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WASHINGTON – Senate Republicans on Wednesday plan to block Democrats from raising the country’s debt ceiling, daring President Joe Biden and his party’s top lawmakers to devise another path forward just 12 days before the U.S. government could run out of flexibility to pay its bills.
For the third time in as many weeks, Senate Majority Leader Charles Schumer, D-N.Y., is set to hold a vote on a measure that would suspend the borrowing limit into next year, aiming to act before Congress blows past an Oct. 18 deadline that could catapult the country into an economic recession.
But the proposal is likely to be as doomed as the two that preceded it. Democrats for the moment cannot advance in the debate over the debt ceiling unless 10 GOP lawmakers join them – and Republicans once again are refusing to supply the votes as part of their broader campaign to oppose Biden’s economic agenda.
“They basically want us to be aiders and abettors to their reckless spending and tax policies, and we just aren’t going to do it,” said Sen. John Cornyn, R-Tex..
Absent congressional action, a default threatens to unleash widespread financial havoc: It could rattle markets, delay seniors’ Social Security checks, prevent some veterans from receiving benefits and raise the cost of borrowing for millions of Americans by driving up interest rates. Biden recently likened the doomsday scenario to a “meteor” crashing into the U.S. economy, only months after the coronavirus pandemic created the worst such devastation since the Great Depression.
But the president’s dire warnings have not been enough to loosen the weeks-long logjam on Capitol Hill. Instead, Republicans have united behind Senate Minority Leader Mitch McConnell, R-Ky., in planning to filibuster a key procedural vote Wednesday. They argue Democrats should raise the debt ceiling entirely on their own, using a special legislative maneuver that only requires their tiebreaking majority to pass.
Schumer and his fellow Democrats have maintained a steadfast refusal to take this approach, known as reconciliation, stressing they simply do not have enough time to complete the arduous process before the critical default deadline in less than two weeks. Republicans dispute that assessment, adding to the intensity in a dangerous stalemate that puts Washington one step closer to a crisis entirely of its own making.
“We’re not in the mood to facilitate their difficult job, to make their difficult job easier,” Sen. Kevin Cramer, R-N.D., said in response to a question about Republicans’ strategy.
Asked what might happen if Schumer is correct – and Republicans’ procedural demands do prevent Congress from raising the debt ceiling by the Oct. 18 deadline – Cramer stressed that the blame remains squarely on the Democrats.
“Then too bad,” Cramer said. “It’s just really, really unfortunate that they’re that irresponsible.” He later said he did not think the country would breach the debt ceiling, adding, “I don’t think anybody wants that to happen.”
In the meantime, the clock keeps ticking.
With less than two weeks until the debt ceiling deadline, the Biden administration has ratcheted up its appeals for urgent action. The president on Tuesday again unleashed a barrage of criticism on Republicans, warning that there are “not many options” and “not much time left” if the GOP holds firm. He also raised the possibility that Senate Democrats could seek to rethink the chamber’s filibuster rules to ensure they can raise the debt limit before the deadline.
Earlier in the day, Treasury Secretary Janet Yellen echoed Biden’s concerns. She told CNBC that a breach in the debt ceiling would erode the “full faith and credit of the United States,” particularly undermining government bonds generally seen as “the safest asset on the planet.”
The tumult in recent days also has caught the eye of two credit-rating agencies. Moody’s Investors Service and Fitch Ratings have expressed some measure of confidence that the United States can still avert a fiscal doomsday, even though both warned about the catastrophic consequences if the government defaults. Fitch, in particular, said a misstep on Capitol Hill could carry “probably negative implications” for the country’s credit rating, a move that could affect millions of Americans, including homeowners, who could see their mortgages become more expensive overnight.
“Downgrade is hovering over us,” Schumer warned Tuesday at a fiery news conference making the case for action. “It is not too late, but it’s getting dangerously close.”
Democrats are in lockstep about the need to immediately raise the debt ceiling. But Schumer’s entreaties have failed to stir support among Republicans, who are primed to block a measure Wednesday to suspend the borrowing cap until 2022, which had passed the House last week.
GOP lawmakers could simply stand aside, refrain from a filibuster and allow Democrats to address the debt ceiling entirely on their own. But McConnell said he “can’t imagine” his conference taking that approach, which in its most expedient form would “require getting consent from every single Republican.”
“It’s not in dispute the debt ceiling needs to be addressed. The only issue is who does it,” he said at his own news conference Tuesday.
For Republicans, the debt debate essentially doubles as a proxy war over Biden’s fuller spending plans. That includes a still-evolving, up to $3.5 trillion measure that would expand Medicare, invest new sums to combat climate change and expand a host of federal education, immigration and safety net programs.
