Speaker Mike Johnson aims to tie a 2025 debt-limit bill to trillions of dollars in spending cuts, but Democrats say they’ll use the upcoming debt deadline as leverage to slow down the Republican tax agenda.
House Republican leaders told lawmakers they plan to raise the debt limit by $1.5 trillion and cut $2.5 trillion in spending in a filibuster-proof bill passed through the budget reconciliation process in 2025, Rep. Tom Tiffany (R-Wis.) said.
GOP leaders outlined the latest proposal after the House on Thursday rejected a debt-limit suspension attached to a continuing resolution, a combination pushed by President-elect Donald Trump to take care of the debt limit before he’s sworn in to his second term. Almost all Democrats, along with several dozen Republicans, opposed Thursday’s stopgap bill in part because it included a suspension of the debt limit.
The chamber Friday passed a three-month stopgap funding bill without it that the Senate cleared and President Joe Biden signed early Saturday.
The newest debt plan is risky. It would require a nearly unanimous vote by Republicans to increase the debt limit — a bitter pill for hard-line conservatives to swallow. But tying a debt-limit increase to $2.5 trillion in spending cuts over a decade could be both palatable to conservatives and realistic to accomplish, Tiffany said Friday, confirming details first published by Punchbowl News.
“I mean, Christ, it’s over 10 years. It’s $250 billion a year. So it isn’t that much money in Washington-speak,” Tiffany, a member of the hard-right House Freedom Caucus, said.
Finding $2.5 trillion to cut couldn’t affect Social Security, which is barred from being included in the reconciliation process. But GOP leadership did not outline what they’d target — the deal could hit Medicaid, another major portion of mandatory spending, but Medicare cuts are off the table, according to Rep. Tim Burchett (R-Tenn.).
The GOP plan comes after Democrats made it clear they wouldn’t bail Trump out by giving him an easy vote to raise or suspend the debt limit. Now they’ll aim to use the debt-limit negotiations to constrain the amount of money Republicans can add to the deficit with a partisan tax-cutting measure to extend portions of the 2017 GOP tax law.
‘Blank Check’
“If we get rid of the debt ceiling now, while Democrats are in charge, it gives Donald Trump a blank check to greatly cut taxes on corporations, on wealthy billionaires,” Rep. Don Beyer (D-Va.) said.
Republicans can pass a tax bill without Democratic support through the budget reconciliation process, “but if they run right into the debt limit, it really constrains them,” Beyer said. “It’s one of the few negotiating tools that we have.”
A 2023 suspension of the debt limit expires Jan. 1, 2025, though Treasury Department officials can extend the effective deadline, likely until mid-2025. If lawmakers don’t act before Treasury runs out of options, the federal government will default on payments, which lawmakers have warned would shake the markets and severely damage the US economy.
Democrats have constantly decried Republicans for using the debt ceiling and the threat of a default as a leveraging tool. But they changed their tune after Trump’s insistence on a debt-limit measure during the tail end of the Biden administration.
“They made it a bargaining tactic. And so, you know, I think it shouldn’t be used as a bargaining tactic, but they made it so. So we’re not walking away from that,” Rep. Pramila Jayapal (D-Wash.) said.
Tiffany was one of the 38 Republicans who voted against the GOP stopgap tied to the debt-limit suspension last Thursday. Tiffany and other Republicans met with Johnson (La.) in the speaker’s office Friday morning. In that meeting, they pressed leadership for assurances on spending cuts to be tied to any debt-limit measure.
“We have to have assurances that there’s going to be a fiscal responsibility element,” he said.
Rep. Eric Burlison (R-Mo.), shared similar sentiments, that he was open to raising the debt ceiling despite his previous vows he would never touch a debt-limit measure. If Republicans could follow through on their ambitious reconciliation agenda, he could support it.
“You got people like me who have never raised the debt ceiling but if you’re fixing the border and you’re instituting a bunch of fiscal cuts then that’s a completely different conversation and I think it passes overwhelmingly by Republicans,” Burlison said.
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