Dems Reportedly Mulling Ploy to Defuse Debt Ceiling Stand-off with GOP to Avert Gov't Shutdown
© AP Photo / Patrick Semansky
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With the 2021 fiscal year drawing to a close at the end of September, the White House earlier proposed a stopgap measure to fund the government to avoid the shut-down of federal government as lawmakers tussle over a $1 trillion infrastructure bill and a Democrat-backed $3.5 trillion budget reconciliation package.
Top Democrats led by House speaker, Nancy Pelosi, and the Senate majority leader, Chuck Schumer, are said to be mulling a strategy to tie the threat of the US defaulting on its $28 trillion debt in with a government shutdown to resolve the spending impasse with the Republicans, according to sources cited by The Guardian.
Lawmakers have until the end of this month to fund the government, as the fiscal calendar runs from 1 October to 30 September. Failing that, a shutdown will occur, prompting a wave of furloughs for federal workers.
The plan ostensibly being considered by the Democrats involves adding wording regarding a debt ceiling suspension beyond the 2022 mid-term elections to the stopgap funding measure. This tactic would keep the government funded through either 3 December or 10 December, as 10 Senate Republicans are persuaded to support the bill.
Experts say that failure to raise or suspend the debt limit when tied in with the stopgap funding bill would result in a particularly sharp fiscal crisis, leaving the US unable to service its debt obligations along with a non-functional federal government on its hands.
Dawn breaks over the US Capitol building in Washington DC
© AP Photo / J. Scott Applewhite
If Republicans were to block the stopgap funding measure with a filibuster, denying it the required 60 votes needed to pass the 50-50 split Senate, they would be held responsible for the catastrophic fall-out, according to the cited strategy.
This comes as the Treasury Department sent a letter warning Pelosi that without congressional action, the government could face default at some point in October, once extraordinary measures to finance the government after the nation’s debt hit its statutory limit on 1 August were exhausted. The fall-out, warned treasury secretary, Janet Yellen, would do “irreparable harm” to the economy.
“Once all available measures and cash on hand are fully exhausted, the United States of America would be unable to meet its obligations for the first time in our history,” Yellen wrote.
Nevertheless, Senate Minority Leader, Republican senator Mitch McConnell, rejected an earlier appeal by Yellen for Republicans to side with the Democrats in raising the debt limit as part of a standalone bill. According to him, the measure should instead be included in a sprawling infrastructure package that can be passed on a party-line vote.
McConnell tweeted on Wednesday that the Democrats “have every tool they need to raise the debt limit. It is their sole responsibility.”
Let’s be clear: With a Democratic President, a Democratic House, and a Democratic Senate, Democrats have every tool they need to raise the debt limit. It is their sole responsibility. Republicans will not facilitate another reckless, partisan taxing and spending spree.
— Leader McConnell (@LeaderMcConnell) September 15, 2021
In a scheduling notice on Friday, House Majority Leader Steny Hoyer said the House will vote next week on both the debt ceiling and the stopgap spending measure.
Adding to the pressure on the GOP, President Joe Biden’s administration warned in a letter to state and local governments that breaching the debt ceiling “could cause a recession. Economic growth would falter, unemployment would rise, and the labor market could lose millions of jobs.” It also stated that the S&P 500 could plummet in the event of a prolonged stand-off, “and the value of state pension fund assets would fall as a result, hampering states’ ability to pay their pension obligations.”
