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    Biden Hammers Republicans on the Economy, With Eye on 2024

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    The president has found a welcome foil in a new conservative House majority and its tax and spending plans, sharpening a potential re-election message.WASHINGTON — President Biden on Thursday assailed House Republicans over their tax and spending plans, including potential changes to popular retirement programs, ahead of what is likely to be a run for re-election.In a speech in Springfield, Va., Mr. Biden sought to reframe the economic narrative away from the rapid price increases that have dogged much of his first two years in office and toward his stewardship of an economy that has churned out steady growth and strong job gains.Mr. Biden, speaking to members of a steamfitters union, sought to take credit for the strength of the labor market, moderating inflation and news from the Commerce Department on Thursday morning that the economy had grown at an annualized pace of 2.9 percent at the end of last year. In contrast, he cast House Republicans and their economic policy proposals as roadblocks to continued improvement.“At the time I was sworn in, the pandemic was raging and the economy was reeling,” Mr. Biden said before ticking through the actions he had taken to aid the recovery. Those included $1.9 trillion in pandemic and economic aid; a bipartisan bill to repair and upgrade roads, bridges, water pipes and other infrastructure; and a sweeping industrial policy bill to spur domestic investment in advanced manufacturing sectors like semiconductors and speed research and development to seed new industries.Republicans have accused the Biden administration of fanning inflation by funneling too much federal money into the economy, and have called for deep spending cuts and other fiscal changes.Mr. Biden denounced those proposals, including a plan to replace federal income taxes with a national sales tax, curb safety net spending and risk a government default by refusing to raise the federal borrowing limit without deep spending cuts. Why, he asked, “would the Americans give up the progress we’ve made for the chaos they’re suggesting?”Speaker Kevin McCarthy and House Republicans have not yet released a detailed or unified economic agenda.Haiyun Jiang/The New York Times“I will not let anyone use the full faith and credit of the United States as a bargaining chip,” Mr. Biden said, reiterating his refusal to negotiate over raising the debt limit. “The United States of America — we pay our debts.”But the president also sought to reach out to working-class voters — in places like his native Scranton, Pa. — who have increasingly voted for Republicans in recent elections. Mr. Biden said those voters had been left behind by American economic policy in recent years, and he tried to woo them back by promising that his policies would continue to bring high-paying manufacturing jobs that do not require a college degree to people who feel “invisible” in the economy.“They remember, in my old neighborhoods, why the jobs went away,” Mr. Biden said, vowing that under his policies “nobody’s left behind.”The Biden PresidencyHere’s where the president stands as the third year of his term begins.State of the Union: President Biden will deliver his second State of the Union speech on Feb. 7, at a time when he faces an aggressive House controlled by Republicans and a special counsel investigation into the possible mishandling of classified information.Chief of Staff: Mr. Biden plans to name Jeffrey D. Zients, his former coronavirus response coordinator, as his next chief of staff. Mr. Zients will replace Ron Klain, who has run the White House since the president took office two years ago.Voting Rights: A year after promising a voting rights overhaul in a fiery speech, Mr. Biden delivered a more muted message at Ebenezer Baptist Church in Atlanta on Martin Luther King Jr.’s birthday.The speech built on a pattern for Mr. Biden, who has found the new and narrow Republican majority to be both a political threat and an opportunity.Republicans in the chamber have begun a series of investigations into Mr. Biden, his family and his administration. They have also demanded deep cuts in federal spending in exchange for raising the borrowing limit, a position that risks an economic catastrophe given the huge sums of money that the United States borrows to pay for its financial obligations.The president has refused to tie any spending cuts to raising the debt limit and has called on Congress to increase the $31.4 trillion cap so the nation can continue paying its bills and avoid a federal default..css-1v2n82w{max-width:600px;width:calc(100% – 40px);margin-top:20px;margin-bottom:25px;height:auto;margin-left:auto;margin-right:auto;font-family:nyt-franklin;color:var(–color-content-secondary,#363636);}@media only screen and (max-width:480px){.css-1v2n82w{margin-left:20px;margin-right:20px;}}@media only screen and (min-width:1024px){.css-1v2n82w{width:600px;}}.css-161d8zr{width:40px;margin-bottom:18px;text-align:left;margin-left:0;color:var(–color-content-primary,#121212);border:1px solid var(–color-content-primary,#121212);}@media only screen and (max-width:480px){.css-161d8zr{width:30px;margin-bottom:15px;}}.css-tjtq43{line-height:25px;}@media only screen and (max-width:480px){.css-tjtq43{line-height:24px;}}.css-x1k33h{font-family:nyt-cheltenham;font-size:19px;font-weight:700;line-height:25px;}.css-1hvpcve{font-size:17px;font-weight:300;line-height:25px;}.css-1hvpcve em{font-style:italic;}.css-1hvpcve strong{font-weight:bold;}.css-1hvpcve a{font-weight:500;color:var(–color-content-secondary,#363636);}.css-1c013uz{margin-top:18px;margin-bottom:22px;}@media only screen and (max-width:480px){.css-1c013uz{font-size:14px;margin-top:15px;margin-bottom:20px;}}.css-1c013uz a{color:var(–color-signal-editorial,#326891);-webkit-text-decoration:underline;text-decoration:underline;font-weight:500;font-size:16px;}@media only screen and (max-width:480px){.css-1c013uz a{font-size:13px;}}.css-1c013uz a:hover{-webkit-text-decoration:none;text-decoration:none;}How Times reporters cover politics. We rely on our journalists to be independent observers. So while Times staff members may vote, they are not allowed to endorse or campaign for candidates or political causes. This includes participating in marches or rallies in support of a movement or giving money to, or raising money for, any political candidate or election cause.Learn more about our process.But Mr. Biden, who is facing a divided Congress for the first time in his presidency, is increasingly acting as if the newly empowered conservatives have given him a political opening on economic policy. As he prepares for a likely re-election bid in 2024, he is seizing on the least popular proposals floated by House members to cast himself as a champion of the working class, retirees and economic progress.Mr. Biden’s speech on Thursday waded deep into policy details, including the acreage of western timber burned in fires linked to climate change, the global breakdown of advanced chip production and the average salary of new manufacturing jobs, as he recounted his legislative accomplishments.House Republicans have not yet released a detailed or unified economic agenda, and they have not made a clear set of demands for raising the debt limit, though they largely agree that Mr. Biden must accept significant spending curbs.But members and factions of the Republican conference have pushed for votes on a variety of proposals that have little support among voters, including raising the retirement age for Social Security and Medicare and replacing the federal income tax with a national sales tax.Mr. Biden has sought to brand the entire Republican Party with those proposals, even though it is not clear if the measures have majority support in the conference or will ever come to a vote. Former President Donald J. Trump, who has already announced his 2024 bid for the White House, has urged Republicans not to touch the safety-net programs. Other party leaders have urged Republicans not to rule out those cuts. “We should not draw lines in the sand or dismiss any option out of hand, but instead seriously discuss the trade-offs of proposals,” Senator Michael D. Crapo of Idaho, the top Republican on the Finance Committee, wrote in an opinion piece for Fox News, in which he called for Mr. Biden to negotiate over raising the debt limit.Representative Kevin Hern, Republican of Oklahoma, who sits on the House Ways and Means Committee, told a tax conference in Washington this week that there are “lots of problems” with the plan to replace the income tax with a so-called fair tax on consumption. Those include incentives for policymakers to allow prices to rise rapidly in the economy in order to generate more revenue from the sales tax, he noted.“Let’s just say it’s going to be very interesting,” Mr. Hern said at the D.C. Bar Taxation Community’s annual tax conference. “I haven’t found a Ways and Means member that’s for it.”Despite those internal disagreements, Mr. Biden has been happy to pick and choose unpopular Republican ideas and frame them as the true contrast to his economic agenda. He has pointedly refused to cut safety-net programs and threatened to veto such efforts.“The president is building an economy from the bottom up and the middle out, and protecting Social Security and Medicare,” Karine Jean-Pierre, the White House press secretary, told reporters this week. “Republicans want to cut Social Security, want to cut Medicare — programs Americans have earned, have paid in — and impose a 30 percent national sales tax that will increase taxes on working families. That is what they have said they want to do, and that is clearly their plan.”The focus on Republicans has allowed Mr. Biden to divert the economic conversation from inflation, which hit 40-year highs last year but receded in the past several months, though it remains above historical norms. On Thursday, he chided Republicans for a vote to reduce funding for I.R.S. enforcement against wealthy tax cheats — a move the Congressional Budget Office says would add to the budget deficit, and which Mr. Biden cast as inflationary.“They campaigned on inflation,” Mr. Biden said. “They didn’t say if elected, they planned to make it worse.”Progressive groups see an opportunity for Mr. Biden to score political points and define the economic issue before the 2024 campaign begins in earnest. That is in part because polls suggest Americans have little appetite for Social Security or Medicare cuts, and have far less focus on the national debt than House Republicans do.“It is a political gift,” said Lindsay Owens, the executive director of the Groundwork Collaborative, a liberal nonprofit in Washington. More

