The United States Congress has until midnight Friday to pass a bill that would raise the country’s borrowing limit, also known as the debt ceiling, without which large parts of the government could stop working.
A bill drafted by both Democrats and Republicans that would have extended the deadline to March 14 was scrapped after President-elect Donald Trump announced his opposition on Wednesday following an attempt by a billionaire ally Elon Musk cause contradiction.
Republicans have indicated that a new bill has been agreed upon and could be voted on Thursday evening. However, it is still unclear whether it will actually pass in both houses of Congress.
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 US politics?
How high is the debt limit?
The Debt ceiling is a cap set by the U.S. Congress on how much money the government can borrow to close the gap between its revenue and spending.
How often will the debt ceiling be raised?
The US has raised the debt ceiling 103 times since 1939, and for most of that time it has been largely a procedural act in US politics.
Failure to raise the debt ceiling could leave the U.S. Treasury struggling to make payments on the national debt, which could rattle global financial markets and dent the country’s vaunted creditworthiness.
When did the debt ceiling become so controversial?
In 1995 and 1996, a Republican-controlled Congress led by the more controversial House Speaker Newt Gingrich used the prospect of a debt ceiling expiration to pressure then-President Bill Clinton into further spending cuts.
Although debt ceiling negotiations are often hailed as a principled commitment to fiscal correctness, they have become a political opportunity for parties – often in the minority – to use their influence to force concessions from the rival party or the president. They can also become occasions when rival factions within a party fight over priorities.
One such standoff occurred between December 2018 and January 2019, during Trump’s first term, when the Republican thwarted a COVID-19 relief bill by insisting on provisions for more aggressive anti-immigration measures.
This shutdown was the longest in U.S. history and was widely seen as politically damaging for Trump and Republicans.
What role does Trump play in the current conversations?
The president-elect wields significant influence over the conservative Republican Party, and his announcement on Wednesday that he would oppose the bipartisan debt ceiling bill was enough to guarantee his death.
What does Trump want to see instead?
It is not entirely clear what Trump wants to replace the bill with. However, he has said he wants the politically sensitive issue of renegotiating the debt ceiling off the table for his second term. In a television broadcast on Thursday, he suggested that the debt ceiling could be scrapped entirely.
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 negotiations.
“President Trump’s last-minute request to eliminate the debt ceiling brings a whole different issue into the debate,” said Sen. Susan Collins, the top Republican on the Senate Appropriations Committee.
Trump’s intervention has also weakened the Republican majority speaker in the House of Representatives Mike Johnson in trouble as he rushes to reach a deal and avert a government shutdown without running afoul of the new Republican president, just weeks before he faces his own fight to retain his current leadership position.
“Anyone who supports a bill that doesn’t address the Democrats’ quicksand known as the debt ceiling should be brought forward 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, used social media to rally opposition to the bipartisan bill, which he portrayed as full of excessive spending.
“My phone kept ringing,” Republican Rep. Andy Barr said Wednesday. “The people who elected us listen to Elon Musk.”
What does this say about Musk’s new role in the Trump administration?
Musk has positioned himself as a crusader against government spending and regulation. He is ready to head the so-called Department of Government Efficiency (DOGE) in Trump’s incoming administration, which will seek to cut around $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 richest man in the world exercises his powerwithout elected office, to reshape government in favor of the private sector.
What are Democratic lawmakers saying?
Democrats have used the sudden collapse of the bipartisan bill to portray the Republican Party as willing to put its loyalty to Donald Trump and wealthy figures like Elon Musk above its responsibilities as lawmakers.
“This reckless, Republican-driven shutdown can be avoided,” said Democratic House Speaker Hakeem Jeffries, adding that Republicans should “simply do what is right for the American people and stick to the bipartisan agreement.” that they have negotiated themselves”.
Others have pointed out that conservatives pushing for cuts to such programs also plan to extend a series of tax cuts from Trump’s first term that mostly benefited the super-rich.
This would cost the government about $4 trillion in lost revenue over the next decade, adding to the government’s current debt of about $36 trillion.
Democrats could respond positively to Trump’s proposal to abolish the debt ceiling, which Republicans have long used as an opportunity to push for drastic cuts to social programs.
“I agree with President-elect Trump that Congress should repeal the debt limit and never again govern by hostage-taking,” Sen. Elizabeth Warren said Thursday.
