For the next two years, President Trump must run his administration with a Congress controlled by the opposing Democrats. And in the power struggle to come, a key battleground is already being set out: How to keep the lights on at federal government.

A number of budget deadlines are marked on Washington, D.C.’s calendar: First is December 11, the day on which a temporary 72-hour funding bill signed by the president in September will expire.

After that is a loose circle around fall 2027, when the U.S. debt ceiling will need to be raised. At the moment, that ceiling stands at $41.1 trillion, of which $40.5 trillion has been borrowed, per Treasury data. And while one might assume it would take some time—even for an economy as huge as the United States of America’s—to borrow the best part of $1 trillion, analysts expect that point will be reached approximately a year from now.

And of course, that’s before anyone gets to the conversation being urged by budget watchdogs about the deficit levels that are adding to the debt pile. Currently, the U.S. Treasury is managing a budget deficit of approximately 6% to 7% of GDP, a figure that debt watchdogs would like to see halved to a target of 3% of GDP.

So while the immediate concessions demanded by the Democrats of their Republican counterparts may be clear (de-escalation of the conflict in Iran, and rolling back some tariffs), the outcome of numerous budget battles is yet to be determined.

Goldman Sachs’s Alec Phillips and Abhay Duggirala have been thinking about the potential of a government shutdown in December, with Congress stuck in a not uncommon “lame duck” standoff because “the outgoing party sees one last chance to exert greater influence while the incoming party sees an opportunity to clear items from the agenda before taking power.”

That said, both parties have spending priorities they want to advance, reducing the likelihood of a shutdown. Republicans want to sign off on funding for defense, while Democrats are likely to focus on healthcare.

The next issue for the two sides is raising the debt ceiling, which Goldman estimates will need to be agreed upon no later than October 2027. “Congressional Republicans are likely to attempt to raise the debt limit before year’s end, but thin margins in the House and pushback from fiscal conservatives make this unlikely to succeed,” the Goldman duo notes.

Increased spending may provide common ground for raising the debt ceiling next year, notes PIMCO’s head of public policy, Libby Cantrill. But Cantrill says that either party may also overplay their hand, pushing the economy closer to the “X date”—the day on which the debt limit is reached and no further borrowing is signed off.

“Failing to address the debt limit in a timely manner can undermine investor confidence that the federal government will make good on all its obligations, and lenders may demand higher interest rates—which results in higher costs for households and businesses alike,” warns the Bipartisan Policy Center’s Caleb Quakenbush. “A government operating near its borrowing limit would have limited capacity to respond expeditiously to an escalation of the Iran conflict, a sudden economic downturn, or another black swan event.”

The $40 trillion question

While these fiscal hurdles need to be overcome to continue day-to-day operations, they do little to address the broader, long-term question of the U.S. fiscal trajectory.

Debt hawks warn that government borrowing ultimately filters down to the voters they serve. The increased bond yields we saw this summer are signs that lenders to the U.S. could begin to demand higher rates of return in order to purchase Treasury debt.

“Americans are rightly concerned about rising costs and prices, and the best thing a new Congress and the White House can do to improve affordability is to enact meaningful deficit reduction,” Maya MacGuineas, president of the Committee for a Responsible Federal Budget, said yesterday. “If past is prologue, our dangerously polarized and hyperpartisan politics in Washington will only serve to punt these decisions to future generations or until bond markets force it upon us … Washington should heed the demand of voters to focus on issues impacting their pocketbook while also living up to the responsibility entrusted in elected leaders to be stewards of our nation’s fiscal future.”