US President-elect Donald Trump surprised Washington lawmakers this week by calling for lifting the federal borrowing limit and even abolishing it in social media posts and interviews.
The debt ceiling is a law that caps the amount of money the US federal government can borrow cumulatively to meet existing legal obligations.
A congressional vote in December 2021 increased the debt limit to £25.11 trillion ($31.4 trillion). However, a bipartisan deal last year suspended the limit until 1st January 2025. Currently, the US has an outstanding national debt of £28.94 trillion ($36.18 trillion).
The US Treasury Department can leverage special measures to finance additional federal expenditures until mid-2025 without borrowing beyond the limit. However, if the debt limit is not increased after that, the US government will default on its debt, subsequently impacting economies worldwide.
Trump Forces Stopgap Bill To Prevent A Government Shutdown
Congress had until Friday midnight to keep the government running as the money authorised by lawmakers to keep federal agencies operational was set to expire within days.
A government shutdown would have led to federal agencies shutting down, delayed Social Security checks, closing of national parks, and countless federal workers losing their jobs.
However, Trump and Elon Musk, the upcoming co-leader of the US Department of Government Efficiency, ensured that House Speaker Mike Johnson abandoned a spending bill on Wednesday to prevent a shutdown.
Republican party leaders agreed on a "continuing resolution" to keep federal operations running through Christmas. As Trump torpedoed the bipartisan government spending bill, he made an out-of-the-blue demand to lift or eliminate the national federal debt limit.
Trump Threatens Reelection Prospects of Republicans Against Removal Of The Debt Limit
Trump reportedly threatened primaries against Republican lawmakers who are against his proposal to eliminate the debt ceiling. "Anybody that supports a bill that doesn't take care of the Democrat quicksand known as the debt ceiling should be primaried and disposed of as quickly as possible," Trump told FoxNews.
"The Democrats have said they want to get rid of it. If they want to get rid of it, I would lead the charge," he later told NBC News, referring to the debt ceiling, adding that the repeal would be "the smartest thing" Congress could do.
Mid-week, Trump asked on Truth Social about the government spending deal if anyone could "imagine passing it without either terminating or extending the Debt Ceiling guillotine coming up in June?"
Democrats, who have long sought to eliminate the debt cap, were surprised by Trump's demand. Many were unaware that Trump would prioritise repealing the debt ceiling during government funding deliberations. "This was on no one's radar," a senior congressional aid had said.
