The U.S. is once again pushing up against the debt limit. That means Congress is on the clock to raise the debt ceiling or risk defaulting.
The Treasury Department is taking “extraordinary measures” to keep from borrowing more than Congress has allowed to date. The national debt clock is now above $36.2 trillion.
“They’re saying, ‘Oh, we have too much debt.’ Well, guess what? You helped create it without funding it,” said Kathleen Day, a lecturer at Johns Hopkins Carey Business School. “And that’s actuarially, financially, fiscally irresponsible. Do your job.”
Sometime in the next few months, the treasury says it will run out of tricks. Congress will either raise the debt ceiling to pay the bills or face catastrophic default. But is there a third option?
Repeal the debt ceiling
Since winning the election, President Donald Trump proposed getting rid of the debt ceiling. During a phone interview with NBC News in December 2024, he said it would be “the smartest thing [Congress] could do. I would support that entirely.”
“It doesn’t mean anything, except psychologically,” Trump added.
“I agree with President-elect Trump that the debt limit should be repealed,” Sen. Elizabeth Warren, D-Mass., said during Treasury Secretary nominee Scott Bessent’s confirmation hearing.
“If he wants to eliminate the debt limit, I will work with him and you on that,” Bessent told Warren.
“I still don’t think it makes it more likely to happen, and I think it might be a bad thing if it does because what it’s saying is, we want to tell the voters we want to cut the debt, but let’s hide the fact that we haven’t done it,” Day told Straight Arrow News.
Trump wants to but do Republicans?
While the leader of the GOP is floating a repeal of the debt ceiling, some conservatives in Congress are not on board.
“No, we absolutely need a debt ceiling limit,” Sen. Ron Johnson, R-Wisc., said on Fox Business. “We absolutely need that debt limit, or there’s no control over out-of-control government spending.”
“They look at it as another lever that they can use to try to call attention to the debt,” Day said.
What happens if the debt ceiling isn’t raised, suspended or repealed?
Congress has never allowed the U.S. government to default on its debt. While resolutions sometimes get pushed to the limit, the holders of the purse strings always come to some kind of consensus before it’s too late.
Since 1960, Congress has acted 78 times to raise, extend or revise the debt limit, according to Treasury Department data. It has been done 49 times under Republican presidents and 29 times under Democratic presidents.
“No one believes the United States is going to default on its debt, although it’s not as remote an idea as it used to be, because we’re so politically crazy right now,” Day said.
Global credit rating agencies have blamed this brinkmanship for harming the United States’ ratings and global standing. In 2023, both Fitch Ratings and Moody’s downgraded the nation’s credit rating after a debt-ceiling deal came down to the wire.
“The repeated debt-limit political standoffs and last-minute resolutions have eroded confidence in fiscal management,” Fitch Ratings said when announcing the downgrade.
“Everyone believes the United States will eventually pay his debt, but there’s no longer this assurance that it will be paid on time,” Day said. “Time is money. If you delay paying a debt you owe, you are deemed a riskier borrower, and so it costs more to borrow money.”
In turn, higher borrowing costs increase the nation’s debt, working against efforts to lower it.
“Congress has to get its ‘you know what’ together – both sides – and figure it out. Because if they don’t, there’s going to be ‘you know what’ to pay at some point. The ‘you know what’s’ going to hit the fan,” Day said. “Get rid of the debt ceiling. You haven’t fixed the problem. There’s an underlying problem.”
Watch the full interview in the video above.