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Why Does the Debt Ceiling Deal Include a Fossil Fuel Pipeline?
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Key Topics You’ll Learn About in This Article
- What the debt ceiling deal is and long-term consequences
- How different political parties view the debt ceiling deal
- How the debt ceiling deal could directly impact Americans
After months of political negotiations in 2023, the United States raised its debt ceiling through the Fiscal Responsibility Act of 2023, which was signed into law on June 3, 2023 in order to prevent the country from being unable to pay its loans.
However, this temporary reprieve has come to an end - as the debt ceiling was reinstated on January 2, 2025, at $36.1 trillion, forcing the federal government to once again resort to extraordinary measures to avoid defaulting on the federal debt.
The current federal debt crisis facing the United States in 2025 could impact millions of Americans if the federal government continues to default on its government debt obligations. The Treasury Department has implemented extraordinary measures to temporarily manage federal debt below the ceiling, but over the long-term – the federal budget must be amended to effectively avoid national debt in the future.
In this article, we'll discuss what is the debt ceiling, how the 2023 debt ceiling deal worked amongst the debt ceiling debate, and how federal agencies will now cope with another federal debt crisis on the horizon in 2025.The table below will break down the various places budgets are being cut in order to avoid a debt ceiling the following fiscal year:
What is the Debt Ceiling?
The debt ceiling is the term used to refer to the limit on the amount of money that the United States can borrow. This term and concept was created back in 1917 under the Second Liberty Bond Act, which is commonly referred to as the debt limit or the statutory debt limit.
In today’s political dialogue, this concept is referred to as the debt ceiling – which is where government spending is exceeding the current rate of federal borrowing.
“ There’s no debate that the seriousness of the U.S. not paying its debts, whether it’s Social Security checks, small-business loans or whatever, all the way up to Treasury notes and bills, is the most serious thing we have, and we witnessed that in August '11, and you saw the ramifications: a slowdown in the economy, and we’re facing that again – (Brian Moynihan). ”
Think of the debt ceiling similar to the limit on someone’s credit card: there is only a certain amount of money that someone can borrow on a line of credit before their credit card is rejected and they can no longer make purchases that do not directly debit their bank account. The same goes for the debt ceiling in the United States.
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Why Is Raising the Debt Ceiling What Usually Happens Instead of Admitting The U.S. Has Reached Federal Debt?
If the United States is ever unable or unwilling to raise the debt ceiling, the country would have no choice but to default – which means the U.S. essentially admits they are unable to pay their bills and do not have the financial resources to do so on time.
The U.S. have never defaulted, not once, but with this most recent debt ceiling crisis – many were fearful the U.S. would have no other choice but to default. As a result of the United States remaining adamant on paying their bills on time, the debt ceiling has been raised multiple times over the years to ensure Americans do not suffer the consequences of a default.
Raising the Debt Ceiling: Pros and Cons of Increasing Debt Limit
Although raising the debt ceiling is bound to have other implications within Congress, there are numerous as to why it proves advantageous for the United States.
The flip cards below (move cursor over cards to flip) will reveal some of the pros of the debt ceiling increase:
💵 Fiscal Efficiency
The debt ceiling lets the U.S. Treasury issue bonds without constant re-approval — helping streamline government financing.
📊 Organized Finances
The debt ceiling helps maintain budget discipline and ensures the U.S. monitors national borrowing practices.
🏛️ Supports Federal Programs
It enables funding for critical federal operations — including disaster relief, education grants, and military spending.
💗 Social Safety Net
The debt ceiling allows uninterrupted funding of Social Security and Medicare — protecting millions of Americans.
However, that being said – there are also downsides to the debt ceiling. The drop down sections below will explain how raising the debt ceiling could impact future spending, borrowing costs, federal employees, treasury bonds, and more:
A downgrade could raise interest rates for U.S. borrowing and reduce confidence in the Treasury market, making government loans more expensive.
Ongoing tax cuts—especially without offsetting revenue—can contribute to rising deficits and long-term fiscal strain.
Funding shortfalls could impact federal agencies and programs like Social Security, Medicare, or disaster relief without predictable budgets.
Veterans Affairs may face delays in appointments or care if funding disruptions occur due to unstable debt ceiling policy.
Extraordinary Measures to Avoid Government Debt: Does It Mitigate Government Spending?
