US House rejects Trump’s plan to fund federal operations, suspend debt ceiling

The US House of Representatives has rejected President-elect Donald Trump’s new plan to fund federal operations and suspend the debt ceiling, just one day before a potential government shutdown.

Trump demanded that a provision to raise or suspend the nation’s debt limit be included in the legislation to avoid a shutdown. The debt ceiling is the total amount of money the US government can borrow to meet its existing legal obligations. To borrow beyond this limit, Congress must approve an increase.

Instead of raising the limit by a specific amount, lawmakers suspended it until January 1, 2025. When the suspension ends, the debt limit will automatically rise to match the amount of debt issued by the Treasury Department.

Once the limit is triggered in January, the Treasury can use extraordinary measures to prevent the US from defaulting on its debts. Some estimates suggest these measures could delay the default deadline until the summer of 2025, which Trump wants to avoid, as an increase would be needed during his presidency.

Raising or suspending the debt limit doesn’t authorise new spending or tax cuts; it simply allows the government to meet its existing obligations. Some have argued for eliminating the debt limit altogether for this reason.