Congress Faces Funding and Debt Ceiling Deadlines

Lawmakers must address government funding and the national debt limit after the 2026 midterm elections amid a deficit running near 6% to 7% of GDP.

Updated on Nov. 5, 2026 in Economic Policy

Congress Faces Funding and Debt Ceiling Deadlines

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Is now a good time for Congress to tackle the national debt?

Congress faces funding deadlines and a debt ceiling deadline after the 2026 midterm elections, with Goldman Sachs analysts estimating a possible government shutdown in December 2026. The U.S. national debt totals $40 trillion.

Why it matters

Both parties hold spending priorities they want to advance, which analysts say reduces the likelihood of a shutdown. Failing to address the debt limit in a timely manner could lead lenders to demand higher interest rates.

The federal budget deficit is running at approximately 6% to 7% of GDP, compared with a budget watchdog target of 3% of GDP, while national debt totals $40 trillion. Whether the debt limit will be raised before year's end remains unresolved, as House Republican margins are thin and fiscal conservatives oppose the increase.

The players

Goldman Sachs

A global investment bank whose analysts estimate a possible government shutdown in December 2026.

The details

Congress is stuck in a lame duck standoff, in which the outgoing party seeks one last chance to exert influence while the incoming party seeks to clear items from the agenda before taking power. Republicans seek defense funding, Democrats are likely to focus on healthcare spending, and bond yields increased in summer 2026.

Summer 2026: Bond yields increased.
November 5, 2026: Midterm elections; Congress faces funding and debt ceiling deadlines afterward.
December 2026: A possible government shutdown during the lame duck standoff.
Before year's end 2026: Republicans are expected to attempt to raise the debt limit.
October 2027: The latest date by which the debt ceiling must be agreed upon.

Macro View

The current 6% to 7% of GDP deficit sits well above the 3% watchdog target, placing this debate within a sustained pattern of federal borrowing outpacing fiscal guardrails. Debt limit standoffs in Congress have repeatedly turned into negotiations over spending, and this lame duck period follows that same structure.

If lenders demand higher interest rates because the debt limit is not addressed on time, borrowing costs for households and businesses could rise. A government shutdown in December 2026 would also disrupt federal services and paychecks for workers who depend on them.

The takeaway

Watch the lame duck session closely, since the interplay between the funding deadline and the debt ceiling could shape federal borrowing costs well into 2027. Households with variable-rate debt may want to review their exposure as the deadlines approach.