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[[File:Federal Debt graphic PD WC.jpg|thumb|Components of Federal Debt As Percentage of GDP FY1980-FY2007]]
The '''Federal Debt Limit''', commonly known as the '''debt ceiling''' is the overall limit on federal government borrowing, as authorized by [[Congress]]. It is similar to an individual's credit card limit.
The '''Federal Debt Limit''', commonly known as the '''debt ceiling''' is the overall limit on federal government borrowing, as authorized by [[Congress]]. It is similar to an individual's credit card limit.
According to the Constitution, the Congress must approve all borrowings on behalf of the United States. Before the 20th century, Congress approved all bond issuances separately and explicitly. With the introduction of the debt ceiling, the treasury now had a line on which it could borrow as it needed to without having to go back to Congress for borrowings under the ceiling.
According to the Constitution, the Congress must approve all borrowings on behalf of the United States. Before the 20th century, Congress approved all bond issuances separately and explicitly. With the introduction of the debt ceiling, the treasury now had a line on which it could borrow as it needed to without having to go back to Congress for borrowings under the ceiling.
== History of the Debt Limit ==
== History of the "Debt Limit" ==
The Second Liberty Bond Act of 1917, which helped finance the United States’ entry into [[World War I]], allowed the U.S. Treasury to issue long-term Liberty Bonds marketed to the public to hold down the federal government's borrowing costs. The 1919 Victory Liberty Bond Act raised the maximum allowable federal debt to $43 billion, although the total outstanding federal debt at the time was only $25.5 billion.
The Second Liberty Bond Act of 1917, which helped finance the United States’ entry into [[World War I]], allowed the U.S. Treasury to issue long-term Liberty Bonds marketed to the public to hold down the federal government's borrowing costs. The 1919 Victory Liberty Bond Act raised the maximum allowable federal debt to $43 billion, although the total outstanding federal debt at the time was only $25.5 billion.