The debate comes as several Republicans have advocated using the debt ceiling to extract concessions from the White House, and reflects growing concerns in Democratic and economic circles that the GOP is threatening the nation’s credit and May be willing to risk financial stability. Political objectives
America has never paid off its debt. But such a move would immediately send the economy into a tailspin, raising interest rates and reverberating around the world.
“It’s just over-the-top madness to go down that path, but I think the odds are increasing that we will,” Mark Zindi, chief economist at Moody’s Analytics, said of the debt ceiling breach. “If we’re not in a recession by then, we will be.”
The White House is unlikely to move until after the midterms, and could still allow the issue to linger until 2023, when a new Congress is sworn in. Insisting that Democrats still lack control over their House and Senate majorities.
Biden, who as vice president was at the center of repealing the Obama-era debt ceiling, has refused to scrap the debt ceiling, calling it an “irresponsible” idea. But he has seized on Republican rhetoric around him in the final days of the midterm campaign, warning that the GOP would tank the economy if given control of Congress.
“Nothing, nothing, nothing will create more chaos and hurt the American economy more than whether or not we pay our national bills,” Biden said during an appearance in Florida on Tuesday.
Still, inside the administration and on Capitol Hill, there’s little doubt that Republicans are poised to take at least the House — and that Democrats will move quickly to make the most of their final weeks in power. will be needed.
Democratic leaders are already juggling several competing priorities for the lame-duck session, including efforts to pass a major defense bill, push through outstanding energy authorization legislation and protect same-sex marriage and the election process. including voting on proposals to advance Congress also needs to reach an agreement on government funding before a December 16 deadline.
Yet as those preparations have accelerated in recent days, many Democrats have come to what one person familiar described as an “increasing agreement” to withdraw, if possible, by the end of the year. First the debt limit should be settled.
“You’re really talking about tearing up the interior of the country,” an economic adviser to a top Democrat said of the risk of a debt default. “A superhuman effort must be made by rationally minded people to do everything possible to get it out of the way.”
Still, the way forward is limited. The Biden administration is mulling whether to negotiate a deal with Senate Republicans to lift the cap in the weeks after the midterms, hoping that Minority Leader Mitch McConnell will renege on a possible debt ceiling stalemate. Those who know about it will be open to avoid financial loss. said the initial strategy.
The alternative would be for Democrats to use the budget reconciliation process to raise the debt ceiling with just 50 Senate votes — an approach that would bypass Republicans entirely, but with several other options. The car would need what lawmakers hoped to dedicate. On other last minute agenda items.
Some Democrats have floated more aggressive proposals, including giving the administration unilateral authority to end the debt ceiling, raising some unresolvable amount to effectively end it, or asking Biden to end the cap. should be urged to reconsider its complete abolition. In a letter sent earlier this week, 31 House Democrats urged their Hill leadership to “permanently end the threat that the federal debt ceiling poses to our economy and our standing in the world.”
But some of Biden’s advisers have called the repeal option politically ill-advised, and consensus among Democrats is far more difficult to achieve.
“It’s going to be a very difficult vote to convince people that we’re going to borrow as much as we want without a limit,” said one Biden adviser. “Attack ads write themselves.”
Officials are still hoping that McConnell, who was the top Senate Republican during the 2011 debt ceiling impasse, will be eager to avoid a repeat of the damaging event more than a decade later. But his willingness to cooperate may depend at least on Democrats keeping control of the Senate. A proposition that is looking increasingly uncertain as the campaign continues.
There is less certainty that House GOP Leader Kevin McCarthy will be open to talks, especially as his conservative wing leverages the debt ceiling to negotiate spending cuts. During the demands to be used as Former President Donald Trump has repeatedly attacked McConnell for not using the debt ceiling as leverage., Thursday, saying Republicans should “impeach” McConnell if he brokers a debt ceiling deal with Democrats.
“If I were a Democrat, I would try and push through an extension during the lame duck,” said Doug Hay, a Republican strategist who was on the House GOP leadership staff during Obama’s debt ceiling battles. He added that the party’s conservative base is likely to be happy about the debt ceiling fight even if there is no clear exit strategy. “If they don’t, they’re in a situation of negotiating with Republicans who don’t really want to negotiate.”
Biden advisers expressed confidence that Republicans would ultimately take responsibility for any fallout from playing chicken with the debt ceiling, stressing that it would be up to McCarthy to lead his controversial caucus. rally and sell the public on his demands — while Democrats can rally behind him. The simple position that the hat should be raised should not be up for debate.
But Biden himself is not yet in office. While the White House has said it believes any bill to raise the debt ceiling must be clean and reject entitlement reform as part of any deal to raise the ceiling, it has ruled out discretionary spending. I have not drawn similar lines about deductions.
The assumption, in part, is that the scenario of economic collapse will carry some of the political heavy lifting for them.
“Every time we go down that road, we get closer and closer to the brink,” Zandi said. “If they slip even a little, the consequences will be dire.”
Ben White and Sarah Ferris contributed to this report.
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