Biden administration is warning federal and state governments about drastic cuts to Medicaid, food stamps, disaster relief and other national programs if Congress fails to raise or suspend the debt ceiling soon.
The fight to raise the government's borrowing limit carries big risks for state and local officials, the White House said in a fact sheet obtained by the Associated Press. With the total debt standing at $28.5 trillion, the government would be forced to slash federal programs unless the cap is suspended or lifted.
The Treasury Department began implementing extraordinary measures to keep the government operating after the debt limit was reinstated in August around $22 trillion about $6 trillion less than the actual level. Treasury Secretary Janet Yellen has warned Congress to run out of cash in October.
But lawmakers are engaged in a dangerous game of brinkmanship over the debt ceiling: Republicans are pressing Republicans to support an effort to raise or suspend the ceiling, adamant that they won't stick it in a $3.5 trillion spending bill. At the same time, Senate Minority Leader Mitch McConnell has repeatedly told reporters that he will not sanction further increases, arguing that Democrats have the ability to go it alone.
Let s be clear: With a Democratic President, a Democratic House, and a Democratic Senate, Democrats have every tool they need to raise the debt limit. It is their sole responsibility, McConnell tweeted on Wednesday. Republicans will not favor another reckless, partisan taxation and spending spree. Biden has countered that Republicans joined with Democrats three times to delay the limit and that the rising deficit was due to Republican spending. He has argued that the sweeping tax and spending package Democrats are still crafting will be fully paid for.
The same folks who passed the Trump tax bill four years ago, Biden said in his Thursday remarks at the White House. It ballooned the federal deficit. If the U.S. failed to raise or suspend the debt limit, it would eventually have to default on some of its obligations, which could have serious and negative economic consequences. Interest rates would likely drop, and demand for Treasurys would go up; even the threat of default can cause borrowing costs to increase.
Broaching the debt limit would also endanger around $100 billion in infrastructure grants for highways, airports and public transit, the memo shows.
A further $50 billion for public education, school districts serving poorer students and other programs would also be threatened, as would $30 billion in food assistance and 10 billion in special health.