Debt-Ceiling Battle This Time Around Offers New Twists

Republicans have the power to raise the debt ceiling by themselves, and they will try to do that in their tax, border, energy and spending-cuts legislation that would wrap many of President-elect Donald Trump's priorities into one bill.

"With all that we're doing to restore fiscal health and prosperity, we ought to put the debt ceiling in there as well, because those are the fiscal reforms that I think should be required to do it," said Rep. Jodey Arrington (R., Texas), chairman of the House Budget Committee. "And Trump's committed to it."

If Republicans' efforts collapse, they will need to turn to Democrats to avert a potential government default around the middle of the year, possibly setting the stage for more deadline drama. While many Democrats have made clear they won't sign off on a GOP plan that kicks the debt ceiling to the next Congress or next president, they have signaled support for effectively getting rid of the debt-ceiling threat altogether.

Trump's recent call for a long-term or permanent debt-ceiling increase which fell short among Republicans could become the basis for an agreement with Democrats, said Rep. Brendan Boyle (D., Pa.). Boyle said he is open to working with Trump on a bill that would permanently alter the debt limit, aiming to prevent Republicans from wielding it against a future Democratic president like they did in 2011 and 2023.

"Both in our political interest and for the good of the country, this is a great opportunity for Democrats to once and for all permanently resolve this issue so it can never again be used as a weapon," said Boyle, the top Democrat on the Budget Committee, who has introduced legislation that would let the administration raise the debt limit unless Congress objects with veto-proof majorities.

Trump, he said, "may actually be someone that Democrats can work with in order to achieve our long-term goals."

House Speaker Mike Johnson (R., La.) has said he wants to include a debt-limit increase in the "one big beautiful bill" that Republicans will try to move through Congress using a procedure known as budget reconciliation, which averts the 60-vote Senate filibuster threshold. Republicans have a narrow 219-215 majority in the House, which is expected to temporarily shrink to 217-215 when two members join the administration.

Johnson reiterated Tuesday that Republicans want to handle the debt ceiling without relying on Democrats, but he acknowledged there was "a broad range of opinion" about the borrowing limit among GOP colleagues.

For decades, Congress periodically raised the limit, often tying it to budget agreements with few threats of a breach. Modern debt-limit politics started in 2011, when the Republican House insisted that any debt-ceiling increase be paired with spending cuts.

"They've certainly become more frequent, more often down to the wire and more political in nature," said Shai Akabas, who tracks debt-limit debates for the Bipartisan Policy Center. "It has not proved to be an effective tool to force Congress to enact debt-reduction policies."

That 2011 negotiation with then-President Barack Obama brought the U.S. to the edge of default and led to a downgraded credit rating. House Republicans repeated that strategy with President Biden in 2023. Both times, Republicans won concessions and Democrats insisted they would never again negotiate on the debt ceiling.

That 2023 deal suspended the limit until this month. Potential missed payments won't happen until later because the Treasury Department can use tax revenue and extraordinary measures-moving money around government accounts to stave off the so-called X date for a few more months.

Trump, seeing the ceiling date for a few more months on the horizon, asked Congress to include a debt-limit increase in an end-of-year spending bill in late 2024, a month before his inauguration. The vast majority of House Republicans voted for a two-year debt-limit suspension, even without spending cuts attached.

But enough House Republicans objected to that billocrats to prevent by Democrats to prevent it from passing, and the ultimate spending bill lacked a debt-limit increase. Trump asked Congress again to raise or eliminate the debt ceiling before he takes office Jan. 20, but lawmakers haven't acted.

"All I want to see is no default because nobody knows what would happen if there is a default," Trump said Tuesday. "It could be 1929 or it could be nothing."

Debt-limit votes can be politically difficult, because lawmakers don't like to be seen as enabling higher debt and deficits. The cuts demanded by some Republicans along with a debt-limit increase might prove unacceptable to other Republicans.

"When your House majority is one seat, it's just going to be really, really difficult to get debt limit over the finish line simply with Republican votes," said Paul Winfree, who was a Trump aide in the first term and is now president of the Economic Policy Innovation Center.