Debt Limit

The debt limit, also known as the debt ceiling, is the maximum amount of money the U.S. government is authorized to borrow to meet its financial obligations. It is set by Congress and acts as a cap on the national debt. When the government reaches this limit, it cannot borrow more funds unless the limit is raised, which is often a political decision. The debt limit ensures a check on government borrowing but also requires periodic adjustments to avoid defaulting on existing debt, thereby maintaining trust with lenders and ensuring the government’s ongoing financial responsibilities are met.