If the government hits the cap on how much money it can borrow, the Treasury Department will begin using so-called "extraordinary measures" to pay its bills. That includes selling existing investments or suspending reinvestments in retirement and health funds.
Treasury Secretary Janet Yellen warned she'll exhaust her bill-paying options sometime in June and after that, the U.S. would default on its debts.
That has never happened before, and experts say it would have "catastrophic" economic consequences.
Millions of people would stop receiving their Social Security payments and Medicare disbursements; Military service members and government workers wouldn't get paychecks; And the country's credit rating could be downgraded, potentially tanking the markets and spiking interest rates.
Why the U.S. has a debt ceiling, while most other countries don't
The U.S. debt ceiling was raised by $2.5T, but it's been raised dozens of times since its 1917 creation.
Conservative House Republicans want deep spending cuts before raising the debt limit.
They back a plan that would have the Treasury pay some bills as they come due after the debt limit is reached.
"Let's change our behavior now. Let's sit down. He's the president, we're the majority in the House, the Democrats are the majority in the Senate — that's exactly the way the founders designed Congress to work. Find the compromise and find the commonsense compromise that puts us back onto a balanced budget," House Speaker Kevin McCarthy said.
The White House says there will be no negotiations.
"This is not a plan. It is a recipe for economic catastrophe. As President Biden has made clear, Congress must deal with the debt limit and must do so without conditions," White House Press Secretary Karine Jean-Pierre said.
With economists warning a default could lead to a global financial crisis, the pressure will build in the coming months for both sides to find common ground.
