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.