The stalemate is about to get more complex. The reason: Congress has a second deadline to deal with. Here’s what you need to know about the debt limit:
Q What is the debt ceiling?
A Congress for the first time passed a law to limit how much debt the government could have during World War I. That limit has been raised many times since and now stands at $16.7 trillion.
Q Why does the limit need to be raised?
A Whenever the government has to borrow, the debt grows. The debt hit the current limit in May. Since then, the government has used various accounting measures to conserve cash, but the extension those techniques provided will only last a little while longer. Congress either has to raise the limit or the nation will no longer be able to pay all its bills.
Q What’s the deadline?
A Treasury Secretary Jack Lew has told Congress that the current “extraordinary measures” will provide enough cash only until Oct. 17.
Q Would the government be unable to pay bills immediately?
A The government will have income from tax revenues — about $30 billion each day. Over time, however, that income will cover only about two-thirds of the bills that come due. A nonpartisan outside group, the Bipartisan Policy Center, estimates that the date would fall between Oct. 18 and Nov. 5.
Q What would happen if the government couldn’t pay its bills?
A No one really knows because Congress has never refused to raise the debt ceiling. But economists and business leaders warn that any hint of a U.S. default on its obligations could rattle financial markets and, perhaps, trigger another financial crisis.