Unlikely Alliance Forms as Trump and Elizabeth Warren Demand End to Debt Ceiling

WASHINGTON D.C. – The United States could default on its $36.2 trillion national debt as early as August unless Congress takes swift action, according to a letter issued by Treasury Secretary Scott Bessent on May 9, 2025. The warning comes with a deadline: Congress must raise or suspend the debt ceiling no later than mid-July, before lawmakers leave for their annual August recess.

“The Treasury Department had crunched all the numbers, calculated all the money that came in from our taxes, and determined that without congressional action, the United States would run out of money to pay its bills by August,” Bessent wrote. He emphasized the urgency of pre-recess legislative intervention, noting that failing to act in time could force the federal government to default for the first time in history.

A default, economists warn, would be financially catastrophic. It would trigger soaring interest rates on mortgages, credit cards, and student loans, decimate stock markets, and cause major disruptions in essential federal services. Millions of government employees and military members could face furloughs or unpaid work, while recipients of Social Security, veterans benefits, and other federal programs may see their payments halted.

Historically, the debt ceiling has served as a fiscal safeguard. Established over a century ago, it restricts how much the government can borrow to meet its existing financial obligations. Contrary to popular belief, raising or suspending the debt ceiling does not authorize new spending—it merely allows the government to pay for programs Congress has already funded.

In a rare display of bipartisan agreement, former President Donald Trump and Senator Elizabeth Warren have both endorsed eliminating the debt ceiling altogether. Trump posted his support on his social media platform Truth Social, stating, “I am very pleased to announce that after all these years, I agree with Senator Elizabeth Warren on something. The debt limit should be entirely scrapped to prevent an economic catastrophe.”

Warren echoed the sentiment in a separate statement, saying, “I’ve argued for years that the debt ceiling is a dangerous and unnecessary law that has become a political weapon used by extremists in Congress to hold our entire economy hostage. If Republicans in Congress were serious about preventing that economic disaster, they would scrap the debt limit entirely.”

Meanwhile, Congress remains divided. The House recently passed a version of a major omnibus bill that includes a $4 trillion increase in the debt ceiling. Senate Republicans, however, are pushing for a $5 trillion increase. Both figures have faced criticism from fiscal conservatives, who argue the proposals are fiscally irresponsible.

The federal debt has surged in recent decades due to consistent spending beyond revenue intake. In the 2024 fiscal year alone, the U.S. government spent more than $1 trillion just on interest payments, money that could have otherwise funded federal programs.

As debate continues on Capitol Hill, the question remains whether lawmakers will choose to raise the ceiling, temporarily suspend it, or follow the suggestion by Trump and Warren to eliminate it entirely. While Senate Republicans have yet to endorse full repeal, the idea is gaining traction as the default deadline looms.

According to Treasury data, approximately 70 percent of U.S. public debt is held domestically, including by the federal government, state and private pension funds, and the Federal Reserve. The remaining 30 percent is owned by foreign governments and investors, with Japan, China, and the United Kingdom being the largest foreign holders.

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