The debt ceiling is the maximum amount of debt the U.S. Treasury can incur, thus limiting how much money the federal government can borrow. The amount is set by law and has been increased over the years. A law passed in 2019 suspended the limit through July 31, 2021. But starting from August 1st, the debt limit will be reset to the previous ceiling of 22 trillion U.S. dollars, plus the cumulative borrowing that occurred during the period of suspension. 

While the United States has never defaulted on its debt, recent history showed that getting close to it can create chaos. In 2011, House Republicans refused to pass a debt ceiling increase and U.S. sovereign credit was downgraded. In 2013, the government was forced to shut down for 16 days after the two parties failed to agree on a budget for the new fiscal year. The debt limit has been in place since 1917, and Congress has raised the cap more than 70 times since 1960.