Democrats search for Plan B as debt stalemate threatens US economy

Senate Majority Leader Chuck Schumer speaks to the media during a news conference in the US Capitol in Washington January 26, 2021. ― Reuters pic
Senate Majority Leader Chuck Schumer speaks to the media during a news conference in the US Capitol in Washington January 26, 2021. ― Reuters pic

Follow us on Instagram and subscribe to our Telegram channel for the latest updates.

WASHINGTON, Oct 6 — Senate Democrats are expected to be thwarted today in a vote to overcome a Republican roadblock on suspending the US debt limit — with just 12 days to avoid a cataclysmic credit default.

The vote, a procedural hurdle for moving forward on House-passed legislation to lift the debt ceiling, needs 60 to pass, but the 50 opposition Republicans in the evenly-divided Senate are expected to block it.

Chuck Schumer, the chamber’s Democratic leader, appealed Tuesday for senators on the other side of the aisle to show they don’t have to “link, arm in arm with those extreme members of their conference running for president.”

“There’s still time for Republicans to get out of the way and allow this bill to pass with a simple majority vote,” he told lawmakers.

The failure will force Democrats to consider lifting the debt limit via reconciliation, an arcane legislative process that would allow the majority party to move on its own without Republican help.

Democrats have publicly ruled this out, saying there isn’t enough time before October 18, when the United States is expected to run out of funds to meet its obligations to creditors and could default on its US$28 trillion debt.

In any case, reconciliation would require them to specify the amount by which they wish to raise the debt — a figure the Republicans could use as a political cudgel in next year’s midterm elections.

The US has never defaulted on its debt and global market analysts still expect its borrowing authority to rise before disaster hits. But with the Senate scheduled to go on recess next week, that could change quickly.

Looming threat 

Despite the looming threat, Republicans say they won’t help the majority party spend or borrow more than the country can afford. 

Democrats counter that it’s not possible to legally increase the debt limit for new spending—and that the move simply honours commitments already made by both parties.

President Joe Biden said Tuesday night making an exception to the “filibuster” rule requiring support from 60 senators for a straight majority vote to go ahead on raising the debt limit was “a real possibility.”

The last resort procedural move would require the assent of every Democratic senator, however, and moderates Joe Manchin and Kyrsten Sinema have come out against the option.

They argue that once you allow a filibuster exception for debt it could open the door for similar carve-outs on voting rights, climate change, gun control and a host of other issues.

Republican leader Mitch McConnell has vowed to retaliate to such a move by turning the Senate into a “scorched-earth” legislative body with no cooperation between warring parties. 

Some commentators have argued that Biden could invoke the 14th Amendment to ignore the debt limit and order the Treasury Department to continue borrowing money. 

But such an unprecedented move, which may not even be constitutional, could end up spooking financial markets anyway. 

A final halfway-house fix could be the Republicans allowing a temporary increase of the debt limit by a party-line vote in return for a pledge to get it extended by reconciliation in a few weeks. 

The party politics appear not to be playing well with ordinary Americans, with both sides viewed negatively in a new Gallup poll showing 55 per cent unfavourability for Democrats and 56 per cent for Republicans.  

“Party favourable ratings often provide clues as to how upcoming elections might go and will be an important indicator to watch as the 2022 midterm elections draw near,” Gallup said yesterday. — AFP

You May Also Like

Related Articles