Trump would abolish the debt ceiling. Here’s what’s going on
Analysis by Zachary B. Wolf, CNN
(CNN) — President-elect Donald Trump confounded members of Congress and flipped the government spending debate on its head when he demanded a premature increase to the debt ceiling on “Biden’s watch” rather than his own.
He doubled down on his call in a Truth Social post overnight Friday, calling for the “ridiculous” ceiling to be extended into 2029.
Trump, in an interview with NBC News, has also endorsed abolishing the limit on federal debt – currently more than $36 trillion – altogether.
These are positions long championed by liberals and anathema to old-school conservatives, though few are to be found in today’s Trump-controlled Republican Party. And there are compelling political reasons why Democrats might not want to go along with Trump’s plan to ditch the ceiling: it provides them leverage in future negotiations with Republicans.
Why is there a debt ceiling?
In 1917, when it was financing World War I with Liberty Bonds, Congress instituted a limit on US borrowing and the debt ceiling evolved from there as US debt has grown and grown and grown.
Lawmakers must pass spending bills each year, and, along with mandatory spending on Medicare and Social Security, they almost always spend more than what the US takes in with tax receipts. This is what’s known as a deficit.
Those deficits, funding wars, highways and so much more, have added up over the past few hundred years to the point where the federal government has sold debt and interest worth more than $36 trillion to itself, other domestic institutions and foreign governments. Defaulting on that debt would leave the government’s creditors, including the Social Security trust fund and maybe your 401k provider, in the lurch and jeopardize the US economy. No wonder Trump doesn’t want to have to deal with it.
Trump’s latest
The Truth Social post was sent at 1:16 a.m. ET Friday.
“Congress must get rid of, or extend out to, perhaps, 2029, the ridiculous Debt Ceiling. Without this, we should never make a deal. Remember, the pressure is on whoever is President,” Trump posted.
The ‘smartest’ thing Congress could do
Getting rid of the debt ceiling would be the “smartest thing it [Congress] could do. I would support that entirely,” Trump said, according to NBC.
Republicans have used the debt as leverage
That’s a shocking and unexpected position for a Republican president-elect to take, because over the course of recent history, it’s usually Republicans who have groused about votes to authorize more and more debt and engineered high-stakes battles with Democratic presidents over raising the debt limit.
Trump’s tax cuts would explode deficits
Now that these same Republican lawmakers are anticipating Trump’s deficit-exploding plan to extend and expand tax cuts, they seem somewhat conveniently willing to set the debt ceiling aside by “suspending” it until after the next election.
Republicans will want to use the debt ceiling in the future
A two-year suspension wouldn’t get applause from Democrats, who hope to be back in the majority in the House after the 2026 election. It’s also telling that Republican lawmakers aren’t endorsing Trump’s agreement that the debt ceiling should be abolished. You can bet they will use the threat of default in the future when there’s a Democratic president.
Why not get rid of it altogether?
Lawmakers of both parties use the debt ceiling to their advantage, but there are plenty of people who think the debt ceiling is a ticking time bomb that should be permanently defused.
Bankers think it’s ‘all politics’
“Every single time this comes up, it gets fixed, but we should never even get this close,” JPMorgan CEO Jamie Dimon told Reuters back in 2021 during a previous fiscal fight. “I just think this whole thing is mistaken and one day we should just have a bipartisan bill and get rid of the debt ceiling. It’s all politics.”
Left-leaning economists think it’s stupid
“In a political system beset by many stupid and destructive institutions, the statutory limit on federal debt might be the worst,” wrote Josh Bivens, chief economist at the Economic Policy Institute, also in 2021.
“When the limit is reached, it forces Congress to reaffirm its willingness to spend what it is already legally obligated to spend,” the progressive economist Stephanie Kelton, a professor at Sony Brook University, wrote in 2023. (Emphasis hers.) She supports the idea that deficits and debt should not alarm Americans.
“My view on the debt ceiling is in no way dependent on which party is in power,” Kelton told me in an email Thursday, arguing that Democratic lawmakers who disagreed when she said Trump is right about the debt ceiling might like the idea of keeping the debt ceiling as their own piece of leverage in the coming debate over tax cuts.
Lawyers have said it can be ignored
This is a minority view, but the Cornell law professor Robert Hockett explained his theory to me in 2023 that a 1974 law actually nullified the need for the debt limit. He thought Biden should have challenged the debt ceiling in court. Biden didn’t.
Progressives have dreamed about ending it
Just this month, a group of 17 Democrats led by Sen. Brian Schatz of Hawaii re-introduced a bill to permanently repeal the debt ceiling.
If you’ve heard about the idea of the Treasury Department issuing trillion-dollar coins, that’s to deal with debt. Others have argued a president could exert authority under the 14th Amendment, which says the “validity of the public debt, authorized by law… shall not be questioned.”
The point here is that if Trump were serious about actually getting rid of the debt ceiling, he’d end up fighting more Republicans than Democrats.
Republicans like the leverage
The biggest standoffs over the debt ceiling have occurred when Democratic presidents faced Republican majorities in Congress. In ‘90s, it was President Bill Clinton vs. House Speaker Newt Gingrich. In ‘10s, it was President Barack Obama vs. House Speaker John Boehner. In 2023, it was President Joe Biden vs. House Speaker Kevin McCarthy. That’s still currently the situation in Washington, DC, but the Biden administration has not featured publicly in this brewing debate.
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