Finance

No deal in sight as Congress nears debt limit deadline

Congress is only a couple of weeks away from hitting the Dec. 15 deadline to raise the federal debt limit, and Senate Majority Leader Charles Schumer (D-N.Y.) and Minority Leader Mitch McConnell (R-Ky.) don’t appear to be anywhere close to a deal.

Democrats insist that Schumer will not burn up a week of Senate floor time to use the budget reconciliation process to raise the debt limit with only Democratic votes. 

And Republicans say there’s no way that McConnell will be able to round up 10 Republican votes to quash an expected filibuster from conservatives such as Sen. Ted Cruz (R-Texas) and allow Democrats to pass debt limit legislation with a simple majority under regular order.

At the same time, both leaders want to avoid another standoff that could threaten the nation’s credit rating and have stepped back from the combative rhetoric they were using in September and early October.

McConnell walked over to Schumer’s office on Nov. 18 for their first in-person sit-down meeting since Democrats took over the Senate in January. 

Afterward he told reporters: “We agree to kind of keep talking, working together to try to get somewhere.”

But the big problem, according to senators and Senate aides, is that there aren’t any easy ways forward. 

Sen. Pat Toomey (R-Pa.) has proposed that Democrats use the budget reconciliation process to raise the debt limit, in which case Republicans would “yield back time and not drag it out” so that it could be done in a few days.

The problem with this option is that it would require two long series of votes on amendments — known as vote-a-ramas — to first amend the 2022 budget resolution to establish a new reconciliation instruction and then to pass the vehicle that would raise the debt limit.

Expediting the process or skipping one or both of the vote-a-ramas would require getting unanimous consent from all 100 senators. 

There’s no certainty that conservatives such as Cruz, Sen. Rand Paul (R-Ky.) or Sen. Mike Lee (R-Utah) would allow Democrats to move quickly when their next step would be to try to pass the $2 trillion Build Back Better Act before Christmas.

Another option would be for McConnell to let Democrats advance long-term legislation under regular order but insist the measure raise the debt limit to a specific number instead of merely postpone it until after the 2022 midterm elections.

A big reason Republicans want Schumer to use the budget reconciliation process is that it would force vulnerable Democrats such as Sens. Raphael Warnock (Ga.) and Mark Kelly (Ariz.) to vote on a higher debt number instead of a suspension of the debt ceiling to a later date.

The benefit to Schumer is that it would allow him to avoid using the time-consuming budget reconciliation process and it would fulfill his demand that the debt limit be raised on a bipartisan basis because Republicans would have to agree to let the Senate proceed to a final up-or-down vote. 

The potential pitfall with this second option is that Cruz, Paul or Lee — or any other conservative — could object to a request to let the debt limit bill proceed to final passage. That means it would fall to McConnell again to round up 10 GOP votes to get the measure over a 60-vote procedural threshold.

When 11 Republican senators, including McConnell, did so in October, it prompted an angry backlash, including from former President Trump, who accused Senate GOP leaders of giving up leverage to stop President Biden’s agenda.

“I think McConnell and Republicans really have to dig in and get something for it. They can’t just let it go after what happened in the last go-around. McConnell is already getting criticized quite a bit for caving the last time on the debt limit,” said Brian Darling, a Republican strategist and former Senate aide.

“If he doesn’t leverage something on spending out of Democrats, especially when we’re looking at the Build Back Better bill possibly passing the Senate in some form, it’s going to be embarrassing,” he added. “The debt limit is the only leverage Republicans have this whole Congress. If they give it away and get nothing for it, it’s going to be a huge embarrassment.” 

A third option would be for Schumer to agree to some spending reforms as part of a deal to raise the debt limit but Democrats have made clear since the 2011 debt limit standoff and the impasse over the 2012 “fiscal cliff” that they will not use the debt limit as a bargaining chip in spending negotiations.

Democrats note that the spending reforms were agreed to in the 2011 Budget Control Act were preceded by months of negotiations. It’s very hard to imagine Democrats suddenly agreeing to spending reforms in the next few weeks.

This opens the possibility that McConnell might agree to another short-term debt limit extension if Democrats promise to enter into longer-term negotiations on deficit reduction beginning in 2022.

Senate Minority Whip John Thune (R-S.D.) said in July that Republicans could allow debt limit legislation to move forward if it set up future spending reforms.

“If they had a realistic way of getting a BCA-type approach to it, that would be great,” he said, referring to the Budget Control Act. “There are a number of budget reforms that our members I think would be supportive in the context of a vote on the debt limit.”  

The impasse is fueling predictions within the Senate that Treasury Secretary Janet Yellen will find a way to push the deadline for increasing the nation’s borrowing authority until January or February. 

“It’s not a terribly credible drop-dead date,” said Sen. Mitt Romney (R-Utah) of the Dec. 15 deadline Yellen announced in a letter to congressional leaders on Nov. 16.

A senior Senate Republican aide also predicted that Yellen would be able to keep the U.S. government solvent to give Schumer and McConnell more time to work out a deal. 

If the Treasury Department is unable to come up with additional “extraordinary measures” to keep the government funded past mid-December, it could eat up at least a week of floor time as lawmakers scramble to avoid the threat of a national default. 

Schumer doesn’t have extra days to spare when he’s trying to wrap up work on Biden’s climate and social spending package.

“My expectation is that Yellen is going to find a couple extra quarters in the cushions and push it to January or February,” said the Senate GOP aide, warning “there aren’t 10 Republicans that will [vote to advance a debt limit measure] again.” 

But Democrats are pushing back on the Republican argument that Yellen has the flexibility to extend the deadline into January or February.

Legislation passed in October to raise the debt limit by $480 billion did not reset the extraordinary measures that Yellen used last time to postpone a default on U.S. government obligations.

Yellen also warned leaders this month that the passage of the $1 trillion Infrastructure Investment and Jobs Act gave her less room to maneuver because it requires a $118 billion transfer to the Highway Trust Fund by Dec. 15.

“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,” she wrote. 

Bill Hoagland, senior vice president of the Bipartisan Policy Center and a longtime Senate Republican aide specializing in budget matters, said another option is that Democrats could vote to overrule the parliamentarian and declare a debt limit increase is not subject to a filibuster or to add it to the budget reconciliation vehicle that Democrats will use to pass Biden’s climate and social spending package.

But that would be a direct shot at the Senate’s filibuster rule, and centrist Sens. Joe Manchin (D-W.Va.) and Kyrsten Sinema (D-Ariz.) have repeatedly said they do not support weakening the Senate filibuster. Their votes would be needed to change the rules in a 50-50 Senate. 

With a rules change off the table, Hoagland said, “I cannot think of any way they can do it with a simple majority without having an agreement from Republicans not to filibuster or going through a revised budget reconciliation bill or budget resolution that then instructed it.” 

Tags Charles Schumer debt ceiling Debt limit Donald Trump Janet Yellen Joe Biden Joe Manchin John Thune Kyrsten Sinema Mark Kelly Mike Lee Mitch McConnell Mitt Romney Pat Toomey Rand Paul Raphael Warnock Ted Cruz

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