The debt limit is a cap set by Congress on the amount of debt the federal government can legally borrow. The United States government relies on debt to continue to operate since it spends more than it takes in. That is right. If you or I did this, we would eventually go bankrupt. However, the government is able to increase its debt limit to continue to pay obligations and keep the government running.
The ceiling is currently set at $14.29 trillion. The accrued debt of the United States hit this mark on May 16, 2011. By taking extraordinary measures, the government was able to continue to allow borrowing through August 2. Although Congress has voted to increase the debt limit sixteen times since 1993, political differences have delayed the decision to increase the current debt limit.After August 2, the United States government will not be able to pay its obligations. The foreseeable consequences include a downgrade in the quality of U.S. Debt, a rise in interest rates, and a shock to the stock market. The result would affect the entire world economy. With this being said, most experts expect a compromise to increase the debt limit.