Referring back the analogy of the debt ceiling functioning a lot like a credit card – someone who has no money in their bank account, but has a credit card, may be lead to believe they can make extravagant purchases with no consequences. This couldn’t be further from the truth, as the user will eventually have to pay interest on everything they bought.
This concept is the same for the United States, as will the U.S. will eventually have to pay interest on its public debt regardless of how many times they raise the debt ceiling.
When cash balances run low, the Treasury Secretary must implement extraordinary measures during a debt issuance suspension period, putting a temporary pause on the sale of certain treasury securities to avoid exceeding the limit. However, just like someone about to max-out their credit card, this only delays the inevitable financial consequences of looking to borrow money to avoid needing to pay bills.
The timeline below will reveal how the Treasury Department plays a role in the process of debt ceiling:
📉 1. Monitoring National Debt
The Treasury tracks how close the U.S. is to the debt ceiling limit, watching borrowing levels daily.
📬 2. Informing Congress
When nearing the limit, the Treasury notifies Congress and urges action to avoid default.
🛠️ 3. Using Extraordinary Measures
If Congress doesn’t act in time, the Treasury implements short-term financial maneuvers to stay under the cap.
🏛️ 4. Awaiting Congressional Approval
The Treasury cannot raise the ceiling — only Congress can. They wait and plan while advocating for quick decisions.
💵 5. Resuming Normal Operations
Once the ceiling is raised or suspended, the Treasury resumes regular borrowing and debt management.
Both the Congressional Budget Office and Government Accountability Office have expressed their concerns regarding how the United States has continuously raised the debt ceiling without addressing underlying fiscal problems. In Fact, the CBO estimates that extraordinary measures will be exhausted as early as August or September 2025.
“ Public debt allows governments to spread costs over time, especially for major infrastructure investments or responses to natural disasters or geopolitical challenges. High debt levels can crowd out private investment and push the fiscal burdens onto future generations. – (U.S. Congressional Budget Office on the concerns of continuing to raise the debt ceiling). ”
In addition to this, the debt ceiling lowers credit ratings and creates contention whether the debt ceiling is morally the right thing to do.
The summary cards below will reveal how debt outstanding could impact the Internal Revenue Service, social security administration, intragovernmental debt, and household wealth:
🧾 Internal Revenue Service
High levels of debt can pressure the IRS to collect more aggressively or expand audits to recover lost revenue.
🏦 Social Security Administration
Outstanding debt may strain trust fund reserves, raising concerns about long-term Social Security payouts.
🔁 Intragovernmental Debt
Much of the U.S. debt is owed between agencies — like the Treasury borrowing from Social Security — complicating internal budgets.
💰 Household Wealth
As national debt grows, potential inflation or higher interest rates can reduce purchasing power and affect savings.
Why Did House Republicans Decide to Raise the Debt Ceiling?
It doesn’t come as a surprise to many that the United States decided to raise the debt ceiling, as if the U.S. were to have defaulted – Americans and governments around the world could have been exposed to new financial problems and even entire government shutdowns.
Typically, these disruptions are caused when conflict arises between the White House and Congress – and where there are disagreements on how to move forward. However, raising the debt ceiling isn’t guaranteed to resolve other issues either – as it could create trouble in congress.
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Republicans vs. Democrats on Future Spending & The Federal Budget
This is due to the fact that Republicans were wary of raising the debt ceiling limit unless Democrats got serious about making budget cuts and spending caps – to ensure the same debt ceiling crisis isn’t met again in a few years.
The battle cards below will break down the differences Republicans and Democrats viewpoints' regarding raising the debt ceiling and how it could impact the government's cost of providing various services to American citizens:
🐘 Republicans
✅ Favor stricter limits on raising the debt ceiling to reduce government spending.
💸 Push for spending cuts tied to any debt ceiling increase.
📈 Argue that high debt increases the government’s borrowing costs.
🚫 Want to limit the government’s ability to fund large-scale social programs.
🧾 Frame debt ceiling negotiations as an opportunity to rein in federal spending.
🕊️ Democrats
🏛️ Support raising the debt ceiling to ensure government services continue uninterrupted.
✂️ Prefer a “clean” debt ceiling raise without added conditions.
⚠️ Argue that default risks from inaction would increase borrowing costs even more.
💚 Emphasize maintaining funding for Medicare, Social Security & federal services.
🧨 Warn that holding the debt ceiling hostage threatens economic stability.
