Days after a grueling, partisan battle on federal spending ended with a bill to fund the U.S. government through September, a new battle is underway over America’s long-term fiscal woes. Democrats and Republicans are offering competing visions to reduce a $1.5 trillion federal deficit and slow the growth of a $14 trillion national debt. A complicating factor is the need to raise the limit on the amount of money the U.S. government can borrow to cover its debt obligations.
Like any government that spends more than it collects in revenue, the U.S. government borrows what it needs to close the budget gap. The amount that can be borrowed is capped by law - a so-called "debt ceiling". Periodically, Congress must set a new, higher limit to allow additional borrowing. Failure to raise the debt ceiling could cause the federal government to default on it.
Like any government that spends more than it collects in revenue, the U.S. government borrows what it needs to close the budget gap. The amount that can be borrowed is capped by law - a so-called "debt ceiling". Periodically, Congress must set a new, higher limit to allow additional borrowing. Failure to raise the debt ceiling could cause the federal government to default on it.
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