This is from the good folks at CNN Money, an excellent primer on the debt ceiling:
What is the debt ceiling?It’s a cap set by Congress on the amount of debt the federal government can legally borrow. The cap applies to debt owed to the public (i.e., anyone who buys U.S. bonds) plus debt owed to federal government trust funds such as those for Social Security and Medicare.
The first limit was set in 1917 and set at $11.5 billion, according to the Center for a Responsible Federal Budget. Previously, Congress had to sign off every time the federal government issued debt.
How high is the debt limit right now? The ceiling is currently set at $14.294 trillion. As of Feb. 28, the debt subject to that limit totaled $14.142 trillion — or $152 billion shy of the cap. But the total can fluctuate up or down daily.
How is the ceiling determined? Based on policies in place, lawmakers have already committed to incurring the obligations that require them to raise the debt ceiling.
“Congress has already passed and the President has already signed legislation that increases spending or decreases revenues. Those decisions have already been made,” said Susan Irving, director for federal budget issues at the Government Accountability Office.
In that sense, much of the political rhetoric is misleading because the money has already been committed and lawmakers are arguing over whether to pay the bill, according to former Congressional Budget Office Director Rudolph Penner.