By MEG KINNARD, Associated Press
A debate over the debt ceiling is at the middle of a dispute over funding that’s bringing Washington to the brink of a federal government shutdown.
President-elect Donald Trump has called for a provision to lift or suspend the nation's debt ceiling – something his own party routinely opposes – to be included in laws to avert a government shutdown. “Anything less is a betrayal of our country,” Trump said in a press release on Wednesday.
Republicans quickly complied, including a provision in a revised government funding proposal that might suspend the debt ceiling for 2 years, until Jan. 30, 2027. However, the bill overwhelmingly failed in a vote within the House of Representatives on Thursday evening, leaving the following steps uncertain.
Here's what it is advisable to know concerning the debt ceiling debate and its role within the shutdown saga:
How high is the debt limit?
The debt ceiling or debt ceiling is the full amount that the United States government can borrow to fulfill its existing legal obligations. In order for the Treasury Department to borrow beyond this amount, the cap should be raised by Congress.
The Federal debt is about $36 trillion, and the rise in inflation following the coronavirus pandemic has pushed up the federal government's borrowing costs, so debt service will exceed national security spending next yr.
The last time lawmakers raised the debt limit was in June 2023. Instead of raising the limit by a dollar amount, lawmakers suspended the debt limit until January 1, 2025. From this point onwards, the limit will mechanically increase to match the quantity of debt issued by the Ministry of Finance.
The debt limit vote has recently been used as political leverage, a must-pass bill that might be loaded with other priorities.
What is the debt ceiling dispute about?
Trump linked the demand for an answer to the debt ceiling with the dispute over government financing, saying one mustn’t be solved without the opposite.
In rejecting the spending proposal on Wednesday, Trump said he desired to have the debt ceiling debate resolved before he takes office next month.
Warning about Trouble ahead For Johnson and Republicans in Congress, Trump told Fox News Digital: “Anyone who supports a bill that doesn't address the Democratic quicksand called the debt ceiling should be brought forward and eliminated as quickly as possible.”
What happens if the debt ceiling just isn’t raised?
Actually, there may be currently no need to lift the debt limit. On January 1, when the debt limit is reached, the Treasury Department can begin taking what it calls “extraordinary measures” to make sure America doesn’t default on its debts.
Some assume that these accounting maneuvers could end in the usual deadline being pushed back to the summer of 2025 – but that is precisely what Trump desires to avoid, as it could then require a rise during his term as president.
The legislature has at all times raised the debt ceiling in a timely manner because the results of failure are serious. Without motion, the federal government would default on its debt, an initial situation that Treasury Secretary Janet Yellen and economists say could possibly be “catastrophic” for the economy and global markets.
Raising or suspending the debt limit doesn’t authorize latest spending or tax cuts; it simply recognizes past budget decisions – i.e. current budget law – and thus enables the federal government to fulfill its existing legal obligations. For this and other reasons, some have advocated abolishing the limit altogether.
What could the debt ceiling fight mean for Speaker Mike Johnson?
Dealing with the debt ceiling could have consequences for Johnson as he seeks to retain his post in the brand new Congress, which begins Jan. 3.
Trump said early Thursday that Johnson would “easily remain speaker” of the following Congress if he “acts decisively and toughly” and presents a brand new plan to do the identical increase the debt limita shocking request just before the Christmas holidays that made this harassed speaker in a fix.
The last Speaker of the House, Kevin McCarthy, worked for months with President Joe Biden to lift the debt limit. Although They made a bipartisan deal House Republicans said cutting spending in exchange for extra borrowing capability didn't go far enough and ended up failing cost McCarthy his job.
Now Trump expects Johnson to pass a debt ceiling extension just hours before a partial government shutdown.
What do Democrats say concerning the debt ceiling debate?
After meeting along with his caucus, Democratic leader Hakeem Jeffries dismissed any possibility that his members would bail out Republicans within the face of the looming shutdown.
“GOP extremists want House Democrats to raise the debt ceiling so House Republicans can lower the size of your Social Security check,” Jeffries posted on social media Thursday. “Hard pass.”
Jeffries and other Democrats say Republicans should honor the spending deal negotiated before Trump's interference. He called the brand new GOP plan “ridiculous.”
Originally published:
image credit : www.mercurynews.com