Five Things to Know About The Federal Debt Ceiling Deal

1. President Barack Obama and the U.S. Congress have agreed to a  deal that would cut trillions of dollars in federal spending over the next decade and clear the way for an increase in the government’s borrowing limit. The deadline was on Tuesday and the government would have defaulted on its debt.

2. The debt ceiling is a limit on the amount of debt the U.S. can incur. The U.S. makes payments out of the tax revenues it receives, and any shortfall is covered by the sale of treasury bonds to individuals and foreign countries.

3. If the debt ceiling was not raised, the nation would have lost its ability to pay its debts and keep the federal government running. No one knows what would have happened because this has never happened before. The worst-case scenario was that the U.S. couldn't pay what it owed.

4. The U.S. National Debt clock says the debt is $14.5 trillion and counting. Debt means borrowing against the future. The current credit line established by Congress for the U.S. government is $14.3 trillion. Federal tax revenue annually is about $2.2 to $2.8 trillion -- what the federal government brings in to pay the bills. Included in those payments is interest on the debt.

5. The law establishing a debt ceiling, which allows the president to go to Congress to request an increase, was passed in 1917. Over the years, Congress has uneventfully voted to raise the limit more than 60 times -- for instance, 18 times under Ronald Reagan, seven times under George W. Bush.

Sources: Washington Times, Daily Kos