Infographic: What Is the Debt Limit?

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 government obligations that have already been incurred as the result of laws and budgets approved by the President and Congress.

The debt limit was suspended through July 31, 2021. On August 1, the limit was reset at the level of gross federal debt that was outstanding at that time. Now, the Treasury will have to draw down its cash balance or resort to “extraordinary measures” to continue borrowing to finance the deficit.

Why is understanding the debt limit important and what are the implications for our economy and our fiscal condition? The infographic below explains. For more details, see our analysis on the debt limit.

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What is the Debt Limit? What is the Debt Ceiling?

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Tweet: Policymakers have come together repeatedly over the years to avoid default by raising the #DebtLimit, no matter which party is in power. via @pgpfoundation

Tweet: Although the U.S. has always paid its bills, the limit on the #NationalDebt has grown since 1981. via @pgpfoundation

Aug 12, 2021

What Does the Debt Mean for Our Future?

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National Debt Clock

See the latest numbers and learn more about the causes of our high and rising debt.