What to Know About the Debt Ceiling as Trump Backs Eliminating It

Months before many officials in Washington — and investors in the bond market — anticipated, the federal debt ceiling has re-entered political discourse, after President-elect Donald Trump said Dec. 19 that he’d back getting rid of the cap entirely, more than a century after its creation. The limit has long been a tool of political leverage for the party in opposition, because of the dire consequences of any failure to either suspend or increase it.

It’s a cap on US government borrowing, first established by Congress in 1917. Because lawmakers keep enacting bills to spend more money than the government takes in, the Treasury must keep borrowing more, pushing up the debt. That requires addressing the debt ceiling or risking default. The last action taken was in June 2023, when lawmakers suspended the ceiling until the start of 2025.