Democrats scramble for strategy to avoid default

Senate Democrats are scrambling to find a strategy to avoid a national default next month when the Treasury Department says it will exhaust its borrowing authority, which could put stock markets into a tailspin.

Democratic senators say they’re discussing a variety of options to extend the debt limit after their first two attempts to do so this week failed in the face of Republican opposition.

Democrats felt a greater sense of urgency Tuesday after Treasury Secretary Janet YellenJanet Louise YellenDemocrats face growing storm over IRS reporting provision Hoyer signals House vote on bill to 'remove' debt limit threat Biden's IRS proposal could mark the end of privacy in banking MORE wrote a letter to congressional leaders warning that the federal government is expected to exhaust its borrowing authority by Oct. 18.

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But while Democrats say they still have a bunch of cards to play, they don’t have many details to offer and just about all the options on the table require a degree of support from Senate Republicans.

Republicans say they won’t provide any help to raise the debt limit and insist that Democrats use the budget reconciliation process to do it by themselves. A budget reconciliation bill can’t be filibustered.

“The debt ceiling they’re going to have to raise on their own. It’s about the future and not the past,” Senate Minority Leader Mitch McConnellAddison (Mitch) Mitchell McConnellHoyer signals House vote on bill to 'remove' debt limit threat Biden signs bill to raise debt ceiling On The Money — Progressives play hard ball on Biden budget plan MORE (R-Ky.) said Tuesday, arguing that raising the debt limit would pave the way for the multitrillion-dollar human infrastructure package Democrats plan to pass under the budget reconciliation process.

Democrats are furious with McConnell and argue both parties should vote to raise the borrowing limit. They have sought to pin any blame for failing to raise the debt ceiling on the GOP leader.

“There are lots of options, lots of opportunities. But at the end of the day let’s remember that Mitch McConnell is responsible for filibustering this,” said Sen. Sheldon WhitehouseSheldon WhitehouseThe Hill's Morning Report - Presented by Altria - Jan. 6 panel flexes its muscle Sen. Whitehouse blasts Alito speech: 'You have fouled your nest, not us' Breyer: Supreme Court 'fallible,' but has served US 'pretty well' MORE (D-R.I.).

Yet with Democrats holding the White House and control of Congress, it may be hard to make that argument stick.

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Sen. Bob CaseyRobert (Bob) Patrick CaseyDemocrats struggle to gain steam on Biden spending plan Building back better by investing in workers and communities Barletta holds wide lead over GOP rivals in early poll of Pennsylvania governor race MORE (D-Pa.) said Democrats need to keep up the pressure on Republicans, and hope that the GOP bends as senators hear from the private sector.

“The plan B still has to be a lot of what plan A is, which is to keep the pressure on them,” Casey said. “I was talking to a CEO today and he was pleading with me to make sure we get this done and I said, ‘CEOs have to do that.’ ”

Some Democrats are quietly floating the possibility of using the budget reconciliation process to end the standoff — which is precisely what McConnell wants.

“The Yellen letter of today means we have to do something quickly. I think we have a couple of different options and reconciliation is one,” said Sen. Tim KaineTimothy (Tim) Michael KaineFill the Eastern District of Virginia  Defense & National Security — Military starts giving guidance on COVID-19 vaccine refusals Blinken pressed to fill empty post overseeing 'Havana syndrome' MORE (D-Va.).

“The leadership is going to figure it out, but I can just tell you Democrats have both houses and the White House. We’re not going to shut down government and we’re not going to default on the debt,” he added.

Kaine said instructions to raise the debt limit under reconciliation should have probably been included in the budget resolution the Senate passed last month.

“I think it would have been easier to do reconciliation had we put it in the [budget] instruction up front,” he said.

House Majority Leader Steny HoyerSteny Hamilton HoyerHoyer signals House vote on bill to 'remove' debt limit threat Feehery: Build back bipartisan Bottom line MORE (D-Md.) on Tuesday also opened the door to using budget reconciliation. He said that Democrats may have no other choice, given Yellen’s warning that Congress needs to act before Oct. 18.