GOP lawmakers have described the entirety of the package – named after Biden’s 2020 campaign pledge to “build back better” – as an attempt to codify socialism into law. And they have insisted it is likely to add to the federal debt, contributing to the party’s growing resistance toward voting to raise the country’s borrowing cap.
“They want to spend the money. They’ve got to provide the votes to get the debt limit increased so they can accommodate that,” said Sen. Charles Grassley, R-Iowa.
Democrats maintain the proposal is financed in full through new tax increases targeting wealthy Americans and profitable corporations. And they point out that their proposed debt ceiling measure covers previous spending, including bills from both parties in responding to the coronavirus last year.
Even so, Democrats for weeks have highlighted their past efforts to provide the necessary votes when Republicans needed to raise the debt ceiling – including under President Donald Trump, who added nearly $8 trillion to the national debt through massive tax cuts and other policies Democrats did not support.
In response to the criticism, Republicans said this week that they have not been hypocritical in their approach. Sen. Mike Rounds, R-S.D., said the situations are different and stressed that the Trump-era tax cuts that Democrats are seeking to roll back actually increased federal revenue because of “the amount of capital that came into the United States.”
The standoff raised the specter of the same debt ceiling brinkmanship from a decade ago, when Republicans warred with President Barack Obama over federal spending and nearly pushed the nation to default. Just the mere prospect of a nation unable to pay its bills cost the U.S. economy as much as $180 billion and 1.2 million jobs by 2015, according to some experts, as it upended the stock market and stoked anxiety among business leaders. Congress only defused the crisis after adopting significant caps on spending at federal health and education agencies – and on other domestic programs – that only expired this year.
Democrats and Republicans alike insisted this week that they cannot, and will not, allow the country to default. But Republicans have still sought to make the process difficult, and Schumer on Tuesday swatted away repeated questions about his party’s next steps as a potentially doomed vote on Wednesday looms.
The Democratic leader instead maintained a vehement opposition to using reconciliation, which would allow his party to adopt a debt ceiling increase with 51 votes, sidestepping the prospect of a GOP filibuster in a chamber where it often requires 60 votes to take action. Unlike the current bill, which suspends the debt ceiling, a reconciliation bill would require Democrats to specify an exact dollar amount by which they would increase the cap – opening the party to Republican attacks about its spending entering the 2022 campaign.
Asked whether the GOP hoped to score political points against the Democrats in the high-stakes fiscal fight, Cornyn on Tuesday sought to walk a fine line. “I know this will shock you, but politics is involved in almost everything here in Washington, D.C.,” he said. “I would say rather than this being about politics, this is about the political consequences of your actions.”
Schumer has described reconciliation as “risky.”
Privately, Democrats have raised concerns that reconciliation could take two weeks or more to complete – far longer than lawmakers have to avert a possible default. The timeline stems from a series of procedural hurdles Democrats must clear to revise the budget, push it through committee, bring it to the floor and eventually hold multiple debates that could allow Republicans to offer near-limitless amendments.
“We’re not doing it on reconciliation,” said Sen. Tim Kaine, D-Va., a member of the Senate Budget Committee, as he exited a Democratic luncheon on Tuesday. “Reconciliation is not the only option, and we’re going to get it done.”
But Republicans stressed that Democrats could do it much faster, and that either way, they have no other choice: “It has been clear for many weeks,” said Sen. Ted Cruz, R-Tex.. “Chuck Schumer is going to surrender, and he is going to do what he could have done months ago. . . . All the rest of it is political games because they want to posture.”
The process could theoretically happen more quickly if the two parties agree to speed up the clock on the more time-consuming parts of the debate, including perhaps the floor battle over amendments. Cruz and other Republicans have recently signaled an openness to striking these deals, which require unanimity, with Senate Democrats. Even Sen. Ron Johnson, R-Wis., one of the Democrats’ leading antagonists on fiscal issues, said this week that he wouldn’t “stand in the way of Democrats’ ability to take responsibility of increasing the debt ceiling – through reconciliation.”
GOP lawmakers said Tuesday that it is ultimately Schumer’s fault for having ignored their calls since the summer. Nearly every Senate Republican signed a letter at the time signaling their belief that Democrats had to tackle the debt ceiling on their own through reconciliation, the same tool the party plans to use to adopt its proposed $3.5 trillion measure at the core of their fight.
“I would say time’s a-ticking here,” Sen. Shelley Moore Capito, R-W.Va., said Tuesday. “I was on the letter. . . . I think that’s pretty good forewarning. This isn’t something out of last week’s newspaper.”
“I don’t think we will blow past the date,” Capito added. “I don’t think any of us wants to see that happen. And who holds the cards? The president really holds the cards.”
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