Donald Trump launched a verbal attack on Joe Biden and his administration regarding how they handled the U.S. debt ceiling last year. On Truth Social, Trump called the decision to extend the debt ceiling "one of the dumbest political moves in years."

According to him, Biden has thrown an economic grenade into the Republicans' hands, turning a disaster that should have been Biden's problem into a Republican mess.

"There is no reason to do this—NO BENEFIT AT ALL," Trump wrote. He labeled the Democrats reckless, claiming they would rather see a recession just to hurt the Republicans. "I call it '1929,'" the president added, comparing the Democrats' financial management to the Great Depression.

Biden's 2023 budget deal and its implications

The 2023 Fiscal Responsibility Act has suspended the debt ceiling until January 1, 2025. On the surface, this seems like a respite for the U.S. Treasury, which now has more time to cover its bills. But timing is everything.

As we reported, Treasury Secretary Janet Yellen recently confirmed that the U.S. will reach a new borrowing limit between January 14 and January 23, 2025. After that, the government will have to take special measures to avoid default.

Let's analyze this. The debt ceiling is the total amount of money the government can borrow to cover things like Social Security, Medicare, military pay, and interest on the national debt. When that ceiling is reached, the Treasury cannot issue new debt, effectively leaving the government bankrupt.

Programs like Medicare, tax refunds, and military operations could be severely impacted. Without an extension in 2023, the U.S. will default for the first time in history, causing chaos in global markets.

Even so, Trump is not impressed. He believes that the Republicans have been played, left to clean up Biden's mess without any leverage. "This is Biden's problem, not ours," he wrote.

Republicans brace for a confrontation in Congress

Things are about to heat up on Capitol Hill. The Republicans, who will take control of both chambers on January 3, are preparing for a fight over the debt ceiling. Far-right lawmakers have made it clear they will not support a simple increase.

They are pushing for deep cuts to federal spending in exchange for agreeing to raise the borrowing limit. Trump added fuel to the fire. Recently, he proposed completely eliminating the debt ceiling or extending it to 2029, the end of his hoped-for second term.

This crazy idea, clearly backed by billionaire Elon Musk, did not last long. A group of far-right Democrats and Republicans killed the plan, citing concerns over skyrocketing budget deficits. Democrats accused Trump of wanting to clear the way for his "massive tax cuts," which could exacerbate the national debt.

By comparison, the national debt currently stands at $36.1 trillion. That's not Monopoly money—it's the result of decades of spending coupled with tax cuts. Just the interest alone has reached $1.15 trillion this year. By comparison, the U.S. spent less than $300 billion on healthcare and defense combined.

What the numbers show

A recent letter from Secretary of the Treasury Yellen outlined a bleak timeline. On January 2, 2025, the debt limit will be reset, adjusted for the $54 billion repayment of Medicare-related securities. But this adjustment is just a blip. By mid-January, the U.S. will again hit its borrowing limit, triggering a financial countdown.

Yellen urged Congress to act swiftly, warning of serious consequences of inaction. According to her:

"However, on January 2, the unpaid debt under this limit is expected to decrease by about $54 billion, primarily due to the scheduled buyback of unsellable securities held by the federal trust fund related to Medicare payments."

A U.S. default would lead to a credit downgrade, increasing borrowing costs for American businesses and consumers. The global market would plummet, forcing the Federal Reserve to struggle to stabilize the economy.

Adding to the pressure is the internal division within the Republican Party. Some lawmakers want to weaponize the debt ceiling to force Biden into major spending cuts. Others are concerned about the economic risks of default.

Trump, as usual, is impatient with the cautious crowd. He demands that Republicans make the Democrats own this mess. "The Democrats must be forced to vote on this dangerous issue NOW, while the Biden Administration is in power, not in June," he wrote.

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