Trump and Warren Are Wrong About the Debt Limit

By Dominic Pino

Wednesday, June 04, 2025

 

President Donald Trump has yet again called for abolishing the federal debt limit, and Senator Elizabeth Warren (D., Mass.) has yet again agreed with him. This issue last came up in December, when Trump demanded that the lame-duck Congress suspend the debt limit for his entire presidency or eliminate it entirely. Republicans such as Representative Chip Roy (Texas) spoke out against it, and Congress did not oblige.

 

Roy said in December that he would not vote to raise the debt limit unless there were significant spending cuts attached. In doing so, he was being consistent with decades of precedent in how Congress has approached raising the debt limit.

 

Critics of the debt limit, which puts a cap on how much debt the Treasury is allowed to issue, argue that it is arbitrary and ineffective at constraining spending. It is certainly arbitrary, in that there is no reason why it should be set at any given number or date. It does not directly constrain spending because it only applies to debt issuance, which is separate from Congress’s approval of spending levels. The U.S. is the only country in the world with a debt limit separate from its budget. If one were to design the fiscal system from scratch, it might not make sense to have a debt limit.

 

All of that being said, Congress isn’t designing a new fiscal system from scratch. Though fiscal irresponsibility has been par for the course for many years, the fiscal situation would be even worse without the debt limit.

The debt limit is one of the few things that gives fiscal conservatives leverage to demand spending cuts. That’s likely why Warren is so enthusiastic about getting rid of it. She knows that if it gets abolished, progressives will be able — long after Trump is gone — to spend unencumbered by the periodic debt limit deadline when annoying conservatives have a chance to demand cuts.

 

Securing spending reforms in exchange for raising the debt limit is not a hypothetical power Congress has. A new memo from Advancing American Freedom, the conservative advocacy group founded by Mike Pence, goes through the history of deficit-reduction laws that were attached to raising the debt limit.

 

“The statutory debt limit has been successfully paired with spending cuts and reforms eight times over the past 40 years,” the memo says. It gives the following examples of conservative policy wins that happened thanks to the debt limit:

 

·         1985 — Balanced Budget and Emergency Deficit Control Act: Required a gradual reduction and eventual elimination of budget deficits over FY1986-FY1991, specified annual deficit limits, and established a budget sequestration process.

 

·         1987 — Balanced Budget and Emergency Deficit Control Reaffirmation Act: Extended the balanced budget target to FY1993 but revised the budget sequestration process that had been invalidated by the Supreme Court.

 

·         1990 — Budget Enforcement Act: Included $324 billion in spending cuts and debt service savings, established discretionary spending caps and PAYGO procedures.

 

·         1993 — Omnibus Budget Reconciliation Act: Included $255 billion in spending cuts and debt service savings and extended discretionary spending caps and PAYGO procedures from the Budget Enforcement Act of 1990.

 

·         1997 — Budget Enforcement Act: Included $198 billion in spending cuts and debt service savings and extended discretionary spending caps and PAYGO procedures through FY2002.

 

·         2010 — Statutory PAYGO Act: Reestablished statutory PAYGO enforced by sequestration.

 

·         2011 — Budget Control Act (Cut, Cap, and Balance): Established statutory discretionary that immediately cut spending by $917 billion, established a Joint Select Committee on Deficit Reduction to report legislation reducing the deficit by $1.5 trillion over FY2012-FY2021, and established automatic cuts if the committee, Congress, and the president failed to enact at least $1.2 trillion in savings over that period.

 

·         2023 — Fiscal Responsibility Act: Established discretionary spending caps for FY2024 and FY2025, rescinded unused COVID funds, and rescinded some expanded funding for the IRS.

 

Those laws have proven to be far from enough to get federal spending under control. But the picture would be even worse without them, and there is no other tool that fiscal conservatives have been able to use eight times in the past 40 years to cut deficits. Elizabeth Warren knows that, which is why she wants to get rid of it. Republicans would be foolish to listen to Trump and do it for her.