Debit Ceiling Impact on Interest Rates
Still, the decision to raise the debt ceiling in 2023 was large in part to prevent several negative repercussions. For instance, if the debt ceiling wouldn’t have been raised: there would’ve been higher interest rates for bonds, mortgages, and credit card loans – demonstrating how choosing a default over raising the debt to be an especially worrisome event seeing as of 2021, 84% Americans make use of a credit card.
“ No one got everything they wanted, but the American people got what they needed. We averted an economic crisis and an economic collapse – (Former President Biden speaking about the 2023 debt ceiling deal). ”
Ultimately, the U.S. decided to raise the debt ceiling to prevent the nation from being unable to pay its bills on time and to protect from the potential negative financial consequences. According to Biden, the country was close to an economic collapse – making the deal necessary even if it didn’t satisfy everyone.
However, raising the debt ceiling has put pressure for there to be budget cuts on behalf of Democrats – meaning the debt ceiling deal could impact current climate change programs being funded by the government.
Where Does the Debt Ceiling Deal Make Cuts in Current Funding?
The debt ceiling may have reached an agreement, but the deal is likely to have an impact on the current climate goals implemented by the United States – from ongoing and potential programs to reduce greenhouse gas emissions to pipeline deals.
This is due to the fact that in order to have the debt ceiling passed, even in 2025, the country will be forced to make budget cuts – many of which could impact existing or future plans to fight against climate change. Recent estimates show that the U.S. is expected to decrease their spending by $55 billion in 2024, and by a whopping $81 billion by 2025.
The table below will break down the various places budgets are being cut in order to avoid a debt ceiling the following fiscal year:
| 💸 Federal Spending Cuts – 2025 | |
|---|---|
| $1.1 Billion | Cut from public broadcasting (e.g., NPR, PBS) |
| $793 Billion | Reduction in federal Medicaid spending |
| $8 Billion | Cut from foreign aid |
Impact on Spending Cuts For Americans, Political Parties & Internal Revenue Service
One of the ways the debt ceiling deal could impact Americans is by phasing out who qualifies for food stamps – putting hundreds of thousands of Americans at risk of starvation and unable to benefit from programs such as the Inflation Reduction Act of social security benefits.
The problem with much of the debt ceiling deal is that it doesn’t satisfy either Republicans or Democrats with the cuts they want to make to reduce the country from further debt. Republicans were keen on taking bigger spending cuts on various work requirements, and also wanted to remove the billions of dollars invested by Biden to transition to the use of clean energy and fight against climate change. On the other hand, Biden was determined to raise taxes for the wealthy to help reduce the costs Americans pay for prescription drugs – even on Medicare.
While neither of these made it into the debt ceiling deal, healthcare such as medicare is set to be impacted as a result of raising the debt ceiling – which is an already a growing problem due to climate change.
Other areas of funding that will be cut as a result of the debt ceiling deal will be with student loans and even IRS funding – both of which will continue to put Americans under financial stress. However, the avenue where the debt ceiling deal is most concerning is when it comes to climate change programs and approving of potential projects that could harm the environment – all for the sake of pulling the United States out of debt.
How Does the Debt Ceiling Deal Impact Fossil Fuel Pipeline Projects?
There are a lot of things in the new debt ceiling deal that will have Americans worried, but one of the most concerning facets of the debt ceiling deal is the tacit implication that there will be changes how climate goals are approved of and executed in the country.
Example: Mountain Valley Pipeline
An example of this is with the Mountain Valley Pipeline, where Republicans were able to integrate the pipeline project into the debt ceiling deal.
“ Well, the pipe it's certainly good for West Virginia. And in general, the debt ceiling deal is a good deal just to avoid the massive financial uncertainty that could have occurred if we hit that debt ceiling in the next week or so... we might save about one and a half trillion dollars over the next 10 years but that's out of a $20 trillion deficit over the same period and $80 trillion dollars in new government spending. – (Senator Joe Manchin). ”
The timeline/summary cards below will explain how pipeline projects, such as the Mountain Valley Pipeline, could be integrated into a future debt ceiling deal in 2025:
🛢️ Timeline: Pipeline Projects in a 2025 Debt Ceiling Deal
🗓️ Q1 2025
Debt Ceiling Talks Begin
Lawmakers reopen negotiations to address the approaching debt ceiling deadline.
➜
🏛️ Q2 2025
Legislative Bargaining
Energy-focused lawmakers push for pipeline approvals (like MVP) as bargaining chips in broader fiscal deals.
