WASHINGTON, D.C. — Senate Democrats accused Republicans Wednesday of a “shameless, cynical” ploy that would damage the economy and the government’s credit rating after the chamber’s GOP leader said his party would vote against raising the federal debt limit.
In the latest chapter of a broad budget battle likely to linger well into autumn, Democrats reacted after Senate Republican Leader Mitch McConnell, R-Ky., said he believes all Republicans will vote against renewing Washington’s ability to borrow money. The government, which has been running huge budget deficits for years, needs to borrow cash constantly to pay its debts, but its legal authority to do that expires July 31.
An expiration of the government’s borrowing authority could lead to a federal default, which has never happened. Analysts say a default could have a devastating impact on the economy, driving up interest rates, lowering the federal credit rating and driving up the government’s borrowing costs.
“The leader’s statements on debt ceiling are shameless, cynical and totally political,” said Senate Majority Leader Chuck Schumer, D-N.Y. “This debt is Trump debt, it’s COVID debt,” he said, a reference to a massive 2017 tax cut enacted under former President Donald Trump and federal spending that’s mushroomed since the COVID-19 pandemic.
It is not unusual for the political party out of power in the White House to threaten to oppose a debt ceiling increase as leverage to exact budget concessions.
This fight comes as the two parties are also at odds over President Joe Biden’s multitrillion-dollar proposals for bolstering federal domestic spending and raising taxes on the wealthy and corporations to pay for it.
Congress suspended the debt ceiling — the limit on federal borrowing — two years ago, but that suspension expires July 31. Federal debt subject to the borrowing limit is $28.5 trillion, up from $19.9 trillion when Trump became president and $27.8 trillion when Biden took office.
The Treasury Department can free up cash for short periods using accounting maneuvers, but it is unclear when it would exhaust that option. Some have suggested the government could run out of money during August, when Congress is scheduled to be on recess. The nonpartisan Congressional Budget Office estimated Wednesday that the crunch is likely to come in October or November.
To overcome a Senate GOP filibuster of legislation raising the debt limit, the chamber’s 50 Democrats would need support from 10 Republicans, which McConnell suggested will not be there.
On Tuesday, McConnell said, “I can’t imagine a single Republican in this environment that we’re in now, this free-for-all for taxes and spending, to vote to raise the debt limit.” McConnell confirmed those remarks Wednesday to The Associated Press, a day after making them to Punchbowl News, a publication that covers Capitol Hill and politics.
On Air Force One, White House press secretary Jen Psaki told reporters, “We expect Congress to act in a timely manner like they did last administration.” Lawmakers extended borrowing authority several times under Trump.
Asked by reporters about McConnell’s remarks, Biden said, “I was hoping that wouldn’t be the case.” He said Republican-backed tax cuts were behind the debt and added: “There are going to be a couple very difficult decisions that are gonna have to be made through the end of the year, and one of them is the debt limit and extending the debt.”
One option would be for Democrats to include the language in an enormous bill financing many government agencies next year that Congress is beginning to craft. A failure to enact that measure by Sept. 30, the end of the federal budget year, could produce a government shutdown.
Democrats could also include a debt limit provision in the $3.5 trillion bill they plan to write financing environment, health, education and family programs. Democrats plan to use a budget maneuver to shield that bill from a filibuster, but it may not be ready for months.