Iran's Revolutionary Guard said the British tanker, Stena Impero, failed to follow international maritime rules.World Newsread more
Amazon hires Trump-allied lobbyist Jeff Miller as battle for Pentagon contract heats up.Politicsread more
In a series of tweets, the president addressed an unusual controversy stemming from a speech delivered Thursday by New York Fed President John Williams.Marketsread more
Boston Federal Reserve President Eric Rosengren is lining up against an apparent push to cut interest rates, telling CNBC in an interview Friday that the central bank can...The Fedread more
More than a quarter of the S&P 500 companies report earnings in the week ahead, and that could buffet the market as investors await the Fed's meeting at the end of the month.Market Insiderread more
Companies aren't waiting for the U.S.-China trade war to be resolved, says the head of the world's biggest money manager.Investingread more
Trump's constant berating of the Fed and its actions does not influence the central bank's decisions, Boston Fed's Eric Rosengren says.The Fedread more
Executives from United Airlines and American Airlines were "shocked" that state-owned airline Qatar Airways CEO Akbar Al Baker was also invited to the meeting, according to a...Airlinesread more
J.C. Penney on Friday afternoon issued a statement responding to a report that the embattled department store chain had hired advisers to explore debt restructuring options,...Retailread more
Earlier this week, a lawyer said Jeffrey Epstein, a former friend of Presidents Donald Trump and Bill Clinton, had "improper sexual contact" with at least one woman under the...Politicsread more
Walmart is making further organizational changes as it continues to integrate its store and digital operations and leadership, according to a memo obtained by CNBC that was...Retailread more
Unless Congress acts to raise the federal government's debt ceiling, the Treasury Department will run out of the ability to borrow money by October 17. Treasury has said that the cash it now has on hand will run out completely on November 1, leaving the government in essence without money to pay its bills.
So what is the debt ceiling? It's a cap set by Congress on how much the government can borrow in order to pay its debts. And here's why it's important:
Warnings about not raising the debt ceiling have been dire. The major credit rating agencies have said they might consider the U.S. in default if it fails to pay its bills, and many economists have warned that there could be a major slowdown to the economy, with job losses alongside a rise in interest rates affecting a range of products from credit cards to home mortgages.
Other fears are that foreign investment in U.S. Treasurys and the dollar would dry up over worries about lost returns.
Federal debt is the amount of money the government currently owes for spending on payments such as Social Security, Medicare benefits, military salaries, interest on the national debt and tax refunds.
But It is not future debt. The debt limit simply allows the government to finance existing legal obligations that Congress and presidents of both parties have made in the past.
The debt ceiling idea came about in 1917. Before then, Congress had to approve borrowing for each item when the government needed money.
But in order to have more flexibility as the U.S. entered World War I, lawmakers at that time agreed to give the government approval for all borrowing as long as the total was less than a specific number. That debt limit number would be set by Congress.
Whenever the government is going to exceed a debt limit—meaning it needs more funding for current debt—Congress has to vote its approval to raise it.
As of October 2013, the debt limit is $16.7 trillion. But President Barack Obama has asked Congress to raise it.
If Congress fails to raise the debt ceiling, funds would not be available to pay bills and the U.S. government would technically be in default.
Since 1960, Congress has acted 78 times to permanently raise, temporarily extend or revise the definition of the debt limit—49 times under Republican presidents and 29 times under Democrats.
Technically, the U.S. defaulted on its debt in 1979, as Congressional talks to raise the debt limit reached a deadline. A deal was reached but the Treasury Department said it had "technical glitches" and was late in paying some of the bills after the deal was reached. But it was not a permanent default, as everyone was paid in full.
In 2011, a debt ceiling crisis was part of a debate in Congress about the appropriate level of government spending and its consequential impact on the national debt and the debt ceiling. (National debt is the sum of all outstanding debt owed by the federal government. It includes not only the money the government has borrowed, but also the interest it must pay on the borrowed money.)
The crisis was resolved with a complex deal that raised the debt ceiling and reduced proposed increases to future government spending, but it did not avert similar debates for future budgets and the debt ceiling.