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    How the U.S. Government Amassed $31 Trillion in Debt

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    Two decades of tax cuts, recession responses and bipartisan spending fueled more borrowing — contributing $25 trillion to the total and setting the stage for another federal showdown.WASHINGTON — America’s debt is now six times what it was at the start of the 21st century. It is the largest it has been, compared with the size of the U.S. economy, since World War II, and it’s projected to grow an average of about $1.3 trillion a year for the next decade.The United States hit its $31.4 trillion legal limit on borrowing this past week, putting Washington on the brink of another fiscal showdown. Republicans are refusing to raise that limit unless President Biden agrees to steep spending cuts, echoing a partisan standoff that has played out multiple times in the last two decades.But America’s ballooning debt is the result of choices made by both Republicans and Democrats. Since 2000, politicians from both parties have made a habit of borrowing money to finance wars, tax cuts, expanded federal spending, care for baby boomers and emergency measures to help the nation endure two debilitating recessions.“There have been bipartisan tax cuts and bipartisan spending increases” driving that growth, said Maya MacGuineas, president of the Committee for a Responsible Federal Budget and perhaps the pre-eminent deficit hawk in Washington. “It’s not the simple story of Republicans cut taxes and Democrats grow spending. Actually, they all like to do all of it.”Few economists believe the level of debt is an economic crisis at the moment, though some believe the federal government has become so large that it is taking the place of private businesses, hurting growth in the process. But economists in Washington and on Wall Street are warning that failing to raise the debt limit before the government begins shirking its bills — as early as June — could prove catastrophic.Despite all the fighting, lawmakers have taken few steps to reduce the federal budget deficit they have produced. It has been nearly a quarter-century since the last time the government spent less than it received in taxes.Because spending programs today are so politically popular, and because retiring baby boomers are driving up the cost of programs like Social Security and Medicare every year, budget experts say it is unrealistic to expect the books to balance again for another decade or more.The White House estimates that borrowed money will be necessary to cover about one-fifth of a $6 trillion federal budget this fiscal year — a budget that includes military spending, the national parks, safety net programs and everything else the government provides.In just two decades, America has added $25 trillion in debt. How it got itself into this fiscal position has its roots in a political miscalculation at the end of the Cold War.President Lyndon B. Johnson signing Medicare into law in 1965. In part because of the popularity and rising costs of programs like Medicare, federal deficits are expected to continue for at least a decade.Associated PressIn the 1990s, America reaped a so-called peace dividend. It reduced spending on the military, believing it would never have to invest as much in national security as it had when the Soviet Union was a threat. At the same time, a dot-com boom delivered the highest federal tax receipts, as a share of the economy, in several decades.Understand the U.S. Debt CeilingCard 1 of 5What is the debt ceiling? More

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    The U.S. Hit Its Debt Limit. What Happens Next?

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    The Treasury Department has started employing “extraordinary measures,” but the path to raising the debt ceiling is likely to be a long one.The United States hit a limit this week on how much money it can borrow, forcing the Treasury Department to initiate so-called extraordinary measures to make sure the nation has enough cash to fulfill its financial obligations.Treasury Secretary Janet L. Yellen has told lawmakers that those measures will allow the United States to keep paying military salaries, retiree benefits and interest to bondholders through at least early June.But initiating those extraordinary measures is just the first step in a series of moves that will take place as the Treasury tries to keep the United States from defaulting on its debt. Ultimately, it will be up to Congress to decide whether to let the country borrow more money or allow it to default on its debt by failing to pay investors who expect interest and other payments.At stake is the fate of the U.S. economy, which could face a financial crisis and fall into a deep recession if lawmakers cannot reach an agreement.Among the looming questions is when the United States will hit the so-called X-date — the point at which the government can no longer find creative ways to stay beneath the $31.4 trillion debt limit and will need to borrow more money or fail to pay its bills.The other big question: Will Congress agree to raise the borrowing cap?So far, House Republicans have vowed to oppose any increase in the debt limit without spending cuts. President Biden has said the debt limit needs to be raised without conditions. That has set up what could be a protracted fight to ensure that the United States does not default on its debt.Here are some of the key moments to expect over the next few months.A Spring Budget BattleThe White House is expected to unveil its annual budget proposal in early March, outlining Mr. Biden’s spending priorities. That could serve as an opening bid for any negotiations between the Biden administration and Republicans in Congress, who have been calling for spending cuts and are likely to seize on this document as evidence of what they say is “runaway spending.”Understand the U.S. Debt CeilingCard 1 of 5What is the debt ceiling? More

