President-elect Donald Trump puzzled members of Congress and turned the government spending discussion on its head when he sought an early raise in the debt ceiling on “Biden’s watch” rather than his own.
He reiterated his proposal in a Truth Social post late Friday, calling for the “ridiculous” ceiling to be extended until 2029.
In an interview with NBC News, Trump also proposed completely eliminating the federal debt limit, which is currently more than $36 trillion.
These are beliefs long championed by liberals and anathema to old-school conservatives, but few can be found in today’s Trump-led Republican Party. And there are compelling political reasons why Democrats may not want to support Trump’s plan to eliminate the ceiling: it gives them leverage in future negotiations with Republicans.
Why is there a debt ceiling?
Congress established a borrowing cap in 1917, while it was financing World War I with Liberty Bonds, and the debt ceiling has altered since then as US debt has increased and grown.
Every year, lawmakers must pass spending bills, and together with obligatory expenditure on Medicare and Social Security, they almost always spend more than the United States collects in tax revenue. This is what’s called a deficit.
Over the last few hundred years, the federal government has sold debt and interest totaling more than $36 trillion to itself, other domestic institutions, and foreign governments. Defaulting on that debt would leave the government’s creditors, notably the Social Security trust fund and maybe your 401k provider, in the lurch, endangering the US economy. No surprise Trump does not want to deal with it.
Trump’s latest
The Truth Social post was sent around 1:16 a.m. ET on Friday.
“Congress must eliminate or extend the ludicrous Debt Ceiling until, possibly, 2029. Without this, we should never reach an agreement. “Remember, the pressure is on whoever is President,” Trump wrote.
The’smartest’ thing Congress could do
The elimination of the debt ceiling would be the “smartest thing it [Congress] could do.” “I completely support that,” Trump replied, according to NBC.
Republicans exploited the debt as leverage.
That is a shocking and unexpected position for a Republican president-elect to take, given that in recent history, Republicans have typically complained about votes to authorize more and more debt and engineered high-stakes battles with Democratic presidents over raising the debt limit.
Trump’s tax cuts would dramatically increase deficits.
Now that these same Republican senators are anticipating Trump’s deficit-exploding proposal to extend and increase tax cuts, they appear to be willing to put the debt ceiling on hold by “suspending” it until the next election.
Republicans will seek to use the debt ceiling in the future.
Democrats, who aim to regain control of the House after the 2026 election, would be unimpressed with a two-year ban. It’s also worth noting that Republican senators are not supporting Trump’s proposal to eliminate the debt cap. You can bet they’ll utilize the threat of default again when there’s a Democratic president.
Why not get rid of it completely?
Lawmakers from both parties use the debt ceiling to their advantage, but many citizens believe it is a ticking time bomb that should be permanently defused.
Bankers think it’s ‘all politics’
“Every time this comes up, it is fixed, but we should never get this close,” JPMorgan CEO Jamie Dimon told Reuters in 2021, during a previous budget fight. “I just think this whole thing is a mistake, and one day we should just pass a bipartisan bill and eliminate the debt ceiling. “It is all politics.”
Left-leaning economists consider it foolish.
“In a political system beset by many stupid and destructive institutions, the statutory limit on federal debt might be the worst,” stated Josh Bivens, principal economist at the Economic Policy Institute, in 2021.
“When the limit is reached, it forces Congress to reaffirm its willingness to spend what it is already legally obligated to spend,” stated Stephanie Kelton, a progressive economist and Sony Brook University professor, in 2023. (Her emphasis.) She believes that deficits and debt should not scare Americans.
“My view on the debt ceiling is in no way dependent on which party is in power,” Kelton told me in an email Thursday, arguing that Democratic lawmakers who disagreed when she said Trump is correct about the debt ceiling might like the idea of using the debt ceiling as their own piece of leverage in the upcoming tax-cut debate.
Lawyers have stated that it can be ignored.
This is a minority opinion, but Cornell legal professor Robert Hockett argued to me in 2023 that a 1974 statute effectively eliminated the necessity for the debt cap. He believed Biden should have challenged the debt ceiling in court. Biden did not.
Progressives dreamed about ending it.
Just this month, a coalition of 17 Democrats led by Sen. Brian Schatz of Hawaii reintroduced legislation to permanently repeal the debt cap.
If you’ve heard that the Treasury Department is considering creating trillion-dollar coins to cope with debt, that’s because of this. Some claim that a president can exercise authority under the 14th Amendment, which states that the “validity of the public debt, authorized by law… shall not be questioned.”
The point is that if Trump is serious about eliminating the debt ceiling, he will have to fight more Republicans than Democrats.
Republicans appreciate the leverage.
The most significant standoffs over the debt ceiling have happened when Democratic presidents faced Republican majorities in Congress. In the 1990s, it was President Bill Clinton versus House Speaker Newt Gingrich. In 2010, President Barack Obama faced off against House Speaker John Boehner. In 2023, it was President Joe Biden versus House Speaker Kevin McCarthy. That is still the case in Washington, DC, but the Biden administration has not officially addressed this brewing controversy.