The US Congress has until midnight on Friday to pass a bill that raises the country’s borrowing limit, also known as the debt ceiling, without which large sectors of the government could stop working.
The bill that would have extended the deadline to March 14, authored by both Democrats and Republicans, was scrapped after President-elect Donald Trump announced his opposition on Wednesday, following an attempt by an ally of the billionaire. Elon Musk To raise the opposition.
A Republican spending bill passed by Trump that would have tied an extension of government funding to a two-year suspension of the federal debt limit failed in the US House of Representatives on Thursday evening, leaving the impasse unresolved.
What is the debt ceiling, why is it so controversial, and what can this latest episode tell us about Musk and his growing influence in American politics?
What is the debt ceiling?
the Debt ceiling It is a ceiling imposed by the US Congress on the amount of money that the government can borrow to cover the gap between its revenues and spending.
How often is the debt ceiling raised?
The United States has raised the debt ceiling 103 times since 1939, and this has been largely a procedural act in American policy for most of that time.
Failure to raise the debt ceiling means the US Treasury could have trouble making payments on the country’s debt, which could rattle global financial markets and damage the country’s vaunted credit rating.
When did the debt ceiling become so controversial?
In 1995 and 1996, the Republican-controlled Congress, led by the most adversarial Speaker of the House, Newt Gingrich, used the prospect of letting the debt ceiling expire to press for additional spending cuts by then-President Bill Clinton.
Although debt ceiling negotiations are often presented as a principled stand for fiscal rectitude, they have become a political opportunity for parties – often minority – to use their influence to extract concessions from the rival party or president. They can also become occasions when rival factions within the party fight over priorities.
One such confrontation occurred between December 2018 and January 2019, during Trump’s first term in office, when the Republican opposed the COVID-19 relief bill by insisting on provisions for more aggressive anti-immigration measures.
The shutdown became the longest in US history and was widely seen as politically devastating for Trump and Republicans.
What role does Trump play in the current talks?
The president-elect wields significant influence over the conservative Republican Party, and his announcement of his opposition to the debt ceiling bill approved by both parties on Wednesday was enough to effectively ensure his death.
What does Trump want to see instead?
After scuttling the bipartisan spending bill, Trump threw his support behind a hastily assembled spending package that included a two-year debt ceiling suspension at his request.
Suspending the debt ceiling would make it easier for Trump to pass promised tax cuts that would add trillions of dollars to the ballooning national debt.
In an interview with NBC News earlier Thursday, Trump said getting rid of the debt ceiling entirely would be the “smartest thing” Congress could do.
“I would absolutely support that,” he said.
The House of Representatives rejected Trump’s spending package by a vote of 235 to 174, with nearly 40 hard-right Republicans joining Democrats to oppose the bill.
What will Republican lawmakers do now?
Both Trump and Musk warned Republican lawmakers of consequences if they supported the bipartisan bill. Some lawmakers were surprised, saying Trump had complicated their efforts by intervening at the last minute to upend the negotiations.
“President Trump’s last-minute request to eliminate the debt ceiling brings up a whole other issue in the debate,” said Senator Susan Collins, the top Republican on the Senate Appropriations Committee.
Trump’s intervention also included the head of the Republican majority in the House of Representatives Mike Johnson is in a bind, as he races to reach a deal and avoid a government shutdown without falling out with the incoming Republican president just weeks before he faces his own battle to retain his current leadership position.
“Anyone who supports a bill that doesn’t take care of the Democratic quicksand known as the debt ceiling should be brought to the forefront and eliminated as quickly as possible,” Trump told Fox News Digital.
What role did Elon Musk play?
Billionaire tech mogul Elon Musk, who has emerged as a key Trump ally and power broker within the Republican Party, took to social media to rally opposition against the bipartisan bill, which he portrayed as rife with excessive spending.
“My phone was ringing off the hook,” Republican Rep. Andy Barr said Wednesday. “The people who elected us listen to Elon Musk.”
What does this say about Musk’s emerging role in the Trump administration?
Musk has positioned himself as a campaigner against government spending and regulation. he Bracing for the head The so-called Department of Government Efficiency (DOGE) in the incoming Trump administration, which will seek to cut about $2 trillion in federal spending from the annual budget.
If Musk portrays himself as a fighter against government largesse, many Democrats see something else: the world’s richest man. He exercises his authoritywithout elected office, to reshape government in favor of private industry.
What are Democratic lawmakers saying?
Democrats used the sudden collapse of the bipartisan bill to portray the GOP as willing to put its loyalty to Donald Trump and wealthy figures like Elon Musk above their responsibilities as lawmakers.
“This reckless, Republican-led shutdown can be avoided,” House Democratic Leader Hakeem Jeffries said, adding that Republicans must “simply do what is right for the American people and stick to the bipartisan agreement they themselves negotiated.”
Others noted that conservatives pushing for cuts to such programs also plan to extend a series of tax cuts from Trump’s first term, which have largely benefited the wealthy.
Doing so would cost the government about $4 trillion in lost revenue over the next 10 years, on top of the government’s current debt of about $36 trillion.
Democrats may respond favorably to Trump’s proposal to eliminate the debt ceiling, which Republicans have long used as an occasion to push for sharp cuts to social programs.
“I agree with President-elect Trump that Congress should end the debt ceiling and never again rule hostage-taking,” Senator Elizabeth Warren said Thursday.
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