What is the Debt Ceiling?
The debt ceiling is the legal limit on the total amount of federal debt the government can accrue. The limit applies to the roughly $24.6 trillion of debt held by the public and the roughly $6.8 trillion the government owes itself as a result of borrowing from various government accounts, like the Social Security and Medicare trust funds. Federal debt continues to rise due to both annual budget deficits financed by borrowing from the public and from trust fund surpluses, which are invested in Treasury bills with the promise to be repaid later with interest.
History of the Debt Ceiling
The debt ceiling was first enacted in 1917 through the Second Liberty Act. Prior to its establishment, Congress was required to approve each issuance of debt in a separate piece of legislation. Since the end of World War II, Congress and the President have modified the debt ceiling more than 100 times, according to the Congressional Research Service. In that time frame, the debt limit increased from $300 billion to just under $31.4 trillion.
Historical U.S. Debt Limit
Source: U.S. Treasury. Data from 6/25/1940 – 5/15/2023.
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