Debt ceiling 101: 12 questions about what's going on

The US Treasury has warned that as early as Oct. 17 it will no longer be able to cover all the government's rising financial obligations. If the government wants to keep paying all its bills, Congress must allow the Treasury to borrow more money – in other words, raise its debt limit.

Therein lies the rub. Many Republicans are uneasy with America's fiscal path and want to use this moment to address it (as well as other issues). Most Democrats say a debt ceiling deadline is too important to hold "hostage" to political horse-trading. We say it's a complicated topic that could use a little explanation.

Here’s your guide to the debt limit deadline and its implications.

By , Staff writer

1. What is a debt ceiling, exactly, and how high is it now?

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    President Clinton's fiscal year 2001 budget was the last to yield a budget surplus. The rest didn't go quite according to plan.
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It’s a Congress-imposed cap on the amount of money the US Treasury can borrow from two sources. The first is “debt held by the public,” mainly Treasury bonds owned by investors in the US or in other nations. The second is “intragovernment” debt, which happens when the Treasury borrows from another government account that has a surplus, such as Social Security.

Since May, the debt limit has been set at $16.7 trillion.

Borrowing is needed when there aren’t enough tax revenues to cover all federal spending. And for decades, the trend has been that Congress arranges for the government to spend more than it takes in as tax revenue. Budget surpluses have been rare.

In September the Department warned that another hike is needed or the Treasury won’t have funds to cover all Congress-ordained spending.

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