President-elect Trump and congressional Republicans are plotting how to address the nation’s debt limit this year.
The debt ceiling, which caps how much money the Treasury can owe to pay the country’s bills, was reestablished earlier this month after being suspended for the past year and half. The national debt now stands at more than $36 trillion.
Trump has called for Congress to move quickly to raise or suspend the debt ceiling. But internal rifts on spending and partisan divides could complicate the path forward.
Here’s a few possible scenarios Trump and Republicans have floated.
Trump’s ‘big, beautiful bill’
Speaker Mike Johnson (R-La.) said this month that Republicans are looking to tackle the debt ceiling as part of a massive reconciliation bill that would contain large pieces of Trump’s agenda.
The maneuver would allow the party to pass the legislation through the Senate with a simple majority, bypassing Democratic opposition — and taking away Democrats’ leverage to extract concessions in exchange for votes to avoid a default.
“The intention is to handle the debt limit in reconciliation in the process, and that way, as the Republican Party, the party in charge of both chambers, we then get to determine the details of that,” Johnson told reporters last week.
“If it runs through regular order or regular process and as a standalone, or as part of the appropriations, for example, then you have to have both parties negotiating, and we feel like we’re in better stead to do it ourselves,” he also said.
But Republicans are already hoping to use that complex maneuver to take on a growing wish list of items in areas like tax, border and energy to advance key parts of Trump’s agenda as part of a major package.
But tacking on debt ceiling legislation to the growing wish list of items Republicans have floated including in the reconciliation bill could add to headaches when GOP leadership in the House tries to lock down support.
Johnson and House leaders are navigating a razor thin margin in the conference, where it can be difficult to get hardline conservatives on board with raising the debt limit.
Trump and House Republicans over the weekend discussed using a different legislative vehicle to lift the debt ceiling, four sources told The Hill. They said Trump did not reveal his preferred strategy.
March funding showdown
Congress is already staring down a mid-March deadline to pass legislation to keep the government funded — and some lawmakers are already signaling openness to the idea of tackling the debt ceiling as part a broader deal to avert a shutdown.
Members are hopeful that Congress will pass their 12 annual government funding bills for fiscal year 2025 by the March 14 cutoff date, but top appropriators say lack of a topline agreement is holding up progress.
The deadline comes about five months after Congress blew past the initial deadline to pass their fiscal 2025 funding bills in October – when fiscal year 2025 actually started.
Asked about the prospect of debt ceiling legislation being attached to an expected spending deal to avert a shutdown around spring, House Appropriation Chairman Tom Cole (R-Okla.) didn’t rule out the idea last week.
“It’s not a problem for me, if that helps our leaders,” he told reporters. “I mean, you’re more likely to get a bipartisan vote in a situation like that.”
California fire disaster aid
As the deadly wildfires in California draw national attention, Johnson on Monday floated tying a debt limit increase to disaster aid for the state.
“There’s some discussion about that, but we’ll see where it goes,” Johnson told reporters when asked about debt limit legislation being a ridealong to a potential disaster aid package.
As part of the stopgap passed last month, Congress passed more than $100 billion in disaster aid to support response efforts following Hurricane Milton and Helene, and other extreme weather events.
The Federal Emergency Management Agency (FEMA) has said it has enough resources to meet California’s needs in wake of the blazes. But some early estimates have valued losses from the fires at more than $50 billion and it’s likely Congress will have to take action this year on helping the state recover.
No more ceiling?
Trump previously called for the abolishment of the debt ceiling – an idea that some Democrats have signaled openness to, though many Republicans have long opposed the thought.
“The Democrats have said they want to get rid of it. If they want to get rid of it, I would lead the charge,” Trump told NBC News in an interview last month, while also calling the idea “smartest thing” that Congress could do.
“I would support that entirely,” he also said.
Rep. James Clyburn (D-S.C.) said of the idea earlier this month: “That may be the only area that I really agree with Donald Trump on.”
Other Democrats are on the fence, however.
“I think we have to hear the details, be open to negotiations, see what we get in return,” Sen. Ruben Gallego (D-Ariz.) said when asked about the pitch. “I don’t think we’re going to give away the power of the purse that easily to President Trump.”
Default
Trump has raised concerns about Democrats using the threat of a national default as a means to extract concessions from Republicans this year.
The party out of power — which Democrats are this year — can demand major concessions in return for agreeing to raise the debt limit. Republicans successfully used the strategy in the last Congress to secure a deal with President Biden that suspended the debt ceiling through the end of 2024, along with caps on some federal spending.
Trump was unsuccessful in his eleventh-hour effort last month to get Congress to pass the debt ceiling as part of a funding stopgap to prevent another shutdown threat before the holidays.
“I was all for giving President Trump what he asked for, which was a two-year suspension. Obviously, not everybody in our conference is on that side,” Cole said. “Democrats normally would have no problem with that. They like it. But now they see a chance to use the debt ceiling to score political points in the reconciliation debate.”
Experts have warned a national default, an outcome seen as the least likely scenario, could yield catastrophic effects for the nation’s economy. But that doesn’t mean the nation hasn’t seen its stellar credit rating downgraded by top agencies in the past as a result of intense partisan standoffs over the debt limit.
