Why Trump suddenly cares about the US debt ceiling

As the US Congress struggled to come up with a spending bill to avoid a government shutdown, US President-elect Donald Trump shocked many lawmakers by demanding that such a bill also increase the country’s debt ceiling.

He insisted that any agreement must include this provision on the debt ceiling, the legal limit on the amount of national debt that the country can incur. It’s a problem that hadn’t been discussed by both parties.

Trump then went a step further and announced, to the surprise of many legislatorsthat he also sought to suspend or eliminate the debt limit before taking office in January.

However, Trump’s plans suffered a setback on Friday night when the Republican-controlled US House of Representatives passed legislation that would avert a government shutdown at midnight, but left out his demand to raise the debt ceiling.

So why is Trump suddenly so worried about the debt ceiling?

What is the debt ceiling?

The debt ceiling is the country’s borrowing limit. If the government needs to borrow more than that amount, it must have congressional approval to do it.

Because the government has been running deficits—spending more money than the taxpayer revenue it generates—it regularly has to borrow money and raise that debt limit.

This money is needed so that the government can meet its existing legal obligations, including payment of Social Security and Medicare benefits, military pay, interest on the national debt, tax refunds and other payments.

Many economists have predicted dire consequences from a default, which could include a downgrade in credit ratings, negative impact on borrowing and the dollar, potential chaos in financial markets and job losses in the thousands, if not millions – all of which could lead to a recession.

Why is it so political?

Almost since its inception in 1917, the debt ceiling has been politicized by both parties, but from 2011 on, it became not just partisan, but dangerous, says Laura Blessing, adjunct professor and senior fellow at the Government Affairs Institute at Georgetown University.

The biggest problem with the cap, according to some observers, is that it has become a dangerous political bargaining chip, holding the economy hostage to extract political demands.

“The pattern has been that the Republican Party has enjoyed using this as a cudgel to try to force Democrats into a legislative deal that would cut spending, which is their policy priority,” Blessing said. “And they have not been very successful in doing this.”

What does Trump say about the debt ceiling?

On Wednesday, Trump said in a joint statement with Vice President-elect JD Vance that “raising the debt ceiling is not great, but we’d rather do it on Biden’s watch.”

“If the Democrats won’t cooperate on the debt ceiling now, what makes anyone think they would in June under our administration?”

The next day, Trump spoke to many US media and warned of a government shutdown unless Congress extended the debt ceiling or eliminated it altogether. In an interview with NBC News, Trump said it would be “the smartest thing (Congress) could do to get rid of the debt ceiling completely. I would totally support it.”

“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 said.

On Friday, Trump took to his social media platform Truth Social to write: “Congress needs to get rid of, or maybe extend to 2029, the ridiculous debt ceiling. Without this we should never make a deal. Remember the pressure is on whoever is president. “

It’s true that some Democrats have supported repealing the debt ceiling, including Massachusetts Sen. Elizabeth Warren, who said Thursday via a social media post that she agreed with Trump “that Congress should repeal the debt ceiling and never again govern hostage taking.”

But many Republicans have been steadfast in their support for the debt ceiling. That’s why Trump’s comments are what Blessing calls a “record-scratching moment,” because he’s asking Republicans to abandon this tool.

“It’s just contrary to the messages. The political attempts, the strategy they’ve used,” she said.

So why does Trump want to remove the debt ceiling?

As Trump prepares to push an agenda of tax cuts and border security, Trump fears a debt border fight next year could disrupt his plans, which are expected to cost trillions of dollarswrote New York Times reporter Alan Rappeport, who has reported on debt limit battles under the Trump and Biden administrations.

“This has nothing to do with serious political ideology and everything to do with power,” said Todd Belt, professor and program director at George Washington University’s Graduate School of Political Management in Washington, DC

Republicans like having the debt ceiling so they can force concessions and cut spending when they’re in the minority, he said.

“But they are afraid that when the shoe is on the other foot, when the Republicans have the majority, the Democrats will be able to use this to slow down the tax cuts that Donald Trump wants to push.”

Those tax cuts and other Trump spending priorities will mean less federal money to service the debt, which is why Trump wants the debt limit removed, Belt said, noting that the reason the president-elect pushed for this happen now, was that he did not I do not want to be accused of being a free user.

“He wants to be able to say this is something Joe Biden signed on to, not me.”

Does this mean the debt ceiling is doomed?

Probably not anytime soon.

While Trump and a handful of Democrats have called for its elimination, there doesn’t seem to be much political will or the votes to scrap it, Belt said.

“In addition, there are the hardline Republicans who want to continue the debt ceiling because they really believe they were sent to DC to shake up the system and stop all the excessive spending,” he said.