Dear Friend,

As negotiations over the debt ceiling have earned more and more media attention, I have received questions about what the debt ceiling is and what moving it would mean.

The debt ceiling (also called the debt limit or borrowing limit) is the official cap Congress has put on how much the federal government can borrow to pay our bills. We borrow from the public through things like bonds and borrowing notes. The federal government also borrows from other government accounts such as the Social Security Trust Fund. Before World War I, Congress had to approve every loan. During the war, Congress gave the Executive Branch more flexibility by saying that every debt could be paid under a certain limit. That system is still in place today and that current limit is $16.7 trillion.

Not raising the debt limit is like going to a restaurant, having dinner, and walking out without paying the bill. That debt exists and in order to avoid default, it must be paid. Like there are consequences if you leave a restaurant without paying, there are consequences for the government if it doesn’t pay its bills and the consequences will affect you:

  • Interest rates on things like credit cards, car loans, mortgages, and small business loans will increase;
  • Retirees may not get their Social Security checks; 
  • Medicare and Medicaid payments may not be made;
  • Default – or the failure to pay back a loan – could reduce foreign investment in the U.S.; and
  • Credit-rating agencies could lower the U.S. credit rating, among other things.

Next Thursday, the U.S. will no longer be able to borrow the money necessary to pay our bills unless Congress increases the debt ceiling. We technically hit the debt ceiling in May, but the Treasury Department has been using “extraordinary measures” to buy more time until an agreement in Congress could be reached. On October 17, the Treasury Department will have exhausted all extraordinary measures.

Because the two sides have not been able to come to an agreement, the House is now working on a six-week debt ceiling increase. This short increase will give Congress and the Administration time to come to an agreement on a long-term solution. 

I will continue to send updates as the process moves forward.


Kay Granger
Member of Congress