New Congress Faces Debt Ceiling Fight, Another Shutdown Deadline in March
The new Congress faces a big to-do list and is getting down to work.
On January 3, 2025, members of the House elected Mike Johnson (R-LA) as speaker again on the second vote, after Speaker Johnson won the support of two holdout Republican members.
Congress also certified the election of President-elect Trump’s victory in the 2024 election. Plus, the Senate is set hold confirmation hearings for the president-elect’s nominees.
In the background is yet another looming battle over funding the government, after a partial shutdown was avoided right before Christmas.
The Senate voted 85 to 11 to approve the continuing resolution that funds the federal government through March 14. This after the House passed the bill by a margin of 366-34. The bill was slimmed down after President-elect Trump and billionaire Elon Musk criticized the spending in the legislation. That prompted House Republicans to pare down the bill, eliminating provisions such as a pay raise for congress and a pharmacy benefit overhaul.
In another Republican win, another $20 billion due to the Internal Revenue Service (IRS) from the Inflation Reduction Act (IRA) was clawed back as legislators failed to change language from a prior bill that called for a $20 billion cut.
However, the final legislation included more than $100 billion in aid for natural disaster victims and for farmers.
That means the next chance for a shutdown will be mid-March, and it will be up to the Trump White House and Republicans in Congress to reach an agreement.
Debt Ceiling Reemerges
Also looming is a fight over raising the debt ceiling, which came back into existence on January 1, 2025, after a provision in the 2023 debt ceiling deal suspending the limit, expired.
Treasury Secretary Janet Yellen noted the U.S. could hit the statutory debt ceiling of $31.4 trillion sometime between January 14 and January 23.
Still the Treasury Department can use accounting tricks known as “extraordinary measures” to keep the bills getting paid until possibly the summer.
“The federal government will begin 2025 with significantly more cash on hand compared to the start of the most recent debt limit debate in 2023,” said Shai Akabas, executive director of the Bipartisan Policy Center’s economic policy program. “This cushion, followed by the buoy of extraordinary measures and April tax receipts, means that the debt limit will not be the first deadline Congress faces in the new year. Each bill they work on in the coming months offers an opportunity for a timely debt limit resolution.”
Some Republicans say they will not support President-elect Trump’s plans to get rid of the debt ceiling altogether.
“We absolutely need a debt ceiling limit. I'll negotiate in terms of how far we increase that. There are all kinds of things we could do, but it starts with, again, going back to a baseline spending this reasonable amount as part of the negotiation on increasing debt limit,” said Senator Ron Johnson (R-WI).
The federal debt currently stands at roughly $36 trillion — which ballooned across both Republican and Democratic administrations.