5 things to know about Trump's call to scrap debt ceiling

President-elect Trump has thrown a wrench into government funding negotiations with his call to eliminate the debt ceiling just days before a potential shutdown. 

Republican lawmakers are already deeply divided over the path ahead for a spending bill after Elon Musk spurred a GOP revolt against a bipartisan spending bill. 

Trump’s call to permanently eliminate the federal debt limit is adding another surprising obstacle in the path to avoid a shutdown. 

Voting to raise the debt ceiling is a nonstarter among many House GOP hard-liners, and Democrats are refusing to lend Republicans a hand despite deep skepticism of the debt limit in their own party. 

Here’s what to know as shutdown politics and the debt ceiling collide:

What is the debt limit, and how do you raise it?

The debt limit, also called the debt ceiling, is the legal cap on how much debt the federal government is allowed to incur at any point. 

It has no direct bearing on how much money the federal government spends or takes in through taxes, which is entirely up to Congress and the president. 

Instead, the debt ceiling limits how much debt the Treasury Department can incur by issuing bonds, which are widely bought and sold in financial markets. 

The president and Congress can lift the debt ceiling by raising it to a certain monetary level, or suspending it for a period of time. Both options allow the Treasury to take on as much debt as necessary to pay for expenses already approved by law until the debt ceiling is reached, or the limit is reimposed. 

The debt limit has existed for more than a century, but has only been used as a leverage point in funding battles over the past two decades.

What happens when the debt limit is reached?

The federal government has reached the debt limit several times over the past decade but avoided serious financial blowback through “extraordinary measures.”

Such measures involve shifting federal funds from certain accounts to pay immediate expenses and other ways to make sure the Treasury has enough cash on hand to pay debts as they come due.

The Treasury Department can typically stave off a debt default by months at a time through extraordinary measures, though how long it can do so shifts and varies along with the economy and federal revenue.

But failing to raise the debt limit after running out of cash could force the U.S. to default on debt payments, which could trigger a financial crisis. 

Why Trump wants to raise it

The debt ceiling was suspended in 2023 through Jan. 1, 2025, and extraordinary measures are expected to buy Congress and Trump a few more months until a potential default.

Trump said Tuesday that he wanted Republicans to force the issue and raise the debt ceiling while President Biden would be forced to take the heat for signing it into law.

Doing so would clear the deck for potentially trillions of dollars in tax cuts that Republicans have been eager to cement.

Trump, who signed three debt ceiling extensions into law during his first term without cutting debt, also said the limit never actually leads to enduring spending reductions.

The debt limit “doesn’t mean anything, except psychologically," Trump told NBC News.

Many Republicans oppose increase without spending cuts

Despite Trump's opposition to the debt limit, many within his party have refused to raise it without drastic cuts to federal spending. With the national debt sitting at roughly $36 trillion, conservative hard-liners insist it is long past time to make major fiscal changes.

"My position is simple — I am not going to raise or suspend the debt ceiling (racking up more debt) without significant & real spending cuts attached to it. I’ve been negotiating to that end. No apologies," wrote Rep. Chip Roy (R-Texas) on the social platform X after Trump ripped the fiscal hawk online and called for him to face a primary challenge.

Republicans have sought major concessions from Democrats in exchange for raising the debt ceiling under former President Obama and President Biden. Such standoffs have brought the U.S. within days of defaulting and damaged the country's credit rating, but have not made a major impact on the size or trajectory of the federal debt.

The latest standoff in 2023 led to a $20 billion reduction in funding for the IRS, cutting a fourth of the $80 billion Democrats had allocated for revamping the tax collection agency.

Why some Democrats want to eliminate the debt ceiling

Some Democratic lawmakers are eager to get rid of the debt ceiling after years of high-stakes showdowns with Republicans and no actual progress toward reducing the national debt.

Critics of the debt ceiling argue that it is not an effective tool for preventing excessive government spending, was never meant to be one and does more harm than good given the catastrophic consequences of a default.

“I agree with President-elect Trump that Congress should terminate the debt limit and never again govern by hostage taking,” Sen. Elizabeth Warren (D-Mass.) said in a post on X.

Trump also cited Democratic support for getting rid of the debt ceiling during a Wednesday call to eliminate the measure.

“The Democrats have said they want to get rid of it. If they want to get rid of it, I would lead the charge,” Trump told NBC News.

House Republican leadership is set to hold a vote Thursday night on a spending agreement that would suspend the debt ceiling for another two years, but it remains unclear if Democrats would support that measure.

House Minority Leader Hakeem Jeffries (D-N.Y.) said Wednesday that his caucus would not be willing to raise the debt limit on Trump's request.

“GOP extremists want House Democrats to raise the debt ceiling so that House Republicans can lower the amount of your Social Security check,” Jeffries posted to Bluesky. “Hard pass.”

Rep. Brendan Boyle (D-Pa.), who introduced a bill that would disarm future debt ceiling showdowns, also criticized Trump's call for an increase.

"We need to reform the debt ceiling — that’s why I introduced the Debt Ceiling Reform Act. But the immediate issue is the looming GOP-driven shutdown. Republicans must honor their deal and stop creating crises that hurt hardworking Americans," he wrote on X.