➜
🔗 Mid-2025
Pipeline Projects Linked
Permitting reforms or fast-tracking pipelines are added as policy riders in debt ceiling legislation.
➜
✍️ Late 2025
Deal Finalized
Debt ceiling raised with provisions including pipeline project authorizations or environmental review changes.
This was done by pressuring Biden and pontificating that the Mountain Valley Pipeline Project would be critical for energy infrastructure and help to lower the energy costs in multiple states. These states included Virgina and North and South Carolina. However, this was done with political persuasion in a moment of crisis – and the pipeline project may not be moving forward so quickly if it weren’t for the debt ceiling crisis.
The debt ceiling deal was approved by the Mountain Valley Pipeline project with the belief it will help support the energy crisis in addition to reducing energy bills – both of which are strong policies demonstrated by the Biden administration. However, the political language was manipulated to convince Democrats that the pipeline project will be more beneficial than it actually will be.
Additional Programs Affected by the Debt Ceiling Deal
In addition to other federal programs, such as ones geared towards fighting against climate change, which are in danger of facing budget cuts – approving of projects like these in timely manners, while could help the U.S. acquire immediate cash, could deter the country from meeting its climate goals.
The summary cards below will reveal some of the various projects that could be paused or halted altogether by the Trump administration
Offshore Wind
Solar Farms
Reforestation
High-Speed Rail
EV Charging
Climate Monitoring
Park Protections
Clean Air
Bike Infrastructure
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Debt Ceiling Deal in 2025: Has Congress Failed to Address the Main Issue?
Ultimately, the U.S. approved of massive cuts for common federal spending programs, much of which is intended to help struggling Americans – in order to ensure that the U.S. can pay their bills on time and prevent the need to raise the debt ceiling again.
While this makes sense, as a default in the United States could put the country and even other nations in financial peril – it is worth questioning why certain projects are being approved of to raise funds quickly, especially when investing in clean energy projects could reap greater financial benefits overtime than fossil fuel pipeline projects will.
It's clear that the United States is failing to address the core financial issues present across the country – as additional borrowing will only result in a prolonged breach until the next debt ceiling increase beyond 2025.
The recent debt ceiling predicament in the U.S. is a reminder that when times get tough, any short-term opportunities can be easily chosen over long-term efforts – even when they don't align with our moral values. The debt ceiling crisis may be resolved, but we may have yet to see the repercussions of the nation's economic distress.
What About Greenly?
If reading this article about how the debt ceiling will help accentuate the use of fossil fuel and production of pimples has made you interested in reducing your carbon emissions to further fight against climate change – Greenly can help you!
It can be hard to keep track of all of the news happening around the world, such as how the economy’s of countries impact the fight against change – but don’t worry, Greenly is here to keep you up to date on all of the latest climate news.
Greenly can help you make an environmental change for the better, starting with a carbon footprint assessment to know how much carbon emissions your company produces.
Sources
U.S. Congress https://www.congress.gov/bill/118th-congress/house-bill/3746/summary/00
Congressional Budget Office https://www.cbo.gov/publication/60887
Reuters https://www.reuters.com/world/us/biden-signs-bill-lifting-us-debt-limit-2023-06-03/
U.S. Senate https://www.finance.senate.gov/imo/media/doc/SRpt71-1836.pdf
Axios https://www.axios.com/2023/05/16/us-history-debt-default
Harvard Law https://journals.law.harvard.edu/jol/2023/11/06/the-need-to-reform-the-debt-limit/
New York Times https://www.nytimes.com/2023/04/26/us/politics/debt-limit-vote-republicans.html and https://www.nytimes.com/2025/06/13/us/politics/trump-public-broadcasting-senate.html
Politico https://www.politico.com/news/2023/06/02/biden-oval-office-debt-limit-00100076
The Daily Beast https://www.thedailybeast.com/big-bird-goes-down-as-house-passes-first-doge-cuts
KFF https://www.kff.org/medicaid/issue-brief/allocating-cbos-estimates-of-federal-medicaid-spending-reductions-and-enrollment-loss-across-the-states/
ABC News https://abc3340.com/news/nation-world/debt-ceiling-deal-includes-manchins-controversial-pipeline-plan-debt-limit-biden-mccarthy-senator-joe-manchin-west-virginia
CNN https://edition.cnn.com/2024/12/27/business/debt-ceiling-trump-republicans-congress