Understanding The Debt Ceiling
as the name implies, the debt ceiling places a cap or ceiling on the amount of money the united states can borrow. it puts a limit on the amount of bonds the united states can issue with the idea of holding the nation's finances in check. the ceiling also applies to the debt owed to federal government trust funds such as social security and medicare. before the debt ceiling was created in 1917, congress had to approve every instance that federal government issue debt. now, the ceiling is set by congress and gives the us treasury a limit of how much it can borrow without having to ask for approval. the treasury can use that debt to fund government operations as needed, as long as they are included in each federal budget. traditionally, the debt ceiling has been raised whenever the united states comes close to hitting a limit. according to the congressional research service, the federal debt limit has now been altered 75 times since 1962. most recently, congress had voted to raise the debt limit eleven times since 2001. if the limit were to be hit, the treasury would not be able to borrow any more money. in turn, interest payments to bond holders could be missed and the united states would be in default, causing the cost of the nation's debt to be raised.