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Democrats unveil new plan to fund government, suspend debt ceiling as major showdown with GOP looms

Lawmakers have less than two weeks to pass a spending bill to avert a government shutdown, and they are running out of time on the debt limit

A flurry of activity sets up Senate Majority Leader Charles E. Schumer (D-N.Y.) and House Speaker Nancy Pelosi (D-Calif.) for a last-minute sprint. (Jabin Botsford/The Washington Post)
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House and Senate Democrats on Monday unveiled a measure that would fund the government into December while staving off a potential default on U.S. debts through next year, setting up a last-minute clash with Republicans ahead of two key fiscal deadlines on Capitol Hill.

The plan sketched out by House Speaker Nancy Pelosi (D-Calif.) and Senate Majority Leader Charles E. Schumer (D-N.Y.) seeks to prevent what they have described as an economic doomsday — a federal shutdown at the start of October and a Treasury Department that’s unable to pay its bills soon after. The dual blows could jeopardize the U.S. recovery, the top Democrats warned, leaving millions of Americans without critical aid while destabilizing global markets.

But the party’s plans immediately encountered fierce resistance from Senate Minority Leader Mitch McConnell (R-Ky.), who reaffirmed Republicans’ prior threats to vote against an increase in the country’s borrowing limit even if it is attached to a measure that funds the government. GOP lawmakers have maintained this position since the spring as part of their broader opposition to President Biden’s economic agenda.

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McConnell’s renewed commitment angered Democrats, who said they had provided the votes necessary to address the debt ceiling during the Trump administration even when it included spending that they disliked. And it raised the odds of a dangerous, market-moving showdown in Congress, coming on a day when the Dow Jones Industrial Average fell more than 600 points.

“The Republicans are doing a dine and dash of historic proportions,” Schumer charged as he announced the road ahead on Monday. “That hurts the American people, and it hurts our country.”

McConnell, taking to the floor, countered soon after: “They will not get Senate Republicans’ help with raising the debt limit.”

For now, the political eruption sets up a furious, last-minute sprint for Pelosi and Schumer in the final weeks of September, a period during which they had hoped to focus their attention on securing roughly $4 trillion in new initiatives targeting healthcare, education, immigration, infrastructure and climate change. It also marks one of the most significant tests to date for Democrats’ narrow yet powerful majorities — as well as Biden’s political prowess in keeping his party together.

“This is a bipartisan responsibility, just as it was under my predecessor. Blocking it would be inexcusable,” Biden warned in a tweet Monday.

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The most immediate, urgent task concerns government funding: Congress has until the end of September to ratify a new spending agreement or else lawmakers risk a shutdown in the middle of a pandemic. An interruption to Washington’s operations could jeopardize critical federal agencies and programs, from closing some national parks to delaying Social Security checks.

Democrats unveiled their plan to avert such a crisis Monday, starting the process by which they hope to bring it to the House floor as soon as this week and the Senate shortly after. Their proposal would fund the federal government into December, at which point lawmakers would have to enact another stopgap or pass a series of appropriations bills that fund the government into next year.

As part of the measure, Democrats also said they would include new aid to the hurricane-affected east and gulf coasts as well as new resettlement money for refugees arriving from Afghanistan. White House officials earlier this month requested $14 billion to respond to the disasters and another $6.4 billion for Afghan relocation efforts.

Even though Democrats possess slim advantages in Congress, they ultimately require Republican votes to advance the funding stopgap in the nearly deadlocked Senate. But their ability to attract the necessary GOP support quickly appeared in doubt, after Democrats tacked an additional element onto the so-called continuing resolution — an effort to address the debt ceiling.

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The ceiling corresponds to the amount the U.S. government can borrow to pay its bills. Democrats and Republicans previously suspended it until the end of July, after which the Treasury Department has utilized a number of special maneuvers to delay its fiscal reckoning. But the Biden administration’s moves only can sustain the government until October, creating the potential for a disruption to the global economy unless Congress acts.

