What’s going on with the debt ceiling?

The United States was rushing towards its very first default in the absence of an agreement to raise or suspend the country’s debt limit, allowing the Treasury to borrow more money to pay its debts. But it looks like what most agree is a crisis that is about to be averted in the short term.

Treasury Secretary Janet Yellen has warned that the “extraordinary” measures currently used to pay government bills should be exhausted if Congress does not act before October 18, and at this point the United States would be strapped for resources and defaulted. It would be “catastrophic,” Yellen said on Tuesday and lead to a recession.

Democrats and Republicans in Congress have been stuck for weeks on how to proceed. In the Senate, where 60 votes are typically needed to pass a bill, Democrats and Republicans agreed that only Democrats would vote to raise the debt ceiling, but since Democrats only have 50 votes, both parties could not agree on how this would be done. Republicans filibustered – or blocked – previous Democrats’ attempts by Thursday.

What is the state of play at Congress?

The problem, according to President Biden and the Democrats, is that GOP lawmakers are blocking their efforts to allow a simple majority of 50 senators to pass a debt ceiling suspension. Republicans, Mr Biden said on Monday, must “get out of here.”

Senate Republicans have so far refused to vote to raise or suspend the debt ceiling, and yet they have already blocked several attempts by Senate Democrats do it by simple majority. The president convinced Republicans to stop hampering Democrats’ efforts to organize the vote according to normal Senate rules.

One way to do this, which has now failed, is to have senators unanimously agree to allow a simple majority to suspend the debt ceiling, rather than the 60 votes normally required to pass a bill. of law. And the problem is, this approach means that no Republican can oppose it.

A breakthrough may be near, however. Senate Minority Leader Mitch McConnell on Wednesday presented a proposal suggesting Republicans would allow Democrats to pass a short-term provision to raise the debt ceiling to a precise figure until December.

Speaking in the Senate around midnight, Senate Majority Leader Chuck Schumer said the two sides “negotiated all afternoon and night. … We are making good progress. We are not. are not there yet, but hopefully we can come to an agreement tomorrow morning. “

McConnell also maintained that Democrats can raise the debt ceiling with the reconciliation process – without any Republican support.

So what are the Democrats going to do next?

Previously, the White House had called it “kick in the box”. Separately, Schumer tries another way. Last week, the House passed a bill to suspend the debt ceiling and Schumer planned to move forward with this legislation. Schumer estimated that if 10 Republicans voted to allow the vote, Democrats would not need any Republicans to support raising the debt ceiling in the final vote. The vote could take place on Thursday or Friday.

Is this going to work?

Probably not. It is always expected to fail.

Is there not another way to get around the filibuster?

There is what is called the “nuclear option”, an extreme measure that allows the majority leader to change the rules of the Senate. It was first used by Senate Democratic Majority Leader Harry Reid to kill the obstruction, the 60-vote threshold, for any appointment other than a Supreme Court justice. During the Trump administration, GOP Senate Majority Leader Mitch McConnell again called on him to drop the filibuster of Supreme Court justices as well.

Here’s how it works: The Senate Majority Leader raises a point of order that breaks current rules. The chairman rejects the point of order, then the majority leader appeals the decision and requests a vote. A simple majority reverses the president’s decision, and the false statement made by the majority leader becomes the new rule.

For example, in 2013, Reid declared that “the vote on closure under Rule XXII for all appointments other than to the Supreme Court of the United States is by majority”. The Chair replied, “According to the rules, the point of order is not accepted.

Reid then called for a vote on upholding the president’s ruling, and by a vote of 48-52, the president’s ruling was overruled. “The threshold for nominations to close, not counting those to the Supreme Court (…) is now in the majority”, declared the president pro tempore.

On Tuesday, President Biden suggested he was open to yet another filibuster exception to raise the debt ceiling. “I think it’s a real possibility,” he told reporters. He said he opposed the elimination of filibuster because it would “throw the whole Congress into chaos” and make action impossible.

To do this, every Democrat in the Senate should support the action. Senators Joe Manchin and Kyrsten Sinema, both moderates, voiced their opposition to the end of the filibuster, and on Wednesday Manchin rejected the idea, telling reporters: “I have been very, very clear on my position on filibuster – nothing changes. ”He implored McConnell and Schumer to work together and lead.

In June, Sinema wrote in a Washington Post op-ed: “If we remove the 60-vote threshold from the Senate, we will lose a lot more than we gain.

Can Democrats Use Reconciliation To Fix The Debt Ceiling?

Sure, but Democrats rejected the idea, calling it “too risky.” President Biden does not like movement. It’s a longer and more complex way to hold the vote, but the White House has said it’s not completely ruled out.

“The reconciliation process would essentially mean starting from scratch,” White House press secretary Jen Psaki said on Monday.

Bill Hoagland, of the Bipartisan Policy Center, explained that while using reconciliation to settle the debt ceiling would involve revising the budget resolution, it would not jeopardize the debate on the $ 3.5 trillion reconciliation package. dollars already in progress. It can be considered in a separate bill.

“You could have three different reconciliation bills with the three different dates. They only combined the income and expenses into one reconciliation bill,” Hoagland said. “It all just sets up a separate reconciliation for a separate bill that is just the debt limit.”

To use budget reconciliation, Democrats could only raise the debt ceiling, not suspend it. The first requires them to come up with a specific dollar amount, while the second does not require a specific number. Suspending the debt limit means that it would not be operational for a specific period of time until a certain date, and when that happens, the debt limit would automatically increase to cover funds spent during the period of time. suspension.

Hoagland estimates that the full process of revising the budget resolution and advancing a debt limit reconciliation bill could take up to two weeks, but with the threat of a default that looming, he thinks it could go a lot faster.

“If you want to work a bit around the clock, you can do it in a week,” Hoagland said. Delay tactics could still be used, he noted, but wondered why Republicans would delay if they really wanted Democrats to use reconciliation to raise the debt limit.

Did Biden vote against increasing the debt ceiling as a senator?

With the national debt of more than $ 28.4 trillion resulting from the past actions of both parties, Democrats have pushed for a two-party approach to tackling the debt limit.

In a letter to Biden on Monday, McConnell said that if the Democratic Party is to govern alone, “it must also manage the debt limit on its own.” McConnell asserted that the debt limit is often a partisan vote when the same party controls Congress and the White House.

“In 2003, 2004 and 2006, Mr. President, you joined Senate Democrats in opposing debt ceiling increases and you made Republicans do it ourselves,” the letter read. He stated Biden’s view at the time that the ruling party should take responsibility, as the GOP now insists.

In the three years McConnell mentioned, Republicans voted with little to no Democratic support to tackle the debt ceiling. In 2003, the debt ceiling was tackled with 50 votes from the GOP and 3 Democrats in the Senate; in 2004, it was 50 GOP votes and 2 Democrats; and in 2006, it was 52 votes from the GOP without Democrats according to the Tax Policy Center.

Journalists on Monday asked the president why his “no” votes from those years differed from the GOP’s current position. Democrats were not threatening to obstruct the vote, Biden replied. Democrats never demanded that Republicans find 60 votes to raise the debt limit – as they are now.

Hoagland, who was the personnel director of the Senate Budget Committee for Republicans, said that a direct vote up or down, the route Democrats would like to take, would be much faster and less complicated than use reconciliation to increase the debt limit.

Jack Turman and Brian Dakss contributed to this report.