Congressional debt ceiling showdown looms ahead of October deadline
WASHINGTON – Congress heads for a high-stakes debt ceiling showdown as the Treasury Department says the U.S. government will run out of money to pay its bills next month.
In a letter To congressional leaders on Wednesday, Treasury Secretary Janet Yellen warned of a likely deadline in mid-October to raise the debt ceiling. “The most likely outcome is that liquidity and extraordinary measures will be exhausted during the month of October,” she wrote. She said “waiting until the last minute” to tackle the problem could “seriously damage business and consumer confidence.”
Lawmakers from both parties have repeatedly warned that not raising the debt ceiling would be catastrophic for the U.S. economy, but that hasn’t stopped Republicans from trying to leverage concessions when a Democrat occupies the White House by refusing its support.
House Speaker Nancy Pelosi, D-Calif., And Senate Minority Leader Mitch McConnell, R-Ky., Are in the midst of a deadlock over how to approach the issue.
McConnell wants Democrats to raise the debt ceiling without any Republican backing – a position that will allow its members to avoid political heat while still allowing them to criticize the other side of the aisle.
But Pelosi told reporters on Wednesday that House Democrats would not impose a debt limit increase in the multibillion-dollar social safety net, which they expect to pass without the support of the republicans.
One option Democrats are considering is to tie an increase in the debt limit to the government funding bill, which must be passed by September 30 in order to avoid a government shutdown. Pelosi said the vehicle has not been decided.
“We will have several options. We will let you know about them as we shrink and move forward. But it has to happen,” she said of extending the borrowing limit. “We won’t put it in reconciliation. No.”
But if Democrats don’t raise the debt ceiling in the filibuster-proof budget, it would take at least 10 Senate Republicans to agree to raise the limit.
McConnell said that because Democrats are proposing billions in new spending, they should increase the borrowing limit themselves.
This week, a McConnell aide highlighted a speech last month in which he explained his position, which is supported by many Republican senators.
“Democrats have all the existing tools they need to raise the debt limit on a partisan basis,” McConnell said Aug. 9 before leaving the Senate for vacation. “If they want 50 tight Democratic votes to spend billions and billions more, they can find 50 Democratic votes to fund it.”
McConnell said Democrats were behaving like a friend who “flies to Las Vegas to waste all his money” and “wants you to co-sign a loan for him before he leaves.”
The debt limit is a self-imposed hurdle the United States has created to meet its obligations that Congress regularly addresses. Lifting it would not authorize new expenses or debts; it would simply allow the government to borrow money to pay the bills that Congress has racked up.
The question should be raised whether or not the Democrats have adopted their multibillion-dollar package, in order to continue funding bipartisan government operations such as national and military spending.
Now, to fix the problem, one party would have to blink at the dead end.
Debt limit tends to become a political football under Democratic presidents as Republicans criticize them for their spending. Raising it on a partisan basis could be a painful vote for some Democrats and subject them to attacking GOP ads, which is why the party wants bipartisan membership.
Senate Majority Leader Chuck Schumer, DN.Y., said it would be “the height of irresponsibility” for Republicans to “take the debt ceiling hostage”, calling it an “act horrible and despicable “.
Pelosi said Democrats supported several increases to the debt limit under former President Donald Trump, even as Republicans increased the debt by cutting taxes based on party line.
“During the Trump administration, which racked up over $ 7 trillion in debt – that’s what the increased debt ceiling pays… we pay off the Trump credit card,” Pelosi told reporters. “When President Trump was president, we Democrats supported lifting the debt ceiling because it is the responsible thing to do. I hope Republicans act equally responsibly.”
She said “even the threat of not lifting it” can hurt America’s credit rating.
In 2011, after Republicans used the debt limit to get concessions from then-President Barack Obama, McConnell told The Washington post that most GOP members didn’t think “the default problem was a hostage you could try to shoot”, but they learned it was “a hostage that deserved a ransom”.
McConnell spokesperson Doug Andres replied on Twitter to Pelosi: “Democrats control Washington now. They can increase the debt limit themselves. It would be a crisis of their own accord. “
Teaganne finn and Frank Thorp V contributed.