“It is not an alternative not to protect the full faith and credit of the United States. So, we may have to use reconciliation,” Hoyer said during a press call.

Yet other Democrats are loath to take that step, not only because it would be a win for McConnell but also because it is a laborious process that will complicate their other legislative efforts.

Senate Majority Leader Charles SchumerChuck SchumerBiden's Supreme Court commission ends not with a bang but a whimper Hispanic organizations call for Latino climate justice in reconciliation Senate to vote next week on Freedom to Vote Act MORE (D-N.Y.) on Tuesday ruled out using reconciliation to raise the debt limit.

“Going through reconciliation is risky to the country and is a non-starter,” Schumer told reporters after meeting with the Senate Democratic caucus.

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“Going through the long, convoluted, difficult reconciliation process with debt limit is very, very risky,” he added. “We’re not pursuing that. The reconciliation process with debt limit goes back and forth, it pingpongs between the House and Senate, it’s two or three times, it’s not just adding on one amendment.”

But across the Capitol, Pelosi was far less definitive when asked whether reconciliation is no longer an option to raise the debt ceiling. “Well, we’ll see what our options are,” she said.

Other rank-and-file Democrats are ratcheting up talk about changing the Senate’s filibuster rule to pass the debt-limit suspension if Republicans continue to stand firm.

Schumer declined Tuesday to address how the impasse may be changing his views about filibuster reform.

He would need the support of the entire Democratic caucus and moderate Sens. Joe ManchinJoe ManchinPressure grows for breakthrough in Biden agenda talks Climate activists target Manchin Hoyer signals House vote on bill to 'remove' debt limit threat MORE (D-W.Va.) and Kyrsten SinemaKyrsten SinemaPressure grows for breakthrough in Biden agenda talks Sanders, Manchin escalate fight over .5T spending bill Biden gets personal while pitching agenda MORE (D-Ariz.) have repeatedly said they oppose doing away with the 60-vote threshold to pass most legislation.

Schumer’s most recent effort to suspend the debt limit until December 2022 failed Tuesday afternoon when McConnell objected to his request for unanimous consent to pass a debt limit increase with a simple majority vote.

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McConnell retorted that Democrats couldn’t expect Republicans to agree to waive a filibuster after Schumer repeatedly required Republicans to muster 60 votes to process noncontroversial nominees during the Trump administration.

“When the Democratic leader was recently in the minority, he made us file cloture on matters that weren’t one-tenth as controversial,” he said. “But now the leader wants us to skip that step on something this controversial? This controversial? Of course, that’s not going to happen.”

Schumer’s initial strategy was to combine debt limit language with a continuing resolution to fund the government beyond Sept. 30 and provide emergency funding for Afghan refugee resettlement and disaster assistance in states hit by wildfires and storms.

That failed Monday when the entire Senate Republican conference, including moderate Sens. Susan CollinsSusan Margaret CollinsMcConnell gets GOP wake-up call Republicans are today's Dixiecrats Biden's push for unity collides with entrenched partisanship MORE (Maine) and Lisa MurkowskiLisa Ann MurkowskiAnti-Trump Republicans endorsing vulnerable Democrats to prevent GOP takeover GOP rallies around Manchin, Sinema McConnell gets GOP wake-up call MORE (Alaska), along with Louisiana Sens. John KennedyJohn Neely KennedyMORE and Bill CassidyBill CassidyHillicon Valley — Presented by American Edge Project — Americans blame politicians, social media for spread of misinformation: poll Biden signs bill to strengthen K-12 school cybersecurity Senators gear up for bipartisan grilling of Facebook execs MORE, who are desperate for disaster funding, voted to block the measure.

McConnell personally asked the GOP conference to stick together on what he saw as a politically important vote.

Now Democrats are backing off their plan to tie the debt limit to government funding and say they will offer a “clean” bill to fund the government soon.

Asked about his plan to avoid a government shutdown on Friday, Schumer told reporters, “I think very soon we will put down a bill to deal with the shutdown and move forward.”

“We’re doing everything we can to avoid a shutdown,” he said.