“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 voted to raise the debt limit ten times since 2001.”
With the current recession, federal debt and budget deficits have become increasingly contentious topics.
The Congressional Research Service has issued a 25-page study by D. Andrew Austin and Mindy R. Levit on The Debt Limit: History and Recent Increases. The study is of considerable value for those who wish to attain a more detailed and nuanced understanding of the issues surrounding this topical question.