James GordonIn a rare move, the Democratic party has called for a “path forward” on the debt ceiling. The decision comes as Republicans have been unwilling to negotiate with Democrats over raising the debt ceiling without any concessions.
WASHINGTON— Republicans are likely to reject another vote on increasing the debt limit on Wednesday, putting additional pressure on Senate Democrats to chart a fresh way forward ahead of a possible default on US financial commitments later this month.
For the third time in two weeks, Senate Majority Leader Chuck Schumer (D., N.Y.) is attempting to overcome Republican resistance in the 50-50 chamber to approve a simple raise in the borrowing ceiling. He attempted and failed in two Senate votes last week to overcome the 60-vote barrier that stands in the way of raising the debt ceiling, which is presently set at $28.5 trillion.
Republicans said they don’t want to make raising the debt limit easy for Democrats since the party has raced to pass billions in additional spending over GOP opposition. They have encouraged Democrats to approve a debt-limit bill along party lines through a procedure known as budget reconciliation, which only needs a simple majority.
Democrats have rejected this method, claiming it is time consuming and unpredictable, and have asked Republicans to allow them to pass the debt limit like normal legislation. Furthermore, they argue that raising the debt ceiling is a shared duty, noting that similar votes were bipartisan throughout the Trump administration.
Treasury Secretary Janet Yellen has warned that unless Congress acts, the department’s cash-saving methods would be exhausted by Oct. 18. She is unsure if the Treasury would be able to fulfill the country’s obligations after that, a scenario that would compel the government to prioritize payments and, as she has said, would plunge the economy into a recession.
Senate Democrats, who met behind closed doors with White House officials including Susan Rice on Wednesday morning, haven’t come up with a backup plan if they can’t get 10 Republicans in the 50-50 Senate to end debate and move to a simple-majority vote to extend the debt ceiling suspension until Dec. 16, 2022.
Democrats are debating whether to end the filibuster, which enables the minority to delay legislation by getting 40 out of 100 senators to vote no, allowing a debt-ceiling hike to pass with 50 senators voting yes and Vice President Kamala Harris breaking a tie.
President Biden said late Tuesday that altering Senate rules was a “serious possibility.” He has previously said that he does not want the filibuster to be abolished, but he may be open to modifications.
President Biden and Treasury Secretary Janet Yellen had a meeting with business leaders on Wednesday to discuss the debt ceiling.
Associated Press photo by Evan Vucci
Still, a spokesman for Sen. Joe Manchin (D., W.Va.), who has opposed eliminating the filibuster, indicated Wednesday that he opposes creating an exception for the debt-ceiling vote. If the two parties continue at odds, Democrats will be left with few options.
Mr. Manchin urged Senate leaders to find an agreement, saying, “Work this out; this should not be a catastrophe.” “I’ve been very, very clear about my position on the filibuster. I don’t think I need to say it again; I believe I’ve been quite clear. “There was no change.”
Because Democrats controlled both houses of Congress and the White House, 46 Republicans wrote in August that they should adopt the partisan strategy of budget reconciliation, which enables some kinds of spending and tax measures to pass with a simple majority vote.
If no Republicans change their minds, Democrats will only be able to get four Republican votes, leaving them six votes shy of the ten they need. In an attempt to compel the Democratic Party to accept responsibility for debt levels, the Republican proposal would also require Democrats to designate a monetary value to the debt limit rather than a future date.
A vote to extend the debt ceiling does not approve additional expenditure; rather, it enables the Treasury Department to raise money to pay for government-authorized costs. Democrats have argued that using reconciliation to increase the debt limit would be dangerous because of the time it would take to go through the procedures involved with the strategy, which include two separate Senate sessions of amendment votes.
Republicans and Democrats may strike a deal to expedite the reconciliation process, which would direct the tax-writing committees to draft a separate debt-ceiling measure. Republicans, on the other hand, would have to concur unanimously.
President Biden will meet with business executives on Wednesday, including those from Bank of America, JPMorgan Chase & Co., Nasdaq Inc., AARP, and the National Association of Realtors, in an effort to warn Republicans about the danger of recession and a downgrade of the United States’ credit rating.
Mr. Biden, who will be accompanied by Ms. Yellen, is likely to express worry about the impact on ordinary Americans, who may face increased vehicle and house loan interest rates, as well as credit-card charges, according to the White House. Officials have cautioned that tens of millions of elderly who depend on Social Security and Medicare may be impacted.
In a blog post, the White House Council of Economic Advisers said, “The 2008 financial crisis had rippling effects across the global economy that ricocheted back to U.S. shores, leading businesses to lay off employees and reduce private investment.” “A default-driven financial crisis has the potential to be much catastrophic.”
Mr. Biden said that he intends to meet with Senate Minority Leader Mitch McConnell (R., Ky.), but the White House had not provided any details as of Wednesday morning.
The Bipartisan Policy Center, a think tank whose senior leadership includes former Republican and Democratic lawmakers, updated its forecast for when the United States would no longer be able to meet all of its financial obligations on Wednesday, estimating that the so-called X date would most likely occur between October 19 and November 2, a narrower range than the previously expected period of October 15 to November 4.
“The Treasury Department will find itself with dangerously low cash levels even leading up to October 19,” said Shai Akabas, the group’s head of economic policy. “An unanticipated occurrence within that time period may lead to a financial catastrophe.”
—This article was co-written by Andrew Duehren.
Siobhan Hughes and Alex Leary may be reached at [email protected] and [email protected], respectively.
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James Gordon