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    America Set to Hit Its Borrowing Limit Today, Raising Economic Fears

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    The milestone will not immediately affect markets or growth, but it sets the stage for months of entrenched partisan warfare.WASHINGTON — The United States is expected to hit a congressionally imposed borrowing limit on Thursday, requiring the Treasury Department to engage in accounting maneuvers to ensure the federal government can keep paying its bills.The milestone of hitting the country’s $31.4 trillion debt cap is the product of decades of tax cuts and increased government spending by both Republicans and Democrats. But at a moment of heightened partisanship and divided government, it is also a warning of the entrenched partisan battles that are set to dominate Washington in the months to come, and that could end in economic shock.Newly empowered Republicans in the House have vowed that they will not raise the borrowing limit again unless President Biden agrees to steep cuts in federal spending. Mr. Biden has said he will not negotiate conditions for a debt-limit increase, arguing that lawmakers should lift the cap with no strings attached to cover spending that previous Congresses authorized.Treasury officials estimate the measures that they will begin employing on Thursday will enable the government to keep paying federal workers, Medicare providers, investors who hold U.S. debt and other recipients of federal dollars at least until early June. But economists warn that the nation risks a financial crisis and other immediate economic pain if lawmakers do not raise the limit before the Treasury Department exhausts its ability to buy more time.The episode has prompted fears in part because of the lessons both parties have taken from more than a decade of debt-limit fights. A bout of brinkmanship in 2011 between House Republicans and President Barack Obama nearly ended in the United States defaulting on its debt before Mr. Obama agreed to a set of caps on future spending increases in exchange for lifting the limit.Most Democrats have solidified in their position that negotiations over the debt limit only enhance the risks of economic calamity by encouraging Republicans to use it as leverage. That is particularly true of Mr. Biden, who successfully stared down Republicans and won an increase in 2021 with no stipulations.Newly elected Republicans, emboldened by anger among their base and conservative advocacy groups over failures in the past to exact concessions for raising the limit, have pledged not to let that happen again.Treasury Secretary Janet L. Yellen has dismissed ideas for lifting the borrowing cap unilaterally, such as minting a $1 trillion coin, as fanciful.Sarahbeth Maney/The New York TimesIn reality, both parties have approved policies that fueled the growth in government borrowing. Republicans repeatedly passed tax cuts when they controlled the White House over the last 20 years. Democrats have expanded spending programs that have often not been fully offset by tax increases. Both parties have voted for large economic aid packages to help people and businesses endure the 2008 financial crisis and the 2020 pandemic recession.Federal spending declined from its pandemic high in 2022, reaching nearly $6 trillion in the fiscal year, or just under 24 percent of the economy. The federal budget deficit, which is the shortfall between what the United States spends and what it takes in through taxes and other revenue, topped $1 trillion for the year. That is a decline from the past two years as emergency pandemic spending expired, though the Biden administration predicts the deficit will rise again in the current fiscal year.Understand the U.S. Debt CeilingCard 1 of 4What is the debt ceiling? More

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    As Debt Ceiling Threat Looms, Wall Street and Washington Have Only Rough Plans

