Congress’s first task post-midterms is to figure out how to keep funding America—and that’s before it addresses the $40 trillion national debt

With Republicans holding Congress and Democrats now controlling it opposite the Trump administration for the next two years, the first fiscal battle is keeping the federal government funded. A temporary 72-hour funding bill signed by the president in September expires on December 11, and Goldman Sachs analysts Alec Phillips and Abhay Duggirala have flagged the possibility of a December shutdown during a typical lame-duck standoff. Both parties, however, have spending priorities they want to advance: Republicans are seeking defense funding and Democrats are expected to focus on healthcare, which Goldman says reduces the likelihood of a shutdown.

The debt ceiling is the next pressure point. The statutory limit currently stands at $41.1 trillion, of which $40.5 trillion has been borrowed according to Treasury data. Analysts expect the limit to be reached approximately a year from now. Goldman estimates that an increase must be agreed no later than October 2027, and warns that Congressional Republicans are unlikely to succeed in raising it before year-end given thin House margins and opposition from fiscal conservatives. PIMCO's head of public policy, Libby Cantrill, suggested that higher spending could create common ground for a debt-limit increase next year, but cautioned that either party could push the economy closer to the X date.

The Bipartisan Policy Center's Caleb Quakenbush warned that failing to address the limit in time could undermine investor confidence and lead lenders to demand higher interest rates, raising costs for households and businesses. He also noted that a government near its borrowing limit would have limited capacity to respond to an escalation of the Iran conflict, a sudden downturn, or another shock.

Beyond these operational deadlines, the deficit remains the larger issue. The federal budget deficit is running at roughly 6% to 7% of GDP, and debt watchdogs want it halved to 3%. Maya MacGuineas, president of the Committee for a Responsible Federal Budget, said that the best way for a new Congress and White House to improve affordability is meaningful deficit reduction, and warned that polarized politics could push these decisions onto future generations or until bond markets force action. The article notes that rising bond yields this summer were an early sign that lenders could demand higher returns on Treasury debt.