FILE PHOTO: The U.S. Capitol building on Capitol Hill, seen during sunset in Washington, U.S., September 30, 2021. REUTERS/Elizabeth Frantz
October 5, 2021
By David Morgan and Susan Cornwell
WASHINGTON (Reuters) -President Joe Biden’s Democrats planned a Wednesday vote in the Senate to suspend the U.S. debt ceiling, setting up yet another confrontation with Republicans that risks an economically crippling federal credit default.
The effort seemed destined to fail as the chamber’s top Republican, Mitch McConnell, said on Tuesday that members of his party would block the vote as they have already done twice. McConnell has urged Democrats to raise the debt ceiling on their own using a more convoluted approach that Democrats have dismissed as unworkable.
“They have the time to do it. And the sooner they get about it, the better,” McConnell said at a news conference.
Absent a clear solution, Congress seemed likely to push the U.S. government closer to an unprecedented and unnecessary default, which analysts say would roil the global financial system, raise borrowing costs and eliminate millions of jobs.
Treasury Secretary Janet Yellen has said the government will exhaust its borrowing capabilities by about Oct. 18 if Congress does not raise the country’s $28.4 trillion borrowing authority by then.
Democrats narrowly control both chambers of Congress, and the House of Representatives voted last week to suspend the debt ceiling until the end of 2022.
But Democrats need at least 10 Republican votes to clear a procedural hurdle in the Senate, which is evenly divided between the two parties. Republicans blocked two other efforts to raise the debt ceiling last week.
“If Republicans want to vote ‘no’ tomorrow, if they really want to be the party of default, that’s their choice,” Schumer said on the Senate floor. “They have a chance to show that they’re still responsible. It’s not too late. But it’s getting dangerously close.”
Republicans have said the unpleasant task should be the responsibility of the party in charge. If they succeed in forcing Democrats to increase the debt limit on their own, the issue would likely be fodder for attack ads against Democratic candidates in the 2022 congressional elections.
McConnell has called on Democrats to use a complicated procedure known as budget reconciliation, which would require no Republican votes.
Biden and Schumer have rejected reconciliation as too convoluted and risky and have warned of economic catastrophe unless Republicans change course. But Schumer did not rule it out at a news conference on Tuesday.
Democratic Senator Chris Van Hollen said his party had other options, but he refused to spell them out. “We will find a way to get it done,” he said.
Without a quick resolution, some government services might be suspended, such as delivering Social Security benefit checks to the elderly.
Even a close call would likely be damaging. A 2011 debt ceiling dispute, which Congress resolved two days before the borrowing limit was due to have been reached, caused stocks to tumble and prompted a first-ever credit downgrade for U.S. debt.
Using reconciliation could consume the attention of Congress, slowing Biden’s ability to reach agreement on his multitrillion-dollar social agenda and potentially undermining his support among moderate and progressive Democrats.
The reconciliation process would require Democrats to adopt a specific dollar figure for a new, higher debt ceiling on their own, rather than simply postponing the issue until after the November 2022 elections.
(Reporting by Susan Cornwell, Richard Cowan and David Morgan; Writing by Andy Sullivan; Editing by Will Dunham and Cynthia Osterman)