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    A default would most likely rattle markets and carry big risks, no matter how the Federal Reserve and Treasury try to curb the fallout.With days to go before the United States bumps up against a technical limit on how much debt it can issue, Wall Street analysts and political prognosticators are warning that a perennial source of partisan brinkmanship could finally tip into outright catastrophe in 2023.Big investors and bank economists are using financial models to predict when the United States, which borrows money to pay its existing bills, will run out of cash. They are assessing what it could mean if the government is unable to pay some of its bondholders and the country defaults on its debt. And they are gaming out how to both minimize risks and make the most of any opportunities to profit that might be hiding in the chaos.The need to start planning for a potential debt limit breach became more urgent last week, when Treasury Secretary Janet L. Yellen told Congress that the United States would hit its borrowing cap on Thursday. At that point, Treasury will begin using “extraordinary measures” to try to stay under the cap for as long as possible — but those options could be exhausted as soon as June.Congress places a limit on the amount of debt the country can issue, with a simple majority in the House and Senate required to lift it. That cap, currently $31.4 trillion, needs to be adjusted to allow the United States to borrow to pay for obligations it has already committed to, such as funding for social safety net programs, interest on the national debt and salaries for troops.Wrangling over lifting the borrowing cap has become a fixture, and this year is shaping up to be particularly complicated. Republicans hold the House by a slim majority, and a small but vocal faction of the party has won changes to the rules that govern legislative debate. They have made clear that they want deep spending cuts in exchange for raising the debt limit, and their empowerment could make this round of negotiations more likely to end in disaster.Bank of America analysts wrote in a note to clients this week that a default in late summer or early fall is “likely,” while Goldman Sachs called the possibility that the government would not be able to make good on its bills a “greater risk” than at any time since 2011. When the nation approached the brink in that episode, its credit rating was downgraded and wild market gyrations helped to force lawmakers to blink.A debt default would most likely rattle markets and carry big risks.Andrew Kelly/ReutersIn Washington, the Federal Reserve and Treasury are not publicly speaking about what they could do if an outright default were to happen this time, in part because the mere suggestion they will bail out warring politicians could leave lawmakers with less of an incentive to reach a deal. But they have a series of options — albeit bad ones — for mitigating the disaster if political impasse takes the nation up to or over the brink of default.It is tricky to guess exactly how financial markets will react, both because the timing of any default is uncertain and because many investors are waiting and watching to see what happens in Washington.But former government officials and cautious Wall Street observers warn that the effects could be significant. Markets have grown bigger and more complex since 2011, and an outright default could lead to mass selling, which would impair financial functioning. While the government has done contingency planning for a default, former officials say there is no foolproof option for staving off a disaster.Understand the U.S. Debt CeilingCard 1 of 4What is the debt ceiling? More

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    How Close Is the U.S. to Hitting the Debt Ceiling? How Bad Would That Be?

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    The United States has a cap on the amount of money it can borrow. That means it can run out of cash if the limit isn’t lifted.Washington is gearing up for another big fight over whether to raise or suspend the nation’s debt limit, with Treasury Secretary Janet L. Yellen warning last week that the United States will reach its existing borrowing cap of $31.4 trillion on Thursday.The United States borrows huge sums of money by selling Treasury bonds to investors across the globe and uses those funds to pay existing financial obligations, including military salaries, safety net benefits and interest on the national debt. Once the United States hits the cap, Treasury can use “extraordinary measures” — suspending some investments and exchanging different types of debt — to try to stay beneath the cap for as long as possible. But eventually, the United States will need to either borrow more money to pay its bills or stop making good on its financial obligations, including possibly defaulting on its debt.Responsibility for lifting or suspending the borrowing cap falls to Congress, which must get a simple majority in both the House and Senate to vote for any change to the debt limit. Raising the debt limit has become a perennial fight, with Republican lawmakers using it as leverage to try to force spending cuts.This year is shaping up to be the messiest fight in at least a decade. Republicans now control the House and they have adopted new rules governing legislation that make it more difficult to raise the debt limit and strengthen Republicans’ ability to demand that any increase be accompanied by spending cuts. Senate Republicans have also insisted that increases to the debt limit should be tied to “structural spending reform.”President Biden has said he will oppose any attempt to tie spending cuts to raising the debt ceiling, raising the likelihood of a protracted standoff.All of this drama raises the question of what the debt limit really is, how it got here and why the United States does not do away with debt limit entirely and spare the nation from its periodic face-off with an economic time bomb.What is the debt limit?The debt limit is a cap on the total amount of money that the federal government is authorized to borrow to fulfill its financial obligations. Because the United States runs budget deficits — meaning it spends more than it brings in through taxes and other revenue — it must borrow huge sums of money to pay its bills. That includes funding for social safety net programs, interest on the national debt and salaries for troops. The debt ceiling debate often elicits calls by lawmakers to cut back on government spending, but lifting the debt limit does not authorize any new spending and in fact simply allows the United States to finance existing obligations.Understand the U.S. Debt CeilingCard 1 of 4What is the debt ceiling? More

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    U.S. Will Hit Debt Limit on Thursday, Yellen Tells Congress

