Democrats try to prevent US default without GOP vote

US Senate Majority Leader Chuck Schumer (D-NY), House Speaker Nancy Pelosi (D-CA) and congressional Democrats discuss the ‘Building Better Back Act’ and investment climate investment during a news conference at the US Capitol in Washington, November 17, 2021.

Elizabeth Frantz | Reuters

After all, Republicans can help Democrats raise the debt ceiling — on their own terms.

GOP congressional leaders have said for months that they will not vote with Democrats to lift the debt limit and remove the threat of a first-time US default. Top lawmakers may have found a new way for Democrats to raise the borrowing limit by December 15, the expected date when the Treasury will no longer be able to pay its bills.

The process will be complicated and carry risks. If the House and Senate can address the issue, Washington will quell the risk of a default that could devastate the global economy and stock markets.

The strategy would tie efforts to lift the debt limit into a bill designed to prevent automatic Medicare spending cuts that are set in motion later this year. Lawmakers will pass a provision in the healthcare bill that would allow the Senate to raise the debt ceiling once with a simple majority.

Under the plan, at least 10 Republicans would have to vote to allow Democrats to raise the borrowing limit themselves. Then the Democrats, who have a 50-50 Senate majority through Vice President Kamala Harris’s breakthrough vote, could raise the debt ceiling in a separate vote without a vote. GOP support.

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The House Rules Committee is set to consider a version of the Medicare bill that includes debt-limiting language on Tuesday. The Full House plans to pass it as soon as Tuesday night.

If both houses of Congress pass the bill and President Joe Biden signs it into law, Democrats could then hold separate votes to increase the debt limit. A source told CNBC that the Democrats’ plan would raise the borrowing limit by about $2 trillion, enough to get the US past its mid-2022 term.

Senate Majority Leader Chuck Schumer on Tuesday expressed confidence that Congress would prevent default – without specifying how it would do so.

“Over the past few days we have made good progress on this and I am optimistic that we will be able to avert the terrible prospect of the US defaulting on its sovereign debt for the first time,” he said on the floor. The Senate. .

The proposal would provide some relief to both sides. Republicans will not have to vote on raising the debt ceiling. Democrats won’t have to include a loan limit increase as part of the budget adjustment process they’re using to try to get through a $1.75k climate and social spending package billion USD.

As part of the strategy, Democrats will have to set a specific dollar figure for the debt ceiling, which Republicans could try to use as a political weapon.

Congressional leaders have considered adding debt-ceiling language to the National Defense Authorization Act, an annual bill that sets defense spending levels, instead of the Medicare law. They decided against it, as the NDAA vote would be more politically complicated for both Senate Republicans opposed to the debt limit mechanism and progressive House Democrats. institute, who are against increasing defense spending.

Schumer and Senate Minority Leader Mitch McConnell had discussions about how they could prevent default. But it’s unclear whether enough GOP senators will sign off on the developing plan for it to succeed.

McConnell on Tuesday told reporters he believes the plan will have enough Republican support to pass. The Senate could vote on Medicare and the debt ceiling bill on Thursday, he said.

“I am confident that this particular procedure, along with avoiding a Medicare cut, will gain enough Republican support to pass the 60-vote threshold,” he said.

Both sides generally favor raising the debt ceiling, a process that has been routine for decades. The GOP has argued that Democrats should raise it themselves this year as they push to pass a $1.75 trillion climate and social spending package without a Republican vote.

Increasing the loan limit does not allow new spending. Treasury Secretary Janet Yellen has also noted that Congress will have to raise the debt ceiling regardless of whether Democrats pass spending bills this year.

– CNBC’s Ylan Mui contributed to this report

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