Are the debt limit's days numbered? Trump and Warren hope so.

Boston Globe

6 hours ago

Advertisement
Their reasons for targeting a mechanism that has become outdated in the hyper-partisan political environment are different, of course.
Get Starting Point
A guide through the most important stories of the morning, delivered Monday through Friday.
Enter Email
Sign Up
For Trump, opposition by some congressional Republicans to raising the $36.1 trillion debt limit is an obstacle to passing his massive tax and budget cut legislation. For Warren, even though axing the debt limit would help Republicans in the short-term, it would benefit Democrats the next time they hold the presidency.
'The time to do it is now when it's not a huge negotiating issue,' Warren told the Globe, noting there was unlikely to be
any Republican
brinkmanship over raising the limit
Advertisement
But despite the backing of Trump and Warren, partisan politics still promise to make it difficult to get rid of the debt limit. A White House spokesperson said there was no additional comment beyond Trump's June 4 post.
'It's the only leverage we've got,' said Senator Ron Johnson, a Wisconsin Republican who wants to significantly reduce federal spending. Another GOP deficit hawk, Kentucky Senator Rand Paul, has said he won't vote for the Senate version of the tax bill in part
because it includes a $5 trillion debt limit increase.
'That's a terrible idea,' he responded when asked about scrapping the debt limit. 'Will it be called the Trump/Elizabeth Warren bill?'
On the other side of the aisle, some Democrats are loathe to help Trump out of a jam on legislation they strongly oppose and believe will hurt average Americans.
'I think we should ultimately get rid of it,' said
The debt limit dates back to 1917. For decades, it was raised routinely and without controversy every year or two as an extension of the budget process to allow the federal government to continue borrowing. That changed in 2011, when Tea Party Republicans withheld their support until the last minute during the Obama administration.
Advertisement
The showdown led Standard & Poor's to downgrade the nation's AAA credit rating for the first time. There were standoffs again in 2013 and 2023, which occurred
with Republican control of at least one chamber of Congress and a Democratic president in the White House.
After the 2023 fight, another leading credit rating firm,
The United States is a global outlier in having a debt limit. Denmark is the only other advanced economy with one and it is set so high that it rarely needs to be raised. Critics say the US debt limit is unnecessary because it authorizes borrowing for spending Congress has already approved and hasn't prevented US debt from skyrocketing over the past decade.
'We've had it for a little over 100 years or so and it's produced no fiscal prudence, so I think we should give up on that theory,' said Douglas Holtz-Eakin, the former director of the Congressional Budget Office and president of the conservative-leaning American Action Forum think tank.
But Rachel Snyderman, managing director of economic policy at the Bipartisan Policy Center, said there's still a value to the debt limit and it should be reformed rather than scrapped. She pointed to a bipartisan House bill,
Advertisement
'It's clear that our current debt limit process does not work,' she said, noting the fast-rising debt. 'However, I do think that we have to ask the question whether eliminating the debt limit and having really no check on that number would be the most responsible action for the world's largest economy and holder of the most stable investment asset.'
Snyderman noted that the third leading credit rating firm,
But Richard Francis, Fitch Ratings' lead analyst for the United States, said the elimination of the debt limit would be 'somewhat positive' because it would take the risk of a default off the table.
That's the point that Warren has been trying to make.
'If we ever default, we can never undo the damage,' she said. 'We can never go back to being a country that always honors its promises.'
Warren wouldn't say what kind of discussions she's had with her colleagues about eliminating the debt limit. But she thinks Republicans might support it since most of them will be voting for a huge debt limit increase in the in the tax bill.
Senator Jim Justice, a West Virginia Republican, said he'd be amenable to scrapping the debt limit.
'You wouldn't have that loom over your head,' he said. 'I mean, for God sakes, don't we have enough things to contend with?'
But Senator John Curtis, a Utah Republican, demonstrated the complexity of the issue with the debt continuing to climb.
Advertisement
'The debt limit has not had any impact on reducing the deficit, so from that perspective, I don't see a lot of value to it,' he said. 'But I'm also hesitant to let it go because it's all we've got.'
Jim Puzzanghera can be reached at