Among the measures Congress is debating to prevent a government shutdown is raising the debt ceiling — or eliminating it entirely.

It is probably the most unusual request from President-elect Donald Trump and other Republicans who want to avert a major government disruption just before the holidays.

That’s because in recent decades, Republicans have been the ones trying to use debt ceiling increases to force concessions from Democrats, arguing that government spending was spiraling out of control.

What is this unusual limit and why have Republicans’ views on it suddenly changed?

Debt limit and default

Like many other businesses, the U.S. government borrows money to pay its bills. The debt ceiling stipulates that, at a certain point, the U.S. Treasury can no longer borrow money to meet the government’s tax obligations.

However, since these spending needs will continue to rise, not raising the debt limit would push the US into technical default, meaning it would no longer be able to pay its bills.

The US pays much of its bills by borrowing. So without this mechanism, in the vast majority of cases, whoever the government owes money to doesn’t get paid.

That would send shockwaves through the U.S. economy and global financial markets. Current White House officials said a default would likely trigger a recession while impacting everything from Social Security benefits to child tax credits to pay for U.S. soldiers and contractors.

A gentle brake on national debt

The debt ceiling is a relatively new tool in the US economic toolkit. For the first 128 years of the country’s existence, Congress directly authorized individual borrowing efforts.

That changed in 1917, when Congress decided to impose a debt ceiling to replace separate borrowing votes and ease the massive financial obligations of World War I.

In 1939, the government officially decided to use the debt ceiling to manage its debt obligations on an aggregate basis.

Since then, the debt ceiling has served as a nominal brake on federal spending, allowing Congress to reflect at any time on the debt burden the United States must bear.

But overall, most of these considerations are not yet very advanced. Since 1960, the debt ceiling has been raised 78 times – 49 times under Republican presidents and 29 times under Democratic administrations.

Debt growth and stagnation concerns

Today, the U.S. has one of the highest debt ratios in the world, meaning it borrows more than it produces.

Debate remains among economists about whether this matters. Compared to other countries with high debt burdens, the interest rates the United States pays to borrow money are relatively low. And until recently, they had actually been declining over a period of decades.

That has changed since the pandemic, as financial markets have become increasingly wary of both continued U.S. spending and broader political gridlock — particularly debt ceiling fights — that have created something of a vicious cycle.

Treasury authorities would prefer that U.S. spending slow. Beyond that, the bigger hope is that government officials will no longer argue over whether to fund spending commitments that have already been put on the books as part of the regular budgeting process.

“One day we should just have a bipartisan bill and get rid of the debt ceiling,” JPMorgan CEO Jamie Dimon said in an interview in 2021. “It’s all politics.”

Bipartisan support

What if the debt ceiling were simply eliminated? This is something Democrats have been demanding for a long time. Ultimately, they argue, for now there is no real legal or financial reason why the government can’t continue to borrow money.

Now the head of the Republican Party appears to be taking up this argument for the first time.

“The Democrats have said they want to get rid of it. If they want to get rid of it, I would take the lead,” Trump told NBC News exclusively on Thursday. The debt limit, he said, “means nothing except psychologically.”

The idea quickly gained support from some prominent Democrats.

“I agree with President-elect Trump that Congress should repeal the debt limit and never again govern by hostage-taking,” Sen. Elizabeth Warren, D-Mass., wrote on social media Thursday.

But the reasons why Trump wants to get rid of it now are likely to be twofold: Firstly, it is likely to strike in the first few months of his second term in office. And second, his tax cut plan is likely to reduce federal revenues by trillions of dollars, meaning government spending obligations already enshrined in law would have to be covered by more borrowing.

Despite sparse support from Democrats, House Minority Leader Hakeem Jeffries of New York’s 8th District said eliminating the debt ceiling is not a solution.

And financial conservatives continue to oppose abolishing the debt ceiling.

“My position is simple: I will not raise or suspend the debt ceiling (thereby adding more debt) without significant and real spending cuts,” Rep. Chip Roy, R-Texas, said in a post on X. “I negotiated for this purpose. No excuse.”

Roy has already drawn the ire of Trump for taking this position.

“The very unpopular Texas ‘Congressman’ Chip Roy is, as always, standing in the way of another major Republican victory – all to gain cheap publicity for himself. Republican obstructionists must be eliminated,” Trump posted on Truth Social.

This time the Democrats appear to be positioning themselves as guardians of fiscal responsibility.