With time running out for Congress to raise the debt limit, Republican senators are betting that Democrats will blink first and try to raise the borrowing limit on their own through a complicated process known as reconciliation. that would allow the Democratic caucus to pass it. The support of its 50 senators. He believes that since Democrats control the government, the public will hold Democrats accountable for not doing everything they can to raise the debt limit.
“We’re not bluffing,” said Sen. John Cornyn (R-Texas).
The Senate is essentially locked in a high-stakes game of chicken, and both sides are convinced the other will back down. Republicans are hoping to implement a law raising the debt limit for the third time this week. They refuse to allow a straight up or down vote, causing Democrats maximum pain on the debt ceiling.
“Democrats are ready to do all they can to increase this,” President Joe Biden said on Monday, calling on GOP senators to drop their filibuster. “Republicans just have to let us do our job. Get out of the way.”
Senate Minority Leader Mitch McConnell (R-Ky.) said Republicans would not allow a simple majority vote.
“Reducing the threshold to 51 would require getting consent from every single Republican,” McConnell said Tuesday. “This will not happen.”
The debt limit is a legal limit on how much the federal government can borrow to fund operations when Congress has authorized it to spend in excess of incoming tax revenue, as has been the case for the past 19 years. The current limit is $28.4 trillion.
Congress has adjusted the debt limit nearly 100 times over the past century, including three times during the Donald Trump administration, when Democrats agreed to suspend the limit without asking. Republicans are refusing to cooperate now that a Democrat is back in the White House.
Treasury Secretary Janet Yellen has said her agency will run out of cash sometime around October 18, meaning the Treasury could start defaulting on payments to bondholders or beneficiaries of programs like Social Security. This gives lawmakers less than two weeks to stop loan defaults.
Yeld warned on Tuesday that a default would lead to a recession. “It would be disastrous for the government not to pay the bills,” Yellen said on CNBC.
Republicans argue that Democrats should handle the debt ceiling through reconciliation, a complicated budget process that could take weeks to complete. Any Republican senator can delay passage of a bill raising the debt limit through conciliation, increasing the likelihood of default. Waiting till the last minute to increase the loan limit can also lead to recession.
“We don’t have the luxury of using a drawn-out, complicated and risky process,” Senate Majority Leader Chuck Schumer (DN.Y.) said Tuesday.
Some GOP senators said they would be willing to vote for a debt limit increase if Democrats drop their safety net and their plans to pass the climate package, the Build Back Better Act. As a “radical” attempt to turn American society toward socialism, the GOP is attacking the law, which is to be financed through taxes on the wealthy. The bill includes funding for free community college and preschool, monthly payments to most families with children, expanded health care coverage, and new subsidies for green energy.
“I’ll take that deal … to New York in a minute. That’s all,” told Senate Minority Whip John Thune (RS.D.).
But other Republicans said they would oppose an increase in the debt limit no matter what — even in the unlikely scenario that the Build Back Better Act after Democrats withdrew the Senate and White House in 2020. abandoned its efforts to pass it into law.
“Probably not because they want open-ended spending. We want some sort of curb,” said Sen. Richard Shelby (Ala.) when asked about the hypothetical proposal.
Sen. Ron Johnson (Wis.) said he would not take that deal because Democrats could “drop it and then bring it back” after the debt limit was raised.
“Once you raise the loan limit they will be free to unilaterally spend a lot of money,” Cornyn said.
Democrats can use the conciliation process to raise the debt limit so high that it never becomes an issue again, or set it so that it automatically matches the amount of additional spending authorized by Congress. But Democrats are not seriously considering such ideas, because not all 50 senators in the Democratic caucus will go for it.
For the most part, Republicans have maintained that a federal default would be disastrous and should be avoided, even if they themselves would not point a finger at helping Democrats avoid it.
The threat of default only in 2013, when Republicans called for spending cuts in exchange for raising the limit, caused investors to avoid Treasury securities, which serve as benchmarks across credit markets. A federal default is likely to cascade through the financial system and result in higher borrowing costs for all.
But some lawmakers believe the Treasury’s October 18 deadline is not certain and that its bad consequences will take longer to develop.
“What would happen is the Treasury would actually be saying, ‘Okay, we have to prioritize how we’re going to pay the bills.'” told Sen. Mike Rounds (RSD). “None of us want to see that happen.”