Sides report deal on debt ceiling
Measure would let Democrats raise cap without GOP support
Top Democrats and Republicans signaled Tuesday that they had clinched a deal to raise the country’s debt ceiling, settling on a complicated legislative maneuver to help them stave off another high-stakes battle and prevent the U.S. government from experiencing a catastrophic default.
The apparent compromise arrived eight days before a critical fiscal deadline, averting what would have been another political and economic crisis. Senate Majority Leader Charles Schumer, D-N.Y., and Senate Minority Leader Mitch McConnell, R-Ky., each expressed a measure of confidence that they had the votes to proceed with their plans, while Speaker Nancy Pelosi, D-Calif., put the House on track to adopt the measure.
The deal itself does not directly raise the debt ceiling but rather sets up a smoother process that allows Democrats in the narrowly divided Senate to accomplish the task without GOP support. The two sides had been at loggerheads over the issue for months, with Republicans refusing to lend their must-have votes to raise the borrowing cap, in protest of President Joe Biden’s economic agenda.
Democrats decried Republicans’ stance, especially since the party provided the votes necessary to address the debt ceiling even when President Donald Trump pursued policies they disliked. In the end, though, GOP lawmakers at least paved the way for Democrats to meet the fiscal deadline without risk of disruption or delay, potentially by raising the cap high enough to last through the 2022 midterms.
“We feel very good about where we are headed,” Schumer told reporters at a news conference, even as he acknowledged it is “not done until it’s done.”
The debt ceiling refers to the statutory limit under which the U.S. government can borrow money to pay its bills. Unless Congress raises it by a specific amount or suspends it outright, the Treasury Department would not be able to meet its financial obligations — and the country could experience a financial calamity, potentially even a new recession.
The U.S. government has nearly $29 trillion in outstanding debt subject to the limit. At the current rate, the Treasury Department says, the country has until Dec. 15 before it again is at risk of exceeding the cap. Absent a fix, Treasury Secretary Janet Yellen has warned Congress there are “scenarios in which Treasury would be left with insufficient remaining resources to continue to finance the operations of the U.S. government beyond this date.”
The United States has never defaulted, even though partisan battles repeatedly have pushed the country to the cliff, including a protracted stalemate that brought the Senate to the precipice of crisis earlier this fall. McConnell and his Republican allies sought to withhold their votes on an increase to the debt ceiling as part of their campaign to oppose Biden’s broader economic agenda, but the GOP ultimately worked out a deal with Democrats.
In the aftermath, McConnell swore that Republicans would not lend their support again. That raised the prospects of another clash in the Senate, since Democrats have only a tie-breaking, 51-vote majority in a chamber where they need 60 to take most action. Schumer, meanwhile, refused to invoke a special legislative maneuver to address the debt ceiling without the GOP, arguing that any solution should be bipartisan.
Under the emerging deal, though, the two sides appeared to secure a way out of that logjam that delivers them both a political win.
The arrangement would first see Congress pass a measure that allows Democrats to raise the debt ceiling just once using a simple majority in the Senate. At least 10 Republicans in the chamber would have to support that bill for it to prevail.
Then, Democrats alone could forge ahead with the actual increase to the debt ceiling, which GOP lawmakers could oppose without risking an economic crisis.
The measure also includes a must-pass provision that staves off automatic cuts to Medicare. In a letter to chamber lawmakers, Pelosi said swift action is critical to prevent a financial mishap that could rattle markets globally.
“Addressing the debt limit is an imperative: For families, we must prevent a loss of millions of jobs and trillions in household wealth and drastic increases in interest for car loans, student debt, mortgages, credit card bills and other types of borrowing,” she said.
Schumer, for his part, took to the Senate floor to herald work on a potential deal and stress the consequences of default. Emerging later from a party lunch, he said Democrats “feel very good about where we’re headed.”
“We believe that we shouldn’t be doing anything that puts our full faith and credit in jeopardy,” he said.
And McConnell similarly endorsed the deal. He said at a news conference that he is “confident that this particular procedure, coupled with the avoidance of Medicare cuts, will achieve enough Republican support to clear the 60-vote threshold.”