Senate Republicans are expected to block a bill on Monday that would fund the government and head off a U.S. debt default as part of a strategy to saddle Democrats with a hike in the nation’s borrowing ceiling ahead of next year’s midterm elections.
While both sides agree the $28.4 trillion limit on borrowing must be raised before the federal government defaults on its loans or has to stop paying military personnel or social security benefits, they are deadlocked over who should act.
The result is increasingly dire warnings of financial catastrophe and recession that could cost up to six million jobs.
The first deadline in a high-stakes week, with President Biden’s vast spending plans on the line, comes on Monday evening.
Republicans have made clear they will not back a bill to fund the U.S. government through Dec. 3 and suspend the nation’s borrowing limit until the end of next year.
‘This could not be simpler,’ said Republican Senate leader Mitch McConnell last week.
‘If they want to tax, borrow, and spend historic sums of money without our input, they’ll have to raise the debt limit without our help.
‘This is the reality. I’ve been saying this very clearly since July.’
Senate Minority Leader Mitch McConnell has said Republicans will not support a bill that includes raising the U.S. debt ceiling in a vote on Monday. ‘If they want to tax, borrow, and spend historic sums of money without our input, they’ll have to raise the debt limit without our help,’ he said recently, despite the looming threat of a shutdown
Democrats face a crucial week with a series of votes that could define Joe Biden’s presidency. Senate Majority Leader Chuck Schumer (r) is deep in negotiations to steer through a massive $3.5 trillion spending plan
A new report claims that a US default on federal debt would be ‘catastrophic’ to the economy, as Republicans and Democrats in Congress try to reach a deal this week
Instead, McConnell is urging Democrats to include their increase with their partisan multi-trillion dollar tax and spending plan – that President Biden and Nancy Pelosi hope to steer through Congress with only Democratic votes.
‘They cannot put partisan ambitions ahead of basic duties,’ said McConnell.
‘The party-line authors of this reckless taxing and spending spree will be the party-line owners of raising the debt limit.’
Democrats are pushing through their $3.5 trillion spending package using a legislative process known as reconciliation, allowing them to avoid Republican opposition in the form of the filibuster.
Adding the debt ceiling to the package would highlight the price tag – which Republicans say may end up as much as $4.3 trillion – and distract from popular elements such as paid family leave, say insiders.
‘The price tag and then the tax hikes that have to go along with that are going to be a core argument for Republicans next year in the mid-terms,’ said a Senate GOP aide.
Jeanne Zaino, professor of political science at Iona College, told DailyMail.com that McConnell had a clear eye on winning back the House and the Senate next week, and his moves had made it harder for Democrats to push the benefits of their spending plan.
‘Whether it’s free education or these birth-to-death issues, they can’t get to the point to talk about it because they have been railroaded by the Republicans to focus on this top line number,’ she said.
Senator Joni Ernst, an Iowa Republican, told Bloomberg News that the party-line debt limit vote would crystalize the case that Democrats’ spending was out of control.
Republicans are lining up to link the debt ceiling increase to President Biden’s spending plans
Democrats accuse Republicans of hypocrisy in their opposition to supporting an increase
The US Treasury Department said it will run out of cash in October unless Congress raises its debt ceiling. The chart shows how the department predicts it will run out of money from now until October 20, when it owed more than $20billion to Social Security recipients
‘It will be very effective in Iowa,’ she said.
GOP strategist John Feehery said Democrats would have to own to debt increase.
‘No Republicans are gonna extend the debt limit so the Democrats can spend more,’ he said. ‘The politics would be terrible for any Republican who does it.’
Democrats say it is irresponsible of Republicans to develop a partisan strategy with an eye on midterms when the country faces so many crises.
‘It is bad for the economy,’ said Senator Cory Booker, a New Jersey Democrat. ‘It is bad during this time we are struggling with a pandemic.
During an interview with CNN he also pointed out that the debt grew by more than $7 trillion under President Trump.
But Republicans shrug off the criticism, saying that Democrats control the White House and Congress, and have all the tools they need to raise the ceiling.
‘The idea that it would be Republicans who case a default strains credulity,’ said the aide.
And Zaino said Democrats had their own good reason to play brinksmanship with the ceiling rather than pursue their own solution.
‘They want to make the case that Republicans are not playing fair, they are not bipartisan,’ she said.
‘When it’s Trump they are willing to raise the ceiling, when it’s Biden they are not.’
The latest forecasts spell out the stakes, suggesting the Treasury Department could run out of cash by mid-October if lawmakers do not act fast.
‘New data demonstrate that Congress has only weeks to address the debt limit,’ Shai Akabas, director of economic policy at the Bipartisan Policy Center, said in a statement.
‘If they don’t, the U.S. government risks missing or delaying critical bills that will come due in mid-October that millions of Americans rely on, from military paychecks and retirement benefits to advanced child tax credit payments.’
Moody’s Analytics recently predicted that the US defaulting on its debt payments could be a ‘catastrophic blow’ to COVID-19 economic recovery and result in the loss of six million jobs, raising the nation’s unemployment rate from 5.4 percent to nine percent.
Moody’s explained: ‘The original intent of the debt limit was to be a forcing mechanism on lawmakers to remain fiscally disciplined.’
The analysis also said after running out of cash the Treasury Department would be unable to meet 40% of all payments due through mid-November.
‘How Treasury would operate in such an environment is unclear,’ it said. ‘Prioritization and delayed payments are two possibilities, but substantial uncertainty exists about operationalizing them.’
The debt ceiling is just one of a series of crucial votes in Congress this week that could define Biden’s presidency.
House Democrats face a vote on a $1 trillion infrastructure bill passed by the Senate with considerable Republican support last month to fund road, bridge, airport, school and other projects.
But progressives say they don’t want to vote until the bigger $3.5 trillion package is agreed.