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Congress is in the process of considering a short-term funding patch to keep the federal government open through Friday, March 14, 2025. There’s a lot to discuss regarding why we’re in a seemingly never-ending cycle of funding cliffs. That would easily double the length of this post, so we’ll leave that topic on the table for another day. To keep this post as short as possible, we’re going to dive into the topic of the debt limit.
The operations and functions of the federal government are funded through 12 regular appropriations bills. These 12 bills cover roughly 26 percent of federal spending, known as discretionary spending or discretionary outlays. The rest of federal spending–mandatory spending and net interest on the share of the debt held by the public–is on autopilot. Congress doesn’t appropriate those outlays.
These autopilot outlays are based primarily on the number of beneficiaries in various federal programs like Medicare, Medicaid, and Social Security. In budget speak, these are mandatory outlays or direct spending. In the case of net interest, outlays are determined by the interest the Treasury owes from selling securities to finance our budget deficits. Mandatory outlays and net interest constitute 74 percent of all federal spending. Three areas of federal spending–Social Security, Medicare, and net interest–are projected to account for half of all federal spending in FY 2025. That figure will grow to almost 58 percent in FY 2034.
So, to recap this real quick, the spending Congress so frequently argues about is 26 percent of federal spending. We’re talking about $1.8 trillion from a $6.8 trillion budget. About half of discretionary spending is designated for defense. The rest is nondefense. Congress isn’t even discussing the actual drivers of deficits and debt. No surprise there.
However, the current debate over government funding became very interesting very quickly when Elon Musk and President-elect Donald Trump targeted the bill to keep the federal government funded just hours before a scheduled vote on Wednesday. They managed to tank a bill negotiated by Republican and Democratic leadership and appropriators. There was a deal, and in the eyes of Democrats, Republicans backed out.
Look, the bill was more than 1,500 pages. Less than ten pages of the bill funded the government. Disaster relief for areas in the Southeast impacted by hurricanes and a one-year extension of the Farm Bill were included, which wasn’t surprising. Those items had been pretty much telegraphed in advance.
What was surprising was all the other items that got added to the bill, including a cost-of-living adjustment (COLA) for members of Congress. We’re not weighing in on the merits of that other than to say that the COLA was not a good look. (A quick note on that COLA and other items added to the bill: there was a ton of misinformation out there about those provisions. Don’t believe everything you read about them.) The bill was a risky move by Speaker Mike Johnson (R-LA), and it didn’t work out well.
Trump also made a demand out of literally nowhere when he demanded that House Republicans include language to eliminate the debt limit. Now, Trump signed legislation to suspend the debt limit in September 2017, February 2018, and August 2019. He floated the idea of eliminating the debt limit during his first administration. Although most congressional Democrats generally support the idea of eliminating the debt limit, most Republicans don’t. Considering the very tight margins in Congress, particularly in the House, the votes aren’t there.
Fiscal conservatives don’t want to eliminate the debt limit because they use it as leverage to extract spending cuts, usually on the discretionary side. That was the case with the Budget Control Act (BCA) of 2011 and the Fiscal Responsibility Act (FRA) of 2023. Even though a number of fiscal conservatives opposed both of those bills because the spending cuts didn’t go far enough for them or they didn’t want to increase or suspend the debt limit, the spending cuts were victories at the time. In the case of the BCA, the spending cuts didn’t last. Congress routinely busted the spending caps established by the BCA. The jury is still out on the effectiveness of the FRA, but the early indication is that it will reduce discretionary spending as a percentage of GDP.
On Thursday, the House considered a pared-back short-term government funding bill that included disaster relief, the extension of the Farm Bill, and a handful of other items. The bill clocked in at 117 pages. Although Trump didn’t get his proposed elimination of the debt limit, Johnson did include a suspension of the debt limit through January 30, 2027.
The bill failed after 38 Republicans and 197 Democrats voted against it. Johnson and House Republicans have to go back to the drawing board with the clock ticking on a government shutdown.
Something Trump inadvertently did by injecting the debt limit into the discussion about government funding was get some members of Congress and political pundits talking about federal spending and the drivers of deficits and debt. Take, for example, Rep. Don Bacon (R-NE), who appeared on CNN on Thursday evening. Not only did Bacon point out that Congress is arguing only about 26 percent of federal spending, but he also said that Congress "has got to do a debt commission” to get mandatory spending under control.
Bacon is a moderate Republican from a very competitive district. He’s sticking his neck out, politically speaking, because there needs to be an adult conversation about deficits and debt and the very spending that drives those deficits and debt.
Fox News commentator Brit Hume also chimed in on Twitter.
I was on the House side of the Capitol complex on Wednesday for meetings, and I watched in real time as the government funding bill collapsed. It was the most interesting day I’ve had on the Hill in years. I walked away with two observations. The first is that too few in Congress take their jobs or the ramifications of failing to do their jobs seriously.
The second is a little more detailed. Back in the late 1970s, during Jimmy Carter’s presidency, the United States experienced an era of stagflation, and people asked whether America’s best days were behind us. Ronald Reagan brought a new era of hope and the uncanny ability to communicate his beliefs and convictions to the American people. It’s why Reagan beat Carter in 1980, and it’s why he was re-elected in a landslide in 1984. Remember, folks, Reagan won every state except one in 1984.
Reagan framed America as the “shining city on a hill” and a beacon of freedom across the world. Barack Obama was the only president since Reagan to bring anything close to that same energy. No one else has. Looking at the current class of politicians, it’s tough to see anyone who will do so any time in the near future.
Back to that question. Considering the hyper-partisanship that has infected our politics (regardless of political party or philosophy), the decline in trust in our institutions, and an increasing likelihood of a severe debt crisis in the near future, the question has to be asked again: “Are America’s best days behind us?” Should it be a statement, not a question? Ultimately, it’s up to us. I can tell you that’s why I joined the Independent Center–to educate independent voters on the problems that face America and to identify policy solutions around which we can build bipartisan consensus to ensure that you, your kids, and their kids can achieve the American Dream that seems so out of reach for so many, particularly Millennials, Generation Z, and Generation Alpha.
Solving these problems and doing so within the next few years won’t be easy. However, it’s easier than easing the pain of the fiscal crisis that we are barreling toward by going along with the preferred approach of some in the political class–Republicans and Democrats alike–who are doing nothing but gaslighting or distracting Americans while they appease the fringe of their party base with political messages and culture wars. We all deserve better than that.
