After the plan was revealed, Senator Mitch McConnell reiterated raising the debt limit would not receive GOP support, in a release stating Republicans would vote for a clean continuing resolution with money for Afghan refugees and disaster relief but not to raise the debt limit. With a split in the Senate, Democrats need 10 Republicans to vote in support of the legislation.
McConnell had suggested Democrats include the debt ceiling provision in their budget reconciliation package, which would have allowed Democrats to suspend the debt limit without any GOP support. But Democrats are still calling for a bipartisan approach. What remains unclear with 10 days to go: Plan B. Congress faces debt ceiling standoff.
Please enter email address to continue. Please enter valid email address to continue. Chrome Safari Continue. Be the first to know. According to a report from the Congressional Research Service , however, the Treasury Department insists that it has no authority to treat some payments as more important than others, even if it would be wise to do so.
Prioritizing payments because of a debt-limit impasse, the report said, could constitute the sort of action prohibited by the act, which bars the administration from delaying or withholding spending for policy reasons. A third issue is more practical. As Treasury officials have said several times over the years, the department is not set up to pick and choose which obligations to pay.
So while it might be humane to prioritize retirement and disability checks, for example, or it might help avoid a global panic to prioritize payments on U. After a summer of criticism, political pressure on Kamala Harris eases — for now. Politics is a strange business. All the attention paid to Kabul and the coronavirus has taken some of the pressure off Vice President Kamala Harris, who spent the early part of the summer taking heat over the large increase of migrants heading to the U.
The House narrowly passed a bill on Sept. Republicans argue that the reconciliation bill offers Democrats the simplest way to raise the debt limit and avert a default. As direct as that path might seem, however, it includes some significant hurdles. Currently, progressive and moderate Democrats are fighting over the size and content of the reconciliation proposal. Few issues in Washington are more misunderstood than the debt ceiling, which once again is the subject of fiscally irresponsible political posturing.
Even the threat of default during a standoff increases borrowing costs. If interest rates for Treasuries increase substantially, interest rates across the economy would follow, affecting car loans, credit cards, home mortgages, business investments, and other costs of borrowing and investment.
The balance sheets of banks and other institutions with large holdings of Treasuries would decline as the value of Treasuries dropped, potentially tightening the availability of credit as seen most recently in the Great Recession.
A shutdown occurs when Congress fails to pass appropriations bills that allow agencies to obligate new spending. However, many more parties are not paid in a default. A default occurs when the Treasury does not have enough cash available to pay for obligations that have already been made. In the debt ceiling context, a default would be precipitated by the government exceeding the statutory debt limit and being unable to pay all of its obligations to its citizens and creditors.
Without enough money to pay its bills, any of the payments are at risk, including all government spending, mandatory payments, interest on our debt, and payments to U. While a government shutdown would be disruptive, a government default could be disastrous. In a number of cases, Congress has attached debt ceiling increases to budget reconciliation legislation and other deficit reduction policies or processes.
Indeed, most of the major deficit reduction agreements made since have been accompanied by a debt ceiling increase, although causality has moved in both directions. On some occasions, the debt limit has been used successfully to help prompt deficit reduction, and in other cases, Congress has tacked on debt ceiling increases to deficit reduction efforts. In nearly all instances in which a debt limit increase was either accompanied by deficit reduction measures or included in a deficit reduction package, lawmakers have generally approved temporary increases in the debt limit to allow time for negotiations to be completed without the risk of default.
Similarly, during the negotiations and consideration of the budget agreement, Congress approved six temporary increases in the debt limit before approving a long-term increase as part of the reconciliation bill implementing the deficit reduction agreement.
The Appendix contains further discussion of provisions attached to debt ceiling legislation, including bills in , , , , , and Policymakers should work promptly to raise or suspend the debt ceiling. Failing to raise the debt ceiling would be disastrous. It would result in severe negative consequences that experts are not capable of predicting in advance.
Even threatening a default or taking the country to the brink of default could have serious implications. Importantly, though, failing to control the national debt would also have negative consequences; rising debt could ultimately stunt economic growth, reduce fiscal flexibility, and increase the cost burden on future generations. They also note that, during Mr Biden's predecessor Donald Trump's term, they joined with Republicans to raise the debt ceiling three times.
Senate Republicans have said raising the debt limit is the "sole responsibility" of Democrats because they hold power in the White House and both chambers of Congress. They are frustrated by new spending proposals that Democrats are trying to push through without Republican support, through a procedural tool called "budget reconciliation".
Minority Leader Mitch McConnell tweeted last month that his party "will not facilitate another reckless, partisan taxing and spending spree". Mr McConnell and other party leaders contend that if Democrats can use reconciliation to achieve their economic policy goals, they can also use it to take action on the debt ceiling.
Democrats have expressed concern over using reconciliation, saying it is too complex and time-consuming a route to take. After two attempts to bring up the debt ceiling measure through regular order in the Senate failed, Mr McConnell proposed an agreement last week that Democrats have now accepted. Some Republicans, including former president Donald Trump, have grumbled that this amounts to "folding to the Democrats", but the temporary measure has now passed through both chambers of Congress.
Under the agreement, Congress will still need to vote again in December to avert a default. The short-term fix gives the two parties more time to address their issues, which clearly remain unsolved.
Shortly after the Senate passed the bill, Mr McConnell wrote a letter to President Biden promising to "not provide such assistance again if your all-Democrat government drifts into another avoidable crisis". Separately, lawmakers also kicked the can down the road last week when they passed a separate short-term bill to keep the government funded until December - so there may be a new round of headaches with the holidays right around the corner. Congress narrowly averts US government shutdown.
What is a government shutdown?
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