The debt limit, or debt ceiling, is the maximum amount of money the federal government can borrow to pay its bills.
The federal government reached the debt limit on January 19, 2023, and the U.S. Department of the Treasury is currently using “extraordinary measures” to prevent a default in the near term.
The federal government will default on its debt obligations as soon as June 5 if Congress does not raise the debt limit.

Raising the debt limit does not authorize new spending commitments. It simply allows the federal government to pay bills previously approved by Congress.
Congress has always reached an agreement to raise the debt limit before the deadline. Since 1960, Congress has increased the debt limit on 78 separate occasions, including 49 times under Republican presidents and 29 times under Democratic presidents.
The threat of a default alone is enough to create significant economic damage. The United States suffered a credit downgrade and financial market turmoil after a down-to-the-wire showdown in 2011.
A default is different from a government shutdown. While government shutdowns have occurred and are disruptive, a government default would be disastrous.
Congress has the authority and responsibility to lift the debt ceiling and safeguard the full faith and credit of the United States.

A default, or even the continued threat of a default, could trigger severe economic consequences.
Millions of middle-class jobs would be lost.
Interest rates for car loans, credit cards and mortgages would increase.
Billions of dollars in pension plans and retirement accounts would be lost.
Funding for vital veterans and military programs would be frozen, jeopardizing America’s national security.

FEDERAL DEBT LIMIT 101: