Congress Is Already Bracing For A 2025 Fiscal Pileup

Congress is headed for a perilous spending pileup in early 2025 — with crisis points on the debt ceiling, federal spending, tax cuts and budget caps all hitting in rapid succession.

It could make the past six months of shutdown heartburn look tame.

The House is preparing to start passing its own, GOP-written funding bills next week, which marks lawmakers' first step toward addressing a fiscal menace that will begin to take shape after the November election. It could end with a delay in government funding at best and a global financial meltdown at the very worst.

At the heart of the problem: Conservatives are pushing to delay spending work into early next year, which would coincide with yet another new deadline to raise the debt ceiling, setting up a fresh partisan standoff.

And it gets worse from there; the Trump-era tax cuts are set to expire next year, along with spending caps that dictate budgets for the military and other federal agencies, and lawmakers in both parties are already eager for a fight over both issues. Top Republicans are already eyeing a massive party-line bill next year if they win unified control of government, extending those tax cuts alongside other long-sought GOP priorities.

The ultimate outcome of the growing fiscal pileup depends on who controls Congress and the White House next year. But if this past year is any indication — four separate government shutdown threats, during which House Republicans booted a speaker for the first time in history over his debt-ceiling deal — there's a high chance of dysfunction. Particularly if the GOP wins the House with another slim majority.

“This is kind of like residential trash service during the holidays — it’s always uglier in the second week,” quipped Rep. Steve Womack (R-Ark.). He added a subtle hope that conservatives might change their minds and let Republican appropriators clear the decks this year: "I’m a big proponent of getting everything we’re responsible for during this Congress off the curb."

If the U.S. ends up with another divided government after November, “we’re in store for another very traumatic effort to raise the debt limit again, probably beginning this time next year,” warned Mark Zandi, the chief economist for Moody’s Analytics.

“There are a lot of moving parts,” he said. “It feels like these parts could all freeze up because they’re all colliding with each other. It’s very possible.”

Unquestionably, lifting the debt ceiling is the highest-stakes item on Congress’ to-do list next year. The government retains that borrowing authority through January, and after that the Treasury Department will once again start considering so-called “extraordinary measures.”

Those measures would only temporarily stave off a default on the nation’s debt — a cataclysmic scenario that has never happened, but the U.S. has teetered dangerously close to recently as lawmakers increasingly use the debt limit as a political bargaining chip.

If that trend continues, lawmakers could once again find themselves toying with a genuine fiscal crisis between May and August of next year, depending on when Treasury’s measures run out. At the same time, Democrats and Republicans will likely be sparring over the expiration of Trump-era tax cuts that could add as much as $4.6 trillion to the federal deficit and debating the merits of setting overall funding caps that could constrain federal spending for future years.

“My sense is that all these moving parts are going to come together at the same time,” Zandi said.

The impending doom helps explain why some Republicans have a fresh pitch for reelecting Trump: He'll tame GOP fiscal demands once he's in the White House, they say. Even Sen. Mitt Romney (R-Utah), who's not voting for Trump, predicted relatively low-drama debt negotiations if the presumptive GOP nominee defeats President Joe Biden.

“If President Trump is president, then he's going to want everything to go smoothly and tell Republicans to make sure that we don't have a financial crisis of some kind,” Romney said. “And a number of Democrats will agree, and there won't be much of an issue.”

Trump helped prevent the government from defaulting on its debt during his first term, deputizing then-Secretary Steven Mnuchin to strike a bipartisan deal with then-Speaker Nancy Pelosi in 2019.

If Biden wins a second term, Romney warned, “then the Republicans will all oppose raising the debt limit without getting something for it.”

But even if one party wins both chambers of Congress and the White House during the upcoming election, an easy solution to the impending fiscal crunch isn’t likely.

In 2021, when Democrats controlled all of Washington, they declined to use a special maneuver known as budget reconciliation that would've allowed them to raise the debt ceiling without GOP help. Instead, they roped Republicans into a standoff in order to ensure they wouldn’t shoulder all the responsibility for adding to the nation’s mounting debt pile.

Republicans in Trump’s universe, meanwhile, have openly entertained the idea of breaching the debt limit as a point of leverage in potential partisan stalemates. Such a breach would sow global doubt about America’s ability to meet its financial promises and possible catastrophe, depending on how long it lasted.

“I’ve seen a lot of debt limit battles over the years, and it feels like each one is scarier than the one that preceded it,” Zandi said. “It just feels like one of these times, we’re just not going to be able to get it together in time.”

Appropriators say that's all the more reason to clear the deck and take care of government funding before the start of the next Congress in January — before lawmakers are dealing with a debt limit deadline in earnest next spring. Federal cash expires on Oct. 1, meaning Congress will almost certainly have to pass a temporary funding patch to avoid a shutdown this fall.

Conservatives want that stopgap bill to last through early next year, hoping the election outcome lends Republicans more leverage to enact sweeping GOP spending priorities. Republican appropriators argue that would be a political blunder, saddling a new Congress and possibly a new president with leftover work when there are other GOP ambitions to fulfill.

“My advice to anybody, regardless of who wins the election, is finish it in the calendar year, if you can’t get it done in the fiscal year,” said House Appropriations Chair Tom Cole (R-Okla.). “Don’t make what may be a new president — we did that to President Trump last time. And I had this discussion with Speaker [Paul] Ryan at the time. I said: ‘This is a mistake.’”

Meanwhile, Republican leaders are moving ahead on spending bills, hoping to pass all 12 on the House floor before August. But they have to walk a familiar tightrope, balancing hardliner and centrist demands that could easily trip up those efforts.

Conservatives have already hinted they'll tank bills if they don't see enough of their priorities addressed, including some of the same divisive provisions Speaker Mike Johnson had to strip out last time around. And moderates have said they won’t be bullied into voting for spending bills loaded with contentious provisions that could jeopardize their standing back home.

Government funding talks are always going to “bend back toward the center” in the end, Cole said, noting that any appropriations package would still require substantial Senate Democratic support even if Republicans control both chambers and the White House next year.

“There are so many things that are new and challenging in a brand-new Congress. We don’t need to add the previous Congress’ unfinished business to the mix,” Womack agreed.

From the sidelines, House Democrats insist that Republicans are setting themselves up for another turbulent funding cycle. The dozen spending bills GOP leaders aim to pass this summer currently include divisive Republican policy provisions and nix tens of billions of dollars in funding initially agreed to by both parties. Senate Democrats and the White House won't accept those cuts and policy riders, likely repeating the extended spending fiasco that ended in March.

“Fasten your seat belts — it’s going to be a bumpy ride,” said Rep. Rosa DeLauro (Conn.), the top Democrat on the House Appropriations Committee.

Jennifer Scholtes contributed to this report.