Before passing Trump’s agenda, GOP must fix debt ceiling

President-elect Donald Trump has a long list of policy promises to fulfill when he first takes office. To help him accomplish much of it, Congress needs to do something about the debt ceiling. Republicans have just a two-vote majority in the House, so nearly the entire caucus must agree on how to move forward. But disagreement is already budding over the issue within the GOP ranks.

What is the debt ceiling?

The debt ceiling is a legal cap on how much money the country can borrow. If the United States hits the ceiling, then the U.S. Treasury will utilize what it calls “extraordinary measures”—a reshuffling of the country’s obligations that prevents it from defaulting on its debt for a limited time. In 2023, the country spent six months under extraordinary measures.

Typically, Congress either pushes the borrowing cap higher or suspends it altogether to allow the Treasury to continue to make payments such as Social Security checks and the salaries of military employees. In the Fiscal Responsibility Act of 2023, Congress stipulated that the debt limit “would not apply” until Jan. 1, 2025.

The ceiling is now set to $36.15 trillion—the total amount of debt the country had on Jan. 1. Because of the sale of some government assets, the United States is a little below that threshold but will hit it again before long.

“The Treasury currently expects to reach the new limit between Jan. 14 and Jan. 23,” Treasury Secretary Janet Yellen wrote in a letter to Congress late last month.

When will Congress act on the debt ceiling?

House Speaker Mike Johnson, R-La., told the public last Tuesday that Republicans will address the debt ceiling in a budget reconciliation bill focused on the border and taxes. The reconciliation process allows the Senate to bypass a filibuster and approve a bill with a simple majority.

“The intention is to handle the debt limit in reconciliation,” Johnson said last week. “That way, the Republican Party—the party in control of both chambers—we get to determine the details of that.”

The reconciliation bill will likely pass in the Senate, where Republicans have 53 out of 100 seats, but the GOP could struggle to get all of its members on board in the House. Johnson has not given a specific timeline for unveiling the reconciliation package.

Where does the House GOP conference stand?

Many in the party stand ready to do what President-elect Donald Trump asks.

“I’m okay suspending it right now. That’s what President Trump says we need right now to support the agenda. I am all in favor of suspending it for a couple years,” said Rep. Ronny Jackson, R-Texas.

Republicans like Jackson believe that the GOP can cut spending and raise the spending limit. To them, the absence of a ceiling doesn’t mean that Republicans will turn a blind eye to fiscal issues.

“Just because you raise the debt ceiling doesn’t mean you have to spend,” Rep. Jim Baird, R-Ind., told WORLD when asked about his support for a suspension.

Who are the outliers?

While some Republicans would be fine with suspending the cap for a few years—a demand Trump made of lawmakers just three weeks ago—fiscal conservatives are likely to insist on a firmer debt ceiling.

“I think it’s important for us to set a number,” Rep. Byron Donalds, R-Fla., told WORLD last week. “But we will see where that ends up at the end of the day.”

Donalds added that he’s not ruling out voting for a suspension of the cap if he becomes convinced that’s the better route to take.

Other Republicans want a number in principle but don’t have a clear idea how much Congress should lift the debt ceiling.

Rep. Derrick Van Orden, R-Wis., wants the conference to evaluate its priorities, take its time on the deliberations, and come back with a realistic idea of what the government needs.

“I think it should be exactly enough and not too much. Where that sweet spot is I don’t quite know yet. I don’t say it has to be X amount of dollars right now because when we do that, we do ‘ready, fire, aim,’ and then we’re wrong.” Van Orden said. “Let’s take out time to do it right.”

Rep. Ralph Norman, R-S.C., wants Republican leaders to commit to spending cuts, commonly referred to as offsets, that would counteract additional borrowing. Norman said he wouldn’t consider the package otherwise—even if the president personally requested it.

“We have got to have offsets. We can’t go to the public and say, ‘We’re going to borrow more money,’” Norman said.

He did not identify any specific areas where he believes House Republicans should cut but stressed that everything is on the table—including nondiscretionary spending government benefit programs.

What else could Johnson do?

Johnson has also hinted Republicans could tie California fire disaster relief to raising the debt ceiling, taking it out of the tax and border package and making it its own issue. While that approach would eliminate concerns over the debt ceiling getting in the way of other GOP priorities, making it a stand-alone issue would require Democratic votes in the Senate.

Members on Monday said they believe that plan is unlikely but are waiting to hear the speaker’s ultimate direction.

“We’re going to work to provide aid for those that have been impacted by natural disasters as we always do,” Rep. Mike Lawler, R-N.Y., told WORLD on Monday. “We have a lot of issues we have to deal with and not a lot of vehicles on how to deal with them at the moment.”

What kinds of cuts might the GOP make?

Nondiscretionary spending makes up the bulk of government funding, accounting for 62% of all expenditures in2023. Jared Pincin, associate professor of economics at Cedarville University, is skeptical that fiscal conservatives will have the leverage to go after popular entitlement programs such as Social Security and Medicare, though they could try to cut other nondiscretionary spending. Johnson has said he won’t touch either program.

“They do need to [address] spending, so there has to be changes—I just don’t think there are the votes to use the debt ceiling as that weapon,” Pincin said. “When you put yourself in a position where you have to make mandatory spending cuts just to make your obligations, that’s not going to be politically popular.”