Republican leaders weigh two bad options for solving President-elect Donald Trump’s debt limit problem after failing to implement his demand to lift the federal borrowing limit in the last government funding bill I am doing it.
One option would require the full buy-in of Republican lawmakers to address the issue through budget reconciliation, a major challenge given the party’s ferocious fiscal stance. The other means winning support from Democrats, who largely rejected President Trump’s initial debt limit package this month.
Sen. Thom Tillis, RN.C., said of President Trump’s recent push to raise the debt ceiling, “Who advised the president that it was possible and how does this work? We need to understand more.”
That will become an urgent issue as soon as Trump takes office. With the U.S. carrying more than $36 trillion in national debt, the federal government plans to reinstate caps on its borrowing authority on January 1, but the Treasury Department could buy months of time with so-called temporary measures. The ticking fiscal time bomb illustrates the uphill battle President Trump and Republican leaders face heading into 2025, siding with Democrats seeking concessions and conservatives known for sticking to their demands for funding cuts. We are considering whether
“I told my caucus that if they tried to do it under reconciliation, they would lose my vote,” said Sen. Rand Paul (R-Ky.). “I said to them, “You want to cancel the settlement or put something on us that we don’t like?”
Raising the debt ceiling on their own would be a big challenge for Republicans. House Republican leaders say they will consider cutting $2.5 trillion in mandatory spending (the large sum of money that administers SNAP supplements, Social Security, Medicaid, Medicare, etc.) in future legislation in exchange for $1.5 trillion in increases. I told the conservatives. Settlement proposal. The bill would also address big party priorities like border security, energy and taxes, which Republicans say they will find a way to pay for. And as Paul illustrates, fiscal conservatives have already voiced their opposition to handling the debt ceiling through a partisan process.
Paul said he believed other Senate conservatives had also told Republican leaders that they would not vote for a settlement that would raise the debt ceiling. The Senate will have a 53-seat majority next year, but opposition from just a few Republicans could dash that dream.
Another challenge for Republican leaders will be getting Republicans to agree on $2.5 trillion in mandatory program cuts over 10 years. President Trump has denied making cuts to Social Security and Medicare, the two most expensive programs. Social Security benefits alone total about $1.5 trillion, of which the U.S. government spends about $4 trillion each year on mandatory programs.
Democrats say the proposal is a public relations nightmare for Republicans.
“Listen, this is the gift that keeps on giving,” said Sen. Chris Murphy (D-Conn.). “This is truly a worst-case scenario for this country. Massive tax cuts for the richest people will be paid for by cutting medical costs to the bone for the elderly and poor children.”
Raising the debt ceiling by $1.5 trillion and matching funding cuts would not prevent the nation from hitting the borrowing ceiling for an extended period of time. The U.S. budget deficit, the difference between taxes and other revenues and spending, was $1.8 trillion in the fiscal year that ended in September. Congress’ nonpartisan budget tabulators project that next year’s total debt interest payments will be nearly $900 billion.
The timing of when Congress absolutely needs to act on the debt limit is also difficult, posing an additional challenge for Republican leaders.
After the debt ceiling is reinstated at midnight on Jan. 1, the Treasury Department plans to deploy typical “temporary measures,” cash-shift accounting tactics meant to keep the country paying its bills for at least a few months. . That way, when tax filing season begins at the end of January, a surge of revenue will start flowing into federal coffers, keeping the U.S. from hitting the borrowing limit for several more months.
All the while, the Treasury Secretary will continue to hone his “X date” predictions for when the U.S. will default on its loans absent Congressional action. Last year, with revenue from the tax much lower than expected, lawmakers thought it would take until August or September to pass the amendment, but the expected default date suddenly moved up to early June.
“This extraordinary measure would extend the actual, real, de facto deadline. But we’ve only seen it in the last year, and it can vary wildly,” House Budget Committee member said Pennsylvania Congressman Brendan Boyle, the group’s top Democrat.
Mr. Boyle has long pushed for legislation that would allow the Treasury to continue paying people despite the debt ceiling, but this comes after outgoing Senate Republican leader Mitch McConnell raised the U.S. borrowing limit. This is similar to the proposal that was put forward during the previous conflict over the issue. But many fiscal conservatives oppose it.
“I want to stick to the debt limit. I like it,” said Sen. Ron Johnson.
The Wisconsin Republican also opposes raising the debt ceiling through the settlement, calling for a “debt ceiling budget” that would show how the national debt has “extraordinarily increased” beyond inflation and population growth in recent years. The plan is to launch it in early 2025.
With Republicans in control of the White House and both houses of Congress, there is no risk of a debt limit crisis, especially with President Trump insisting on swift action and calling on lawmakers to “end” the national debt limit. Raising it isn’t very advantageous for Republicans. Borrow the upper limit completely. But Democrats warn that the demands of a slim Republican majority and fiscal conservatives continue to breed fears of economic catastrophe.
Sen. Sheldon Whitehouse (DR.I.), outgoing chairman of the Senate Appropriations Committee, said, “In times of crisis, there is no point in threatening the economy with debt limits, other than old bad habits.” ” he said.
“This is a bedroom bear trap that Republicans like to keep for negotiating purposes,” the White House added. “Now that they have won the trifecta, they have lost some of their negotiating appeal and are still in a very, very dangerous situation.”
