The debt limit, also known as the debt ceiling, is the maximum amount of money the U.S. Treasury can borrow. Increasing the debt limit allows the Treasury to borrow funds to pay for the government’s obligations that have already been incurred as the result of laws and budgets approved by the President and Congress.
On March 16, the statutory debt limit was reinstated, freezing the national debt at just under $20 trillion. Since then, Treasury has been forced to employ “extraordinary measures” that enable it to manage the government’s finances for a limited amount of time. According to the Congressional Budget Office, those extraordinary measure will likely be exhausted in early to mid-October.
What happens if lawmakers fail to raise the debt limit before then? The infographic below explains, and for more details, see our analysis on the current debt ceiling debate.
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