President-elect Donald Trump said Sunday that the debt ceiling extension will “go down as one of the dumbest political decisions made in years,” referring to a budget deal struck by President Joe Biden and then-GOP House Speaker Kevin McCarthy of California.
Under the deal, Congress suspended the debt ceiling until January 1, 2025. The U.S. Treasury can pay its bills for several more months. However, Congress will have to address the issue sometime next year.
“The extension of the Debt Ceiling by a previous Speaker of the House, a good man and a friend of mine,” wrote Trump on Truth Social, “will go down as one of the dumbest political decisions made in years.”
“There was no reason to do it — NOTHING WAS GAINED, and we got nothing for it — A major reason why that Speakership was lost. It was Biden’s problem, not ours. Now, it has become ours. I call it ‘1929’ because the Democrats don’t care what our Country may be forced into. They would prefer ‘Depression’ as long as it hurt the Republican Party,” Trump continued.
“The Democrats must be forced to take a vote on this treacherous issue NOW, during the Biden Administration, and not in June. They should be blamed for this potential disaster, not the Republicans!”
Beginning January 3, the GOP narrowly controls both congressional chambers, and at least some of the party’s legislators would have to support eliminating or increasing the debt limit for it to become law.
Without the debt limit increase in 2023, the United States would have seen a historic default on its debt payments that would have wreaked havoc on international financial markets.
Debt default would have likely brought a credit rating downgrade
A debt default would also likely have brought a downgrade in the U.S. credit rating, increasing borrowing costs for individuals and businesses.
At the time, numerous Republicans in the House had pushed for deeper cuts in federal spending than what had been negotiated as a condition for raising the debt limit.
Around a week ago, with U.S. government discretionary funding set to expire on December 20, President-elect Trump, encouraged by billionaire Elon Musk, demanded the debt limit be either extended or eliminated, possibly to 2029, when his presidency would end.
The idea was tacked onto an extension of government funding into March. However, it was rapidly voted down by a coalition of Democrats in the House and conservative Republicans, many of whom represent districts in Trump-leaning states.
A government-funded bill without a debt-limit provision was then enacted into law.
Next month, the GOP in the newly-elected Congress is expected to insist on deep federal spending cuts as a condition for increasing the country’s borrowing limit.
Earlier this month, Democrats argued that Trump’s call for an immediate increase or elimination of the debt limit was sparked by his desire to make room for a new round of tax cuts that would likely lower revenues and, therefore, add more to the debt.
The national debt currently stands at around $36.1 trillion because of federal tax cuts and spending levels enacted into law over several decades.
