Republicans can let Democrats hold the bag on raising the debt ceiling | Voice of America
WASHINGTON – As lawmakers on Capitol Hill struggle to push forward a bipartisan bill to invest in the nation’s critical infrastructure, Washington’s most powerful Republican has signaled that his party’s cooperation with Democrats has limits.
Specifically, Senate Minority Leader Mitch McConnell said on Wednesday he did not expect members of his party to support a measure allowing the government to borrow the money it will need to pay for itself. meet its obligations later this year.
Because the amount of debt the U.S. Treasury can issue is capped by law, any time Congress approves spending that exceeds revenues – which it has done with every budget since 2001 – the country threatens to collide to this limit, commonly known as the “debt ceiling”. . “
The current national debt stands at $ 28.5 trillion, 26% more than the gross domestic product of the United States.
In an interview with Punchbowl news, released Wednesday, McConnell said: “I can’t imagine a single Republican in this environment we find ourselves in right now – this free of tax and spending – voting to raise the debt limit.”
Democrats, McConnell said, will have to take full responsibility for the increased federal debt, suggesting they do so using a process called “budget reconciliation,” which allows a bill to bypass the margin of. 60 votes in the Senate imposed by the systematic obstruction.
Later Wednesday, South Dakota Senator John Thune, the third Republican in the Senate, echoed McConnell, saying: “I don’t think there is a single Republican senator who is considering increasing the limit of debt so Democrats can expand government and spend heavily. amounts as something they would like in the end to support.
Angry Congressional Democrats
Democrats in Congress were quick to point out the poor leadership inherent in McConnell and Thune’s statements. Many of the obligations that the Treasury will have to fulfill later this year, and which will require more borrowing, have nothing to do with the legislation currently under consideration in Congress. Instead, they stem from decisions made in the past, when Republicans held control of one or both houses of Congress.
In particular, Democrats pointed to tax cuts enacted in the first half of the Trump administration – when Republicans controlled Congress – that significantly reduced federal revenues. They also point out that the government’s initial response to the coronavirus pandemic while Republicans were in charge of the White House and the Senate was also a debt driver.
Calling McConnell’s position “shameless, cynical and utterly political,” Senate Democratic Majority Leader Chuck Schumer said Wednesday: “This debt is Trump’s debt. It’s the COVID debt. And the bottom line is that Leader McConnell shouldn’t be playing political games with the full faith and credit of the United States. Americans pay their debts.
Asked about McConnell’s suggestion that Republicans would not support an increase in the debt ceiling, President Joe Biden pointed out that Democrats had twice voted for increases in the debt ceiling during the four years in office. of its predecessor.
“I hoped it wouldn’t. You know, in the last four years, they just extended the debt limit, ”Biden said.
“The reason for the large debt is because of their (…) tax reduction,” he added. “And there are going to be some very tough decisions that will have to be made to make it through the end of the year. And one of them is debt limit and debt extension. So I did no answer for you, but it’s – I hope we can get over it.
If the United States did not pay off its debts on time – whether they were interest payments on bonds, Social Security benefit checks, or government salaries – the results could be catastrophic in the face of it. both for the United States and for the wider world economy.
Debt issued by the Treasury is the closest thing to a risk-free asset that investors can buy and is used to compare a number of other assets in the capital markets. If the value of these securities were suddenly in doubt, it would have serious repercussions on the entire world economy.
The enormity of the fallout from a US default would be so deep that many assume it will never be allowed to happen. But lawmakers have danced very close to the edge in the past. In 2011, when House Republicans fought with Democratic President Barack Obama over federal debt, bond rating firm Standard & Poor’s issued the first ever downgrade of US sovereign debt, sparking a liquidation massive stock market.
A little hope for cooperation
Not everyone thinks McConnell and Senate Republicans will necessarily succeed in forcing Democrats to take full responsibility for raising the debt ceiling.
Marc Goldwein, senior vice president and senior policy director of the Committee for a Responsible Federal Budget, said he believes Democrats have at least a chance to persuade some Republicans to agree to a back door increase in the limit, which could be reached with a vote. to “suspend” it rather than increase it.
“I would not rule out a bipartisan debt limit increase,” Goldwein said. “I think that’s the most likely option.” This could be achieved by attaching a suspension to the bipartisan infrastructure bill currently being drafted in the Senate, he said, or in a massive budget bill at the end of the fiscal year, assuming that the Treasury does not lack money beforehand.
The very existence of the debt limit as a sticking point in American policy is an accident of history. The limit was originally intended to make issuing debt easier – not harder. Previously, Congress had to vote on every Treasury debt issue, a process that became cumbersome as the country and government grew.
In 1917, as the country raised funds through bond issues to support its involvement in World War I, Congress gave blanket approval to all debt issues up to a specific amount. It wasn’t until decades later that the debt ceiling became a tool of obstruction. However, as Goldwein points out, this is a problem that the country faces on a regular basis.
“As long as we continue to borrow money, we will have to keep raising the debt limit or suspending it,” he said. “It has been a reality in the United States for a very long time.