Debt limit looming, U.S. Senate Democrats see showdown vote next week

September 22, 2021

By Richard Cowan and Susan Cornwell

WASHINGTON (Reuters) – The U.S. Senate aims to vote next week on raising Washington’s borrowing authority and keeping the government funded, the chamber’s No. 2 Democrat said on Wednesday, as a House Democrat warned that Republican opposition could lead to a historic default on the nation’s debt.

Senator Dick Durbin said the chamber sometime next week would take up the bill passed in a party-line House of Representatives vote. Senate Republican leader Mitch McConnell has said his caucus will sink the emergency legislation to suspend the $28.4 trillion federal debt ceiling – calling on Democrats to act alone using a maneuver called “budget reconciliation.”

Time is short as funding for federal agencies expires on Oct. 1 and the U.S. Treasury has warned it could run out of money to pay the government’s bills by some time in October, potentially triggering a default.

House Budget Committee Chairman John Yarmuth said “parliamentary obstacles” prevent Democrats from including language to raise the debt ceiling in a social spending bill moving through Congress under a reconciliation maneuver that circumvents the need for Republican votes.

“The ball is now in Senator McConnell’s court. If he doesn’t support this bill – or at least ensure it is not filibustered – our country will default and our government will shut down,” Yarmuth said in a statement. “The decision is now his.”

It further complicates a messy picture for Congress, where talks aimed at police reform collapsed on Wednesday and the moderate and progressive wings of President Joe Biden’s Democratic Party are deeply divided on the size of a proposed $3.5 trillion social spending bill that is at the core of the White House’s domestic legislative agenda.

Republicans are betting that dragging out the debt debate will further stymie Democrats.

Republicans say they support additional spending to keep the government operating with the Oct. 1 start of the fiscal year and to help communities recover from recent natural disasters.

But they refuse to vote for it, saying raising the nation’s borrowing authority is Democrats’ problem because of the $3.5 trillion spending plan to invest in expanded social services and address climate change.

Democrats note that they voted to raise the nation’s debt limit during Republican Donald Trump’s administration even though they opposed deep tax cuts that added to the debt.

‘ACCEPT RESPONSIBILITY’

Durbin said: “There comes a point where you have to accept responsibility” for avoiding a U.S. government default on its debt in coming weeks and provide temporary federal funding for the fiscal year that begins on Oct. 1 to avoid the third partial U.S. government shutdown in a decade.

Democrats argue that Biden’s $3.5 trillion program will be paid for with tax hikes on the wealthy and corporations, which Republicans oppose.

Even as he withholds his support for raising the debt limit, McConnell told reporters that Democrats should not play “Russian roulette” with the U.S. economy, saying they have an obligation to pass a debt limit increase on their own.

Biden was meeting on Wednesday with several Democratic lawmakers in an attempt to heal divisions over his $3.5 trillion budget reconciliation plan that Democrats aim to pass in coming weeks using special procedures to do it without any Republican support.

Moderate Democrats see the price tag as too high, while some progressives are threatening to vote down a bipartisan $1 trillion infrastructure bill backed by the president, and set for a Monday vote, unless the $3.5 trillion bill is also nailed down.

There were new signs of Democratic infighting as 11 liberal senators said they supported the House progressives’ position.

Senator Bernie Sanders and the other 10 senators insisted in a statement that they had voted for the bipartisan infrastructure bill with the understanding that the two bills would move together.

“Passing the infrastructure bill first would be in violation of that agreement,” they said. “That is what we agreed to, it’s what the American people want, and it’s the only path forward for this Congress.”

Moderate Democratic Senators Joe Manchin, Kyrsten Sinema and Jon Tester said they would be seeing Biden at the White House, while liberal Democrats including Representatives Jim McGovern and Pramila Jayapal said they would attend a meeting with the president later in the day.

Senate Majority Leader Chuck Schumer pleaded for Republican help in passing a debt limit-government funding bill.

Citing an analysis by Moody’s Analytics Chief Economist Mark Zandi, Schumer said a debt default could wipe out 6 million jobs, erase $15 trillion in household wealth and cause unemployment to soar to nearly 9%.

“Every American family will suffer from the Republican desire to play political games and send our nation into default,” Schumer said.

(Reporting by Richard Cowan, Susan Cornwell, David Lawder and David Morgan; Editing by Scott Malone, Mark Porter and Peter Cooney)

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