The new Congress must balance its progressive priorities with the need to raise the debt limit and keep the government funded. These six questions examine these competing goals.
Question One: When is the debt limit likely to be reached, and what happens if Congress fails to raise it?
CBO projects sometime in 2027 while independent forecasts indicate the event will happen in the first half of the year, probably May or June. Cash reserves and extraordinary measures could postpone missed payments until late 2027 or early 2028.
Once Treasury exhausts its resources, some payments would be delayed—even if bondholders were protected. Moody’s March 2023 study modeled a prolonged breach with bondholders prioritized: GDP fell more than 4%, over 7 million jobs disappeared, unemployment exceeded 8%, and household wealth declined roughly $10 trillion as borrowing rates initially spiked. These are scenario estimates, not predictions.
Debt-limit confrontations raise borrowing costs even without default. A March 2026 GAO study, using a consistent method, estimated $26–27 million in additional borrowing costs from the 2011 impasse and $43–89 million from 2023, in 2024 dollars. An earlier GAO study of the 2011 event estimated $1.3 billion in added borrowing costs, using a different method covering a broader period of uncertainty. The newer study does not apply that earlier method to 2023, so it provides no comparable estimate for the more recent confrontation.
Question Two: How likely are government shutdowns, and what would they disrupt?
Trump’s record offers a warning: the three longest federal shutdowns occurred during his presidencies—the 76-day Homeland Security shutdown in February–April 2026, the 43-day government-wide shutdown in October–November 2025, and the 35-day border-wall shutdown following the 2018 midterms.
Further shutdowns appear highly likely.
Question Three: To what extent will fiscal cliffs determine the new Congress’s fiscal-policy decisions?
Fiscal cliffs force Congress to extend temporary policies, replace them, or accept their expiration.
The 2027–2028 Congress faces a smaller tax-extension agenda than Congress confronted in 2025 because the 2025 tax law made many expiring 2017 individual tax provisions permanent. Several newly enacted temporary benefits remain in effect through 2028 or later.
Annual appropriations create separate funding deadlines rather than tax-policy cliffs. The new Congress must renew government funding by September 30, 2027, and September 30, 2028, or face a shutdown, although continuing resolutions can move these deadlines. The Congress seated in January 2029 will face the same recurring responsibility.
Decisions for the 2027–2028 Congress:
FDA user fees—September 30, 2027. Renew major drug and medical-product user-fee authorities supporting FDA reviews.
Citrus replanting—December 22, 2027. Extend or end special expensing for qualifying citrus-replanting costs.
Energy credits—December 31, 2027. Extend or allow expiration of the clean-hydrogen construction-start deadline, wind-component manufacturing credits, and wind and solar placed-in-service deadlines for electricity credits. Qualifying earlier construction starts are exempt from the latter deadlines.
Transportation taxes—September 30, 2028. Renew expiring highway fuel, heavy-truck sales and tire taxes; aviation fuel, passenger-ticket and cargo taxes; and the underground-storage-tank financing tax.
Four household deductions—December 31, 2028. Extend, modify, or allow expiration of deductions for qualified tips, overtime, qualifying car-loan interest, and eligible seniors.
Trump Account seed contributions—December 31, 2028. Decide whether children born after 2028 should qualify for the federal $1,000 contribution. The accounts themselves remain available.
Decisions for the Congress seated in January 2029:
Expired household deductions—Immediately upon taking office. If its predecessor allows the four deductions to lapse, decide whether to restore them, potentially retroactively.
Health-plan fees and heavy-vehicle use tax—September 30, 2029. Renew or allow expiration of fees supporting patient-centered outcomes research and the annual heavy-highway-vehicle use tax.
SALT deduction cap—December 31, 2029. Extend or replace the enlarged cap or allow its return to $10,000 in 2030.
Energy credits—December 31, 2029. Extend or end the clean-fuel production and metallurgical-coal production credits.
Question Four: What would reversing the 2025 law’s healthcare, student-debt, and energy changes cost, and what is politically achievable?
The new Congress will want to reexamine or reverse provisions on health care that were allowed to lapse by the previous Congress or were modified by the 2025 tax bill.
The following figures are benchmarks from earlier budget scores, not estimates for legislation taking effect in 2027.
