As of January 2, 2025, the nation's debt ceiling has been reinstated, posing a significant challenge for congressional Republicans as they enter the new year.

Treasury Secretary Janet Yellen will inform Congress when the debt limit is reached and will provide an estimate of how long extraordinary measures can be sustained, referred to as the 'X date.'

Once the debt limit is reached, the Treasury will implement extraordinary measures to avoid default, as the government operates at a deficit and needs to borrow to cover expenses.

Thanks to a technical adjustment, the U.S. will not immediately hit the debt limit, but it is projected to be reached between January 14 and January 23, 2025.

The ability of Congress to tackle the debt ceiling will hinge on federal tax revenues in spring 2025, the spending of disaster assistance funds, and the overall economic climate.

House GOP leaders have proposed raising the debt limit by $1.5 trillion in 2025, while also suggesting $2.5 trillion in cuts to mandatory spending to satisfy conservative lawmakers.

Using the reconciliation process, Republicans plan to pass key priorities with a simple majority in the Senate, which they currently control with 53 seats.

President-elect Donald Trump is urging GOP lawmakers to resolve the debt ceiling issue before his inauguration on January 20, 2025.

Even if Republicans successfully raise the debt limit by $1.5 trillion, projections indicate that this new ceiling could be reached by late 2025, potentially leading to a default in early 2026.

The potential consequences of a debt default remain uncertain, as the U.S. has never defaulted before; however, it could disrupt the global economy and lead to higher borrowing costs.

An analysis by the Bipartisan Policy Center suggests that the Treasury's cash and extraordinary measures will last several months after the first quarter of 2025, giving Congress time to address the issue.

Republicans, who control Congress, are facing challenges in addressing the debt ceiling due to a slim House majority and demands from conservative members for spending cuts.