Republicans for months have threatened to withhold their support on a debt ceiling increase, even sending a letter earlier this year in which nearly every Senate GOP lawmaker pledged to cast a vote against it. Their stance stems from Democrats’ decisions to pursue trillions in new spending to overhaul federal healthcare, education, climate, immigration and tax laws, as Biden has sought, an agenda that McConnell on Monday blasted as “an effort to exploit this terrible yet temporary pandemic as a trojan horse for permanent socialism.”

Republicans quickly lined up behind McConnell, even as Sen. Mike Crapo (R-Idaho) acknowledged that the standoff threatened to leave markets and credit-ratings agencies “jittery” in response. “But the spending is as big a part of it as the debt ceiling," he said.

McConnell said that GOP lawmakers would have supported a standalone measure that funds the government and includes disaster relief. But he maintained a refusal to negotiate over the debt limit, enraging Democrats who pointed to the fact the country added roughly $7 trillion to the debt under Trump’s watch. That included a roughly $900 billion bill to provide coronavirus relief aid that both parties supported last year.

“Addressing the debt limit is about meeting obligations the government has already made, like the bipartisan emergency COVID relief legislation from December as well as vital payments to Social Security recipients and our veterans,” Pelosi and Schumer warned in a joint statement. " Furthermore, as the Administration warned last week, a reckless Republican-forced default could plunge the country into a recession."

During the Trump administration, Democratic lawmakers stress they had supplied the votes even when they opposed some of Trump’s spending priorities — especially the sums he devoted toward building a wall along the U.S.-Mexican border. They pilloried GOP leaders on Monday for hypocrisy, which Schumer said would jeopardize the “full faith and credit” of the United States.

Democrats theoretically could tackle the debt ceiling on their own, relying on a special legislative maneuver known as reconciliation that would allow them to bypass Republican opposition even in the nearly deadlocked Senate. With Biden’s blessing, Democrats previously invoked the process to adopt a $1.9 trillion stimulus earlier this year, and they hope to tap it again to advance their up-to $3.5 trillion tax-and-spending measure in the weeks to come.

Such a solution is still possible, and McConnell has called on Democrats to take this route. But some Democrats have expressed misgivings with idea, since they would have to raise the debt limit by a specific dollar amount rather than suspend it outright — giving GOP candidates a number they might weaponize entering the 2022 midterm elections. Democrats on Monday also made the case that lifting federal government’s borrowing ability should be a matter of “shared responsibility," even as some party leaders stressed they would not allow the GOP to push the country toward default.

“We can do it through reconciliation. Leadership has said they don't want to do that. The reason is if we do that through reconciliation, we actually have to specify a number,” said Rep. John Yarmuth (D-Ky.), the top lawmaker on the House Budget Committee, telling MSNBC that doing so would lead to “further chaos” politically.

But, he stressed: “We’ll get the debt ceiling raised, there is no alternative.”

The standoff immediately recalled the brinkmanship from roughly a decade ago, when Republicans held firm against raising the debt ceiling in a move that rattled global markets and resulted in massive cuts to federal spending for years to come. This time, Democrats’ total $4 trillion in proposed new investments hang in the balance, as party lawmakers grapple with additional deadlines in the days ahead.

The Democratic agenda includes a roughly $1 trillion plan to improve the nation’s roads, highways, pipes, ports and other infrastructure, which Republicans support — and a broader, roughly $3.5 trillion tax-and-spending measure that the GOP does not. Democrats have raced to try to complete work on both packages by September 27, a deadline the party imposed on itself as a result of its own internal squabbles.

With the clock ticking, and so much else still to resolve, Democratic leaders this weekend raised the possibility that their timeline could slip into October.

“We are going to work hard to reach that goal and sometimes you have to kind of stop the clock to get to the goal,” said Rep. James E. Clyburn (D-S.C.), the House majority whip, during an appearance Sunday on CNN’s “State of the Union.”

Clyburn added: “We’ll do what’s necessary to get there.”

- Mike DeBonis contributed to this report.