The debt ceiling is a legislative limit on the amount of national debt that can be incurred by the U.S. Treasury, thus limiting how much money the federal government may pay by borrowing more money, on the debt it already borrowed. It is the total amount of money that the United States government is authorized to borrow to meet its existing legal obligations, including Social Security and Medicare benefits, military spending, and other government programs. The debt ceiling is an aggregate figure that applies to gross debt, which includes debt in the hands of the public and intra-government accounts. The debt ceiling has been raised or suspended numerous times over the years to avoid the worst-case scenario: a default by the U.S. government on its debt.

The debt ceiling is designed to be a constraint on the executives ability to manage the U.S. economy. When the federal government runs a deficit, it borrows money to cover the difference, usually by issuing IOUs in the form of U.S. Treasury securities. The debt ceiling is a legal limit on the amount of borrowing the Treasury can do. If the Treasury Department cant pay expenses when the debt ceiling is reached, there is a risk that the U.S. will default on its debt. Failing to increase the debt limit would have catastrophic economic consequences. It would cause the government to default on its legal obligations, which would precipitate another financial crisis and threaten the jobs and savings of everyday Americans.

When Congress is faced with a decision about the debt ceiling, it can either choose to raise the debt ceiling by a fixed dollar amount or to suspend the debt limit for a specified period of time. When Congress raises the debt ceiling, the Treasury can continue to issue debt as needed until it reaches the new debt level. For example, in December 2021, Congress raised the debt ceiling from $28.9 trillion to $31.4 trillion, allowing borrowing to proceed until the total government borrowing reached this new limit. On the other hand, when a suspension period ends, the debt limit is reinstated at a level that accommodates the federal borrowing that has occurred up to that point.

In summary, the debt ceiling is a legal limit on the total amount of federal debt the government can accrue, and it is designed to be a constraint on the executives ability to manage the U.S. economy. The debt ceiling has been raised or suspended numerous times over the years to avoid the worst-case scenario: a default by the U.S. government on its debt. When Congress is faced with a decision about the debt ceiling, it can either choose to raise the debt ceiling by a fixed dollar amount or to suspend the debt limit for a specified period of time.