Top Democrats and Republicans signaled Tuesday they had clinched a deal to raise the country’s debt ceiling, settling on a complicated legislative maneuver to help them stave off another high-stakes battle and prevent the U.S. government from experiencing a catastrophic default.
The deal itself does not directly raise the debt ceiling but rather sets up a smoother process that allows Democrats in the narrowly divided Senate to accomplish the task without GOP support. The two sides had been at loggerheads over the issue for months, with Republicans refusing to lend their must-have votes to raise the borrowing cap, in protest of President Biden’s economic agenda.
Democrats decried Republicans’ stance, especially since the party provided the votes necessary to address the debt ceiling even when President Donald Trump pursued policies they disliked. In the end, though, GOP lawmakers in the Senate at least appeared poised to pave the way for Democrats to meet the fiscal deadline without risk of disruption or delay, potentially by raising the cap high enough to last through the 2022 midterms.
“We feel very good about where we are headed,” Schumer told reporters at a news conference, even as he acknowledged it is “not done until it’s done.”
The debt ceiling refers to the statutory limit under which the U.S. government can borrow money to pay its bills. Unless Congress raises it by a specific amount or suspends it outright, the Treasury Department would not be able to meet its financial obligations — and the country could experience a financial calamity, potentially even a new recession.
The U.S. government has nearly $29 trillion in outstanding debt subject to the limit. At the current rate, the Treasury Department says, the country has until Dec. 15 before it again is at risk of exceeding the cap. Absent a fix, Treasury Secretary Janet L. Yellen has warned Congress there are “scenarios in which Treasury would be left with insufficient remaining resources to continue to finance the operations of the U.S. government beyond this date.”
The United States has never defaulted, even though partisan battles repeatedly have pushed the country to the cliff — including a protracted stalemate that brought the Senate to the precipice of crisis earlier this fall. McConnell and his Republican allies sought to withhold their votes at the time on an increase to the debt ceiling as part of their campaign to oppose Biden’s broader economic agenda. But the GOP ultimately worked out a deal with Democrats, averting a fiscal catastrophe.
In the aftermath, McConnell swore that Republicans would not lend their support again. That raised the prospects of another clash in the Senate, since Democrats have only a tiebreaking 51-vote majority in a chamber where they need 60 to take most action. Schumer, meanwhile, refused to invoke a special legislative maneuver to address the debt ceiling without the GOP, arguing that any solution should be bipartisan.
Under the emerging deal, though, the two sides appeared to secure a way out of that logjam that delivers them both a political win.
The arrangement would first see Congress pass a measure that allows Democrats to raise the debt ceiling just once using a simple majority in the Senate. At least 10 Republicans in the chamber would have to support that bill for it to prevail. Then, Democrats alone could forge ahead with the actual increase to the debt ceiling, which GOP lawmakers could oppose without risking an economic crisis.
House lawmakers soon set in motion a plan to consider, then adopt, the legislative fix Tuesday night. The measure also includes a must-pass provision that staves off automatic cuts to Medicare. In a letter to chamber lawmakers, Pelosi said swift action is critical to prevent a financial mishap that could rattle markets globally.
“Addressing the debt limit is an imperative: for families, we must prevent a loss of millions of jobs and trillions in household wealth and drastic increases in interest for car loans, student debt, mortgages, credit card bills and other types of borrowing,” she said.
Schumer, for his part, took to the Senate floor to herald work on a potential deal and stress the consequences of default. Emerging later from a private party lunch, he said Democrats “feel very good about where we’re headed.”
“We believe that we shouldn’t be doing anything that puts our full faith and credit in jeopardy,” he said.
And McConnell similarly endorsed the deal. He said at a news conference that he is “confident that this particular procedure, coupled with the avoidance of Medicare cuts, will achieve enough Republican support to clear the 60-vote threshold.”
Some Republicans had argued in recent weeks that they should provide Democrats no help at all. But a handful of GOP lawmakers — some of whom have assisted in raising the debt ceiling in the past — did express an early measure of support for the idea as they headed to their own weekly lunch.
“To have Democrats raise the debt ceiling and be held politically accountable for racking up more debt is my goal, and this helps us accomplish that,” said Sen. John Cornyn (R-Tex.).
Other GOP lawmakers saw it as a victory because it forced Democrats to raise the debt ceiling by a specific dollar amount, perhaps allowing GOP leaders to mount attacks on their political foes entering the next election.
“I think it’s different from anything we’ve done in the past, but it does achieve, apparently, a specific number,” said Sen. Roy Blunt (R-Mo.). “We’ll see what the members say. I would expect to be able to be for it.”
Democrats similarly tried to cast the emerging deal in a politically advantageous light.
“This is about making sure that we pay our bills,” said Sen. Ron Wyden (D-Ore.), the leader of the tax-focused Finance Committee. “I think there ought to be some Republican reciprocity now given that people like me, during the previous administration, would step up and say we’re not going to let our country [default].”