ACA premium assistance—About $350 billion over 2026–2035 to restore the enhanced credits permanently. CBO estimated that restoration would leave 3.8 million fewer people uninsured in 2035. Separately, repealing the 2025 law’s marketplace restrictions was estimated to cost $272 billion over that period and insure 2.9 million additional people in 2035. These separately scored estimates should not simply be added.
Medicaid—Roughly $900 billion over a decade to reverse the law’s changes, using its original savings as a benchmark. CBO estimated $887 billion in net deficit reduction during 2025–2034 from the Medicaid chapter and 7.5 million additional uninsured people in 2034. Repealing selected eligibility or financing restrictions would cost less than reversing the entire chapter.
Student debt—The 2025 higher-education package was estimated to save $284 billion over 2025–2034, largely through loan changes. Reversing those changes could increase taxpayer costs through lower payments and larger eventual discharges, but the amount depends on the replacement repayment and forgiveness rules.
Energy—Roughly $500 billion over 2025–2034 as a benchmark for reversing the energy-tax package. Restoring the curtailed credits while retaining the law’s energy expansions would cost more—approximately $543 billion under the original estimates. Selective restoration would cost less; restoring rescinded grants would require additional funding.
These estimates are uncertain, especially for student debt, where costs depend on future earnings, repayment-plan choices, and eventual forgiveness. CBO’s analysis of the 2025 House education proposal emphasizes these behavioral uncertainties; its health-insurance projections similarly depend on implementation and responses by states, insurers, and households.
Disagreements over these provisions could therefore lead to bargaining during a government shutdown.
My proposals in “A More Efficient Path to Universal Health Care” and “A Better Way to Reduce Student Debt” offer alternative approaches. I had hoped a 218–217 House might turn to me as a compromise Speaker, but Jeffries appears safe from that challenge.
Question Five: What new healthcare, student-debt, and energy proposals will Democrats advance, and what could persuade President Trump to sign them?
Democrats will pursue an affordability agenda beyond reversing the 2025 law. Proposals already introduced or under development include:
Student-loan interest relief. The Welch–Courtney Student Loan Interest Elimination Act would eliminate interest on existing federal loans and cap future rates. The sponsors claim budget neutrality, but that claim is not a verified CBO estimate. I examine its financing problems in “The Student Loan Interest Elimination Act”.
Expanded Medicare benefits. The Medicare Dental, Hearing, and Vision Expansion Act of 2025 would add dental, vision, and hearing coverage.
Health-insurance reform. Senate Democrats’ health-reform initiative proposes lowering premiums and deductibles, exploring Medicare-like coverage choices, simplifying enrollment, and restricting improper claim denials.
Electricity affordability. Senate Democrats’ energy-affordability agenda proposes restoring clean-energy incentives, upgrading the grid, protecting consumers, and requiring data centers to bear their fair share of costs.
Permitting and transmission. The Bipartisan American Affordability and Jobs Act of 2026 would accelerate energy-project approvals, expand the grid, and require data centers to pay their associated transmission costs.
Most of these proposals are unlikely to become law in the 2027–2028 Congress because of Trump’s veto power and the difficulty of offsetting new spending or tax cuts under pay-as-you-go rules. Measures that speed energy-project approvals, expand transmission, or require data centers to pay their own infrastructure costs could attract support from both parties and require less federal spending. Perhaps Congress should prioritize these measures.
Question Six: Will the new Congress address Social Security’s and Medicare’s financing shortfalls?
The 2026 trustees’ reports project that Social Security’s retirement and survivor trust fund will exhaust its reserves in 2032 and Medicare’s hospital-insurance trust fund in 2033. Continuing revenues would then cover about 78% and 89% of scheduled benefits, respectively, unless Congress changes the law. These programs would not disappear, but their financing shortfalls require action.
My assessment is that a comprehensive agreement is unlikely in 2027–2028: it would require politically difficult compromises over taxes, benefits, or healthcare payments before the 2028 presidential election. Congress will probably leave these financing problems to its successors, reducing the time available to phase in changes.
Conclusion
The new Congress’s immediate test is to prevent funding and borrowing crises while negotiating affordable improvements that can become law. More ambitious proposals will help define the choices voters face in 2028.