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    The Treasury Department expects to begin taking “extraordinary measures” to continue paying the government’s obligations before what is expected to be a big fight to raise the borrowing cap.WASHINGTON — Treasury Secretary Janet L. Yellen warned on Friday that she would have to begin employing “extraordinary measures” on Thursday to continue paying the nation’s bills if lawmakers did not act to raise the statutory debt limit and that her powers to delay a default could be exhausted by early June.Ms. Yellen’s letter to Congress was the first sign that resistance by House Republicans to lifting the borrowing cap could put the U.S. economy at risk and signals the beginning of an intense fight in Washington this year over spending and deficits.“Failure to meet the government’s obligations would cause irreparable harm to the U.S. economy, the livelihoods of all Americans and global financial stability,” Ms. Yellen wrote.Ms. Yellen said on Friday that considerable uncertainty surrounded how long she could use measures to delay a default. She said she would begin suspending new investments in the Civil Service Retirement and Disability Fund and the Postal Service Retiree Health Benefits Fund and suspending reinvestment of the Government Securities Investment Fund of the Federal Employees Retirement System Thrift Savings Plan this month to avoid breaching the debt limit.The letter is the beginning of what is expected to be a protracted and potentially damaging economic fight. Republicans, who assumed control of the House last week, have insisted that any increase to the debt limit be accompanied by significant spending curbs, most likely including cuts to both the military and domestic issues.Speaker Kevin McCarthy has cited reducing the national debt — which topped $31 trillion last year and has increased during both Republican and Democratic administrations, including about a 40 percent increase under former President Donald J. Trump — as a central focus of his party’s agenda.“The American people are the ones that’s demanding the cut in spending,” Representative Jason Smith, a Missouri Republican and the chairman of the powerful House Ways and Means Committee, said Friday on Fox News. “We have to have fiscal reforms moving forward. We cannot just give an unlimited credit card.”Understand the U.S. Debt CeilingCard 1 of 4What is the debt ceiling? More

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    Why Hitting the Debt Ceiling Would Be Very Bad for the U.S. Economy

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    If Congress fails to increase the government’s borrowing limit in time, the result would be a shock to the economy and financial markets.WASHINGTON — The new Republican majority in the House of Representatives has Washington and Wall Street bracing for a revival of brinkmanship over the nation’s statutory debt limit, raising fears that the fragile U.S. economy could be rattled by a calamitous self-inflicted wound.For years, Republicans have sought to tie spending cuts or other concessions from Democrats to their votes to lift the borrowing cap, even if it means eroding the world’s faith that the United States will always pay its bills. Now, back in control of a chamber of Congress, Republicans are poised once again to leverage the debt limit to make fiscal demands of President Biden.The fight over the debt limit is renewing debates about what the actual consequences would be if the United States were unable to borrow money to pay its bills, including what it owes to the bondholders who own U.S. Treasury debt and essentially provide a line of credit to the government.Some Republicans argue that the ramifications of breaching the debt limit and defaulting are overblown. Democrats and the White House — along with a variety of economists and forecasters — warn of dire scenarios that include a shutdown of basic government functions, a hobbled public health system and a deep and painful financial crisis.Speaker Kevin McCarthy signaled this week that he and his fellow Republicans would seek to use the debt limit standoff to enact spending cuts and reduce the national debt. He said that lawmakers likely have until summertime to find a solution before the United States runs out of cash, a threshold that is known as “X-date.”“One of the greatest threats we have to this nation is our debt,” Mr. McCarthy said on Fox News on Tuesday evening, adding, “We don’t want to just have this runaway spending.”Speaker Kevin McCarthy signaled this week that he and his fellow Republicans will seek to use the debt limit standoff to enact spending cuts and reduce the national debt.Kenny Holston/The New York TimesMr. Biden has repeatedly said he will refuse to negotiate over the debt limit, and that Congress must vote to raise it with no strings attached.That has introduced the very real likelihood of a debt limit breach. “Fiscal deadlines will pose a greater risk this year than they have for a decade,” Goldman Sachs economists wrote in a note.Here’s a look at what the debt limit is and why it matters.What is the debt limit?The debt limit is a cap on the total amount of money that the federal government is authorized to borrow to fulfill its financial obligations. Because the United States runs budget deficits — meaning it spends more than it brings in through taxes and other revenue — it must borrow huge sums of money to pay its bills. That includes funding for social safety net programs, interest on the national debt and salaries for troops. While the debt ceiling debate often elicits calls by lawmakers to cut back on government spending, lifting the debt limit does not authorize any new spending and in fact simply allows the United States to finance existing obligations. In other words, it allows the government to pay the bills it has already incurred.Understand the U.S. Debt CeilingCard 1 of 4What is the debt ceiling? More