By MEG KINNARD, Related Press
A debate over the debt ceiling is on the heart of a dispute over funding that’s pushing Washington to the brink of a federal authorities shutdown.
President-elect Donald Trump has demanded {that a} provision elevating or suspending the nation’s debt restrict — one thing that his personal get together routinely resists — be included in laws to avert a authorities shutdown. “The rest is a betrayal of our nation,” Trump mentioned in an announcement Wednesday.
Republicans shortly complied, together with a provision in a revamped authorities funding proposal that will droop the debt ceiling for 2 years, till Jan. 30, 2027. However the invoice failed overwhelmingly in a Home vote Thursday night, leaving subsequent steps unsure.
Right here’s what to know in regards to the debate over the debt ceiling and the position it’s taking part in within the shutdown saga:
What’s the debt ceiling?
The debt ceiling, or debt restrict, is the overall sum of money that the USA authorities can borrow to fulfill its current authorized obligations. For the Treasury Division to borrow above that quantity, the restrict should be raised by Congress.
The federal debt stands at roughly $36 trillion, and the spike in inflation after the coronavirus pandemic has pushed up the federal government’s borrowing prices such that debt service subsequent yr will exceed spending on nationwide safety.
The final time lawmakers raised the debt restrict was June 2023. Reasonably than increase the restrict by a greenback quantity, lawmakers suspended the debt restrict by means of Jan. 1, 2025. At that time, the restrict can be robotically raised to match the quantity of debt that has been issued by the Treasury Division.
The debt restrict vote in current instances has been used as a political leverage level, a must-pass invoice that may be loaded up with different priorities.
What’s the debt ceiling struggle all about?
Trump has tied a requirement for coping with the debt ceiling to the dispute over authorities funding, saying one shouldn’t be addressed with out the opposite.
When he rejected the spending proposal on Wednesday, Trump mentioned that he wished the debt ceiling debate settled earlier than he takes workplace subsequent month.
Warning of hassle forward for Johnson and Republicans in Congress, Trump instructed Fox Information Digital, “Anyone that helps a invoice that doesn’t care for the Democrat quicksand referred to as the debt ceiling ought to be primaried and disposed of as shortly as attainable.”
What occurs if the debt ceiling isn’t raised?
There’s really no want to boost the debt restrict proper now. On Jan. 1, when the debt restrict is triggered, the Treasury Division can start utilizing what it calls “extraordinary measures” to make sure that America doesn’t default on its money owed.
Some estimate these accounting maneuvers might push the default deadline to the summer time of 2025 — however that’s precisely what Trump desires to keep away from, since a rise would then be wanted whereas he’s president.
Lawmakers have at all times raised the debt ceiling in time as a result of the implications of failure are stark. With out motion, the federal government would go into default on its money owed, a first-ever state of affairs that Treasury Secretary Janet Yellen and financial consultants have mentioned might be “catastrophic” for the economic system and international markets.
Elevating or suspending the debt restrict doesn’t authorize new spending or tax cuts; it merely acknowledges previous budgetary selections — that’s, present finances legislation — and so permits the federal authorities to fulfill its current authorized obligations. For that motive and others, some have advocated putting off the restrict altogether.
What might the debt ceiling struggle imply for Speaker Mike Johnson?
Coping with the debt ceiling might have ramifications for Johnson, as he angles to maintain his job within the new Congress that begins on Jan. 3.
Trump mentioned early Thursday that Johnson will “simply stay speaker” for the following Congress if he “acts decisively and hard” in arising with a brand new plan to additionally improve the debt restrict, a shocking request simply earlier than the Christmas holidays that has put the beleaguered speaker in a bind.
The final Home speaker, Kevin McCarthy, labored for months with President Joe Biden to boost the debt restrict. Though they struck a bipartisan deal that minimize spending in change for added borrowing capability, Home Republicans mentioned it didn’t go far sufficient, and it ended up costing McCarthy his job.
Now, Trump is on the lookout for Johnson to cross a debt ceiling extension simply hours earlier than a partial authorities shutdown.
What are Democrats saying in regards to the debt ceiling debate?
After assembly along with his caucus, Democratic Chief Hakeem Jeffries rejected any risk that his members would bail out Republicans because the shutdown menace looms.
“GOP extremists need Home Democrats to boost the debt ceiling in order that Home Republicans can decrease the quantity of your Social Safety examine,” Jeffries posted Thursday on social media. “Onerous cross.”
Jeffries and different Democrats say Republicans ought to honor the spending settlement that was negotiated earlier than Trump obtained concerned. He referred to as the brand new GOP plan “laughable.”
Kinnard reported from Charleston, South Carolina, and might be reached at http://x.com/MegKinnardAP
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