Late in the evening of December 20, the House of Representatives broke a legislative deadlock to pass a continuing resolution that would fund the federal government for the next three months. Earlier that week, the first two gambits to avert a government shutdown—a 1,500-page continuing resolution, followed by a slimmer version that would have raised the debt ceiling for the next two years—failed. The package that eventually passed the House with overwhelming bipartisan support was similar to the second effort, minus the debt-ceiling hike. This stopgap measure portends a battle royale over the budget and the debt ceiling early in the second Trump administration.
Republicans may not have a functioning legislative majority by the time those fights begin. The GOP won 220 seats in November to the Democrats’ 215—a razor-thin margin that could shrink further because of Florida congressman Matt Gaetz’s preemptive resignation and two other House nominations to the new administration. Depending on the fate of those nominations, Republicans might be down to 217 seats for Trump’s opening months, at least until the conclusion of the special elections for those potentially vacant House seats.
Even a handful of GOP defectors could thus sink any party-line legislation in the House. The vote on the second, slimmer continuing resolution revealed as much, with 38 House Republicans opposing the Trump-endorsed package. As Republicans prepare to debate new tax cuts and spending bills next year, there is no guarantee that they will speak with a single voice—and some legislators may prove indifferent to presidential pressure. As the on-going wrangling about the reelection of Mike Johnson as House Speaker indicates, factional divisions could make even some of the basic elements of congressional control a headache for Republicans. And if Republicans can’t settle on a Speaker by January 6, that could potentially raise some complications for certifying the presidential election.
Upcoming spending battles will amplify the tensions between the Republican Party’s Tea Party and MAGA wings. While both movements tapped into the GOP base’s anti-establishment sentiments, their policy priorities differ. Many Tea Partiers insist on reducing government spending, even if that means squeezing some entitlement programs; Trump, by contrast, has pledged to oppose any cuts to entitlements. Though often allied, the two sides might diverge on spending and deficits more generally.
Kicking the government-funding and debt-ceiling battles to the Trump administration’s opening days will only increase the pressures on this fragile congressional coalition. Theoretically, the fact that the GOP will hold a trifecta (control of the House, Senate, and White House) could give its members leverage to set the parameters for spending and debt deals. But unified control also means shouldering the blame for a shutdown or default. It will be harder for Republicans to blame Democrats for fiscal mayhem if they can’t get a funding or debt-ceiling bill through the House.
House Republican leaders reportedly proposed a “draft agreement” for the first reconciliation package, which would raise the debt ceiling by $1.5 trillion and slash $2.5 trillion in net mandatory spending (presumably over ten years). This could lead to headaches, as the agreement calls specifically for spending cuts, not deficit cuts—the second of which could be achieved by tax hikes, such as tariffs. Since the Congressional Budget Act of 1974 excludes amendments to Social Security from the reconciliation process, these savings would have to be derived from the rest of the mandatory budget. In 2024, non-Social Security mandatory spending totaled about $2.5 trillion, more than half of it directed to Medicaid and Medicare. Fears that Republicans would slash health-care programs have continually derailed the GOP, so Medicare and Medicaid cuts could be politically hazardous. Given the projected $1.8 trillion deficit in 2025, per the Congressional Budget Office, the House’s reported agreement could yield yet another debt-ceiling battle in 2026. It’s not surprising, then, that populist Republican senator Josh Hawley has already dismissed the reported deal, which he says will have “no effect on the Senate.”
In the years ahead, Republicans have a political incentive to avoid a shutdown and, especially, a debt-ceiling default. The GOP has consistently lost shutdown battles, and the last one, occurring under another Republican trifecta, dragged down Trump’s approval rating. A default on the debt would be highly economically disruptive and undercut one of Trump’s key campaign selling points: that he would help restore economic normalcy.
In the first two years of the Biden administration, Democrats passed sweeping reconciliation bills—the American Rescue Plan Act and the Inflation Reduction Act—on party-line votes. Achieving something similar could be a heavier policy lift for Republicans. Their margin in the House is slimmer, and their caucus more fractious, than Democrats’ was in 2021. In this Congress, House Speaker Mike Johnson has sometimes relied on big bipartisan coalitions to pass legislation, including the April foreign-aid package and the latest government-funding resolution. If Republicans can’t reach near-unanimity on spending priorities, leadership might adopt a similar approach in 2025, which would likely mean bigger spending bills. If budget hawks can’t compromise, they might find themselves shut out of negotiations entirely. And Republicans might need to work with Democrats on some of these issues, anyway: entitlements are a major driver of future federal spending, but it often requires a bipartisan coalition to pass major reforms, as the Social Security reforms during the Reagan years demonstrate.
These conflicts pose multiple risks to a Republican Party newly reconfigured along populist lines. In addition to the dangers of a shutdown or default, spending issues could crowd out the rest of the policy agenda. If its messaging focuses on austerity, the GOP could turn off some members of the party’s increasingly multiethnic, working-class coalition.
Without some political agility, the GOP could enter two years of legislative deadlock, in which most policy energy shifts to the executive. In such a scenario, congressional Republicans would use their oversight powers to block and tackle for the White House but would otherwise be unable to muster majorities on many substantive issues, except perhaps tax cuts. The Trump administration, meantime, would be forced to turn its focus to executive action.
To avoid that fate, Republicans could adopt a “relief valve” approach to spending, gradually adjusting fiscal pressures while avoiding sharp cuts. Rather than enacting massive mandatory-spending reductions, the party would build political capital and address some of our fiscal dilemma’s underlying drivers—by, for instance, expanding the supply of health care to drive down entitlement costs.
The GOP congressional caucus remains a house divided, particularly on spending issues. It will take creative policymaking to prevent those divisions from causing a total political impasse.
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