The fight over the debt ceiling could sink the economy. This is how we got here

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2023-03-26 14:30:02

President Biden and Republicans in Congress are on a partisan collision course over raising the debt ceiling — the legislatively mandated limit on how much the U.S. can borrow. And the clock is ticking. The $31.4 trillion ceiling has already been reached, so now the Department of the Treasury is using accounting gimmicks to pay the government's bills. But those maneuvers — what Treasury calls "extraordinary measures" — may only stave off default through early June by the department's current estimate.

Just what's at stake? The consequences of a default could be economically disastrous — sending shock waves through global financial markets. As the battle over the debt ceiling intensifies, here is what you need to know to understand the national debt — where it came from, who owns it and how it is financed.

The debt ceiling is a limit on the total amount of government borrowing. First put in place by Congress during World War I, it was meant to give blanket authorization for the Treasury Department to borrow money up to a set amount.