Debt ceiling
Also known as: debt limit
The debt ceiling is a limit set by Congress on the total amount of money the US Treasury is allowed to borrow to pay for spending that Congress has already approved. Raising or suspending the debt ceiling does not authorize any new spending, it simply allows the government to keep issuing debt to pay bills for spending decisions already made.
When the debt ceiling is reached, the Treasury cannot issue new debt until Congress raises or suspends the limit, though it can use a set of accounting maneuvers, sometimes called extraordinary measures, to keep paying its obligations for a limited additional time.
Debt ceiling standoffs become politically contentious when one party tries to use the vote as for unrelated policy demands, pushing the country closer to what is often called the X date, the point at which the Treasury would run out of ways to keep paying all of its bills on time. Markets, particularly short-term maturing near the deadline and the more broadly, tend to get more the closer the standoff gets to that date, even though Congress has always raised or suspended the limit before an actual default occurred.