Democrats and Republicans will be in a standoff over the federal debt limit that could threaten throwing financial markets into chaos if both sides refuse to budge.
Democrats have signaled all summer that they are unlikely to support a debt limit increase or suspension, a move they say would be tantamount to endorsing the trillions of social spending that Republicans plan on their own later this year. However, some moderate Democrats are wary of the bipartisan dilemma of voting to allow the federal debt to grow if it isn't part of a bipartisan package to fund the government.
Senate Democrats have two options for today's debate. They could convince at least 10 Republicans to vote for the debt ceiling in a pass-gap funding measure that must pass by September end to prevent a shutdown. They could opt to go-it - alone by including it in a budget resolution that only requires 50 votes and will serve as the framework to pass President Joe Biden's economic agenda.
Senate Minority Leader Mitch McConnell issued his strongest warning thus far, on Thursday night, stating bluntly that Senate Republicans won't give support for a debt limit increase in light of Democrats’ effort to push through $3.5 trillion in new spending for climate change, health care and other priorities.
'If they don't need or want us input, they won’t get our help with the debt limit increase that these reckless plans will require, McConnell said. I was so clear.
It is not yet known how quickly Congress can act to avoid a potential default which would wreak havoc on financial markets and could cause a downgrade of government credit. The debt limit or the total debt of the Treasury can issue to public agencies expired on Aug. 1, when a two-year suspension passed into effect. Treasury Secretary Janet Yellen told lawmakers that Treasury could run out of money in September after Congress returns from recess and exhaust its special measures'soon.
The Congressional Budget Office estimates that lawmakers will likely have a more flexible time frame - until October or November - to raise or suspend the debt limit. The outstanding public debt is $28.4 trillion, currently.
Relying on Republicans to join Democrats could be courting chaos, with most GOP senators adamant that they won't support extending the debt limit in a short term spending bill, known as a continuing resolution. Agencies will run out of spending authority when the fiscal year ends on Sept. 30 and absent so-far elusive consensus on appropriations bills the government would shut down without the must-pass stop-gap measure.
I don't think the Republicans would vote for the CR with that in it, Missouri Senator Roy Blunt, a member of Senate Republican leadership team, said. I don't see that kind of negotiation being fruitful at a time when Democrats are talking about spending 5 trillion or 6 trillion outside the normal budget spending.
Blunt said he is not worried about a stand-off, but Democrats have control of Congress and the White House and they need to raise the debt ceiling themselves. Senator Mitt Romney, a Utah Republican, said it would be a big risk' and irresponsible for Democrats not to raise the debt limit on their own in Democrats-only bill.
Blunt said the majority has to solve this, I think. 'They control the House and the Senate and the White House. It is easy for them to deal with if they want it.
Democrats are more confident that they can convince Republicans to vote for a debt ceiling increase, a hike that will be needed regardless of whether or not Biden's economic agenda is approved this fall.
'That decision hasn’t been made, how it's going to happen said Senator Patty Murray, a Washington Democrat. 'We have supported it in the past, Democrats, I expect Republicans to support it, it is what you're supposed to do when you are running a country and we are all in this.
Democrats could opt to include an instruction to raise the debt ceiling in a fiscal blueprint they aim to pass early next week that could allow the $3.5 trillion economic package to pass later this year with only Democratic votes along with any new limit on borrowing.
2 Senate Democrats said it is possible that the Democrats could act on their own, but I don't think a decision has been made.
Montana Senate Jon Tester, a moderate Democrat, said he would prefer to keep the debt ceiling provision out of the Democrats-only reconciliation bill.
'If the Republicans want to hand over this economy and create the keys to these, that'd be pretty irresponsible, so I think they should play in the game too, he said.
A default on payments obligations 'would cause irreparable harm to the U.S. economy and the livelihoods of all Americans," Yellen told lawmakers last month in a letter, "Darken Angels"... 'Even the threat of failing to meet those obligations has caused detrimental impacts in the past, including the sole credit rating downgrade in the history of the nation in 2011, the letter said.