEIGER
as may be held by the Secretary of the Treasury), shall not exceed in
the aggregate $400,000,000,000 ¹ outstanding at any one time. The
In reporting this bill, the Ways and Means Committee precluded
current redemption value of any obligation issued on a discount basis
the addition of a section requiring the payment of a minimum rate of
which is redeemable prior to maturity at the option of the holder
interest on Series E Savings Bonds. We will be seeking to offer an
thereof shall be considered, for the purposes of this section, to be the
amendment on the Floor to provide that the Treasury pay 4 percent
face amount of such obligation.
interest to all holders of these bonds, as long as they hold them for the
minimum time period of 2 months.
Recent Treasury Department data shows that of all purchasers
of savings bonds issued in 1974, nearly one-third redeemed them within
6 months, thereby getting no interest at all. An additional twelve
ACT OF NOVEMBER 14, 1975
percent of 1974 purchasers held the bonds for between 6 months and
1 year, and were paid interest of only 3.7 percent. The reason this
AN ACT To increase the temporary debt limitation until March 15, 1976
happens is because Treasury currently computes interest every 6
Be it enacted by the Senate and House of Representatives of the United
months and even then, there is no minimum guaranteed interest rate.
States of America in Congress assembled, That during the period
The amendment we will offer will provide for computation every
beginning on the date of the enactment of this Act and ending on
month, with an assured rate of 4 percent (the requirement for no
March 15, 1976, the public debt limit set forth in the first sentence
redemptions within the first 2 months is as under current law). At
of section 21 of the Second Liberty Bond Act (31 U.S.C. 757b) shall
most, we expect this could result in additional outlays of $26 million
be temporarily increased by $195,000,000,000.1
in Fiscal Year 1977.
SEC. 2. Effective on the date of the enactment of this Act, the first
Since the effect of H.R. 11893 will be to increase Treasury's au-
section of the Act of June 30, 1975, entitled "An Act to increase the
thority to issue long-term, high-yield instruments, we feel it most
temporary debt limitation until November 15, 1975" (Public Law
appropriate that the bill also increase the rate of return on E Bonds—
94-47), is hereby repealed.
held mostly by citizens who cannot afford the minimum purchase
requirements of the higher yielding Treasury bills.
VII. OTHER MATTERS REQUIRED TO BE DISCUSSED
WILLIAM A. STEIGER,
UNDER HOUSE RULES
PETE STARK.
In compliance with clauses 2(1) (3) and 2(1) of Rule XI of the
IX. MINORITY VIEWS OF THE HONORABLE WILLIAM M.
Rules of the House of Representatives, the following statements are
KETCHUM, DONALD D. CLANCY, BILL ARCHER, PHILIP
made.
M. CRANE, JAMES G. MARTIN AND L. A. (SKIP) BAFALIS
With regard to subdivision (A) of Clause 3, the Committee advises
that its oversight findings led it to the conclusion that an increase in
This is the fifth debt ceiling increase that has been sought in the
the public debt limitation was required before March 15, 1976,
last twelve months. If possible, it makes even less sense than its pred-
and that this occasioned the consideration of the Committee amend-
ecessors.
ment.
We are asked to condone an additional debt of $33 billion for only
In compliance with subdivision (B) of Clause 3 the Committee
a three month period-from $595 billion in March 1976, to $627 billion
states that the change made in the debt limitation provides no new
in June 1976. The numbers have an air of unreality about them-but
budget authority or new or increased tax expenditures.
the reality of the economic chaos they betoken is all too apparent.
Last November we warned that the debt ceiling would be increased
1 The bill as reported provides for a temporary increaase of $227,000,000,000 in this debt
ceiling for the period beginning on the date of enactment of this Act and ending on
by $20 billion every two or three months. We take no comfort in being
June 30, 1976.
18
proven correct. The Treasury Department contemplates asking for an
increase in the debt ceiling of $100 billion between March 1976 and 1977.
If this practice continues, the national debt will be in excess of one tril-
lion dollars by April 1980. Existing national debt will have doubled by
March 1982, just six years from now.
These figures are concrete proof that the wild deficits of recent years
are leading us into bankruptcy. We hope the majority will see the writ-
ing on the wall at last and immediately establish a firm spending ceiling
as close as possible to a balanced budget. We also hope that this latest
debt increase is voted down since we can no longer afford the cost of
programs already approved.
There is nothing that makes it impossible for the United States to go
the same route as New York City. The surest way for this to happen is
to condone the addition of $100 billion in debt every twelve months. The
Members who are serious about restoring fiscal responsibility to govern-
ment will join us in defeating this bill. The Members who are not will
contribute to our economic collapse.
Since we did not vote for the massive Federal spending programs that
created the multi-billion dollar deficit, we feel no obligation to support a
debt ceiling increase. Those who do believe in deficit financing, however,
should bear the weight of the debt. Instead, many seek to run away
from it. The only reason we are faced with this bill is the failure of the
Congressional leadership to restrain its spending. Let them defend this
bill to their constituents-its their legacy.
DONALD D. CLANCY,
L. A. BAFALIS,
PHILIP M. CRANE,
WILLIAM M. KETCHUM,
JAMES G. MARTIN,
BILL ARCHER.
H. R. 11893
Ainety-fourth Congress of the United States of America
AT THE SECOND SESSION
Begun and held at the City of Washington on Monday, the nineteenth day of January,
one thousand nine hundred and seventy-six
An Act
To increase the temporary debt limit, and for other purposes.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled, That during the
period beginning on the date of the enactment of this Act and ending
on June 30, 1976, the public debt limit set forth in the first sentence
of section 21 of the Second Liberty Bond Act (31 U.S.C. 757b) shall be
temporarily increased by $227,000,000,000.
SEC. 2. Effective on the date of the enactment of this Act, the first
section of the Act of November 14, 1975, entitled "An Act to increase
the temporary debt limitation until March 15, 1976" (Public Law
94-132), is hereby repealed.
SEC. 3. (a) The last sentence of the second paragraph of the first
section of the Second Liberty Bond Act (31 U.S.C. 752) is amended
by striking out "$10,000,000,000" and inserting in lieu thereof
"$12,000,000,000".
(b) Section 18(a) of the Second Liberty Bond Act (31 U.S.C. 753)
is amended by striking out "seven years" and inserting in lieu thereof
"ten years".
SEC. 4. Section 22 (b) (1) of the Second Liberty Bond Act (31 U.S.C.
757c(b)) is amended by adding at the end thereof the following new
sentence: "The investment yield on series E savings bonds shall in no
case be less than 4 per centum per annum compounded semiannually
for the period beginning on the first day of the calendar month follow-
ing the date of issuance (or, beginning on October 1, 1976, if later) and
ending on the last day of the calendar month preceding the date of
redemption.".
Speaker of the House of Representatives.
Vice President of the United States and
President of the Senate.
March 15, 1976
Dear Mr. Director:
The following bills were received at the White
House on March 15th:
H.R. 1313
H.R. 11665
H.R. 2575
H.R. 11893
H.R. 3440
H.R. 12193
H.R. 9617
Please let the President have reports and
recommendations as to the approval of these bills
as soon as possible.
Sincerely,
Robert D. Linder
Chief Executive Clerk
The Honorable James T. Lynn
Director
Office of Management and Budget
Washington, D. C.