Debt limit

The debt limit is a restriction on the amount of debt that can be issued by the United States Treasury. This limit puts a cap on the maximum amount of borrowings of the United States government, thereby restricting the ability of the government to pay for its existing legal obligations. The debt limit can be increased by legislative action. If the debt limit is not increased in time for the government to pay its bills, the government would have to default on some of those obligations, likely triggering a downgrade of the country's credit rating and a flight of investors from U.S. government debt securities.

Similar Terms

The debt limit is also called the debt ceiling.