McConnell unmoved on debt limit, risking turmoil for Biden

The Biden administration has been enlisting one emissary after another to convince Senate Republican leader Mitch McConnell to help raise the federal debt limit. It’s not working. Despite the high-level conversations, including a call from Treasury Secretary Janet Yellen, the GOP leader is digging in and playing political hardball. He’s telling all who will listen that it’s up to the Democrats, who have narrow control of Congress, to take the unpopular vote over federal borrowing on their own.

McConnell’s stance is deepening a political standoff and risking turbulence in the financial markets that could ripple into the broader economy. His refusal to rally Republican votes leaves Democrats with only tough choices as they rush to ensure the nation does not default on any of its accumulated debt, which now stands at $28.4 trillion.

President Joe Biden and the Democratic leaders, House Speaker Nancy Pelosi and Senate Majority Leader Chuck Schumer, are scheduled to speak Thursday afternoon. While there is little doubt the Democrats will be able to avert a crisis and vote to allow additional borrowing, the path ahead is uncertain and potentially treacherous.

“We are working, there are a number of different options,” Schumer told reporters earlier this week at the Capitol. “We will do it because its imperative to do it. And Leader McConnell, as I said, is playing dangerous political games by not stepping up to the plate.”

The showdown is sparking a fiscal battle that is reminiscent, but different, from those that have set Washington and Wall Street on edge at times over the past decade. Unlike the brinksmanship of past battles, this one is unique in that there is no deal to be brokered — McConnell simply will not participate.

Late Wednesday, McConnell warned Yellen he is not changing his mind. “The leader repeated to Secretary Yellen what he has said publicly since July,” said McConnell spokesman Doug Andres. “They will have to raise the debt ceiling on their own and they have the tools to do it.”

It was a similar situation Tuesday when Hank Paulson, who was Treasury secretary in the Bush administration, paid McConnell a visit at the Capitol. Other intermediaries have also reached out, according to a person familiar with the talks and granted anonymity to discuss them.

Lawmakers appear to have only a few weeks to devise a plan for approving the federal government’s debt limit before the U.S. Treasury is forced to delay or miss payments.

Stocks and bonds have been relatively calm recently, indicating investors expect Washington will ultimately reach a deal on the debt ceiling.