From left: Senate Minority Whip John Thune from South Dakota, Senate Leader Mitch McConnell (Kentucky) and Roy Blunt, Chair of the Senate Republican Policy Committee of Missouri. Kevin Dietsch/Getty Images
Senate Republicans blocked a measure that would have prevented a federal default and funded the government.
It is certain that the political brinksmanship over the debt ceiling will intensify, leading to the US closer towards economic chaos.
Although Democrats could raise the ceiling by themselves, there is no guarantee that they will succeed.
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Senate Republicans, led by Minority Leader Mitch McConnell, blocked Monday's measure that would have prevented both a default in debt and a shutdown of the government. This brings the US closer to financial disaster as Republicans intensify their efforts to undermine President Joe Biden’s domestic agenda.
The House approved legislation, which suspends the debt ceiling to December 2022 and funds government through December 3, was voted down by all 50 GOP senators. This increases the tension over Congress' inability to pay its bills. It also included $28 million in disaster aid funding to communities affected by recent hurricanes. Also, aid to refugees from Afghanistan.
The bill was defeated 48-50. It failed to reach the 60 votes needed to close the filibuster. Chuck Schumer, the Senate Majority Leader, attacked Senate Republicans after the vote. He said that they had "voted to drive our nation straight to a shutdown of the government and the first default in the country's history."
McConnell insists since June that Republicans won't sign on to a debt limit increase - which is an increase in the amount the US government can repay its bills - even though he stated in September that it was necessary because "America must not default". Republicans claim that Democrats have the ability to unilaterally raise the ceiling and fund their party-line spending from the stimulus law and the $3.5 trillion social spending program.
Insider was told last week by Republican Senator Kevin Cramer from North Dakota, "There is no confusion about who runs the country, [Democrats] possess both chambers." McConnell is one of many Republicans who said they could support a stop-gap bill that would fund the government beyond September 30th, but only if it does not include a debt ceiling rise.
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Democrats have attacked the GOP's reasoning for not lifting the debt ceiling. They argue that both parties are responsible to adding to the federal debt during the pandemic, as well as domestic spending increases under Trump. Some Democratic legislators propose to eliminate the debt ceiling completely.
This debt ceiling dispute recalls an earlier showdown between Republicans, Obama administration and financial markets in 2011, which caused turmoil and resulted in the first ever US credit downgrade. Republicans now vote against raising the debt limit to try and force Democrats to do so. Republicans have voted for it three times under Trump's presidency.
It is not clear if Democrats will push for a party line debt ceiling increase through reconciliation. This is the same process they use to sidestep Republicans in their social spending plan. This tactic allows Democrats pass their package by a simple majority vote.
It could take weeks to complete and there is no guarantee that Democrats will be able to pull it off because of the strict guidelines for reconciliation.
Insider was told by Charlie Ellsworth (a former aide to the Democratic Senate Budget Committee and now a partner at Pioneer Public Affairs) that they have never created a debt limit spinoff. There are many things that must be done to make that path possible.
A potential default could have devastating consequences that can ripple across the American economy. According to the Bipartisan Policy Centre, the Treasury will run out cash in order to pay its financial obligations between Oct. 15th and Nov. 4.
Millions of seniors could lose their Social Security checks and US soldiers could be without regular paychecks. The White House warned about possible federal funding cuts to safety net programs such as Medicaid.
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