Senate Majority Leader Chuck Schumer (D-NY), House Speaker Nancy Pelosi (D-CA) and Congressional Democrats discuss the 'Build Back Better Act' and climate investments during a news conference at the U.S. Capitol in Washington, November 17, 2021.
Democrats may be able to lift the debt ceiling with the help of Republicans.
GOP congressional leaders have said for months that they will not vote with Democrats to raise the debt limit. Democrats may have found a way to raise the borrowing cap before the Treasury is unable to pay its bills.
The process would carry risks. The risk of a default that could wreak havoc on the global economy and stock markets would be quashed if the House and Senate can pull it off.
The strategy would tie the effort to raise the debt limit to a bill that would prevent automatic Medicare spending cuts at the end of the year. The health-care bill would allow the Senate to increase the debt ceiling with a simple majority vote.
Democrats would have to vote to raise the borrowing limit on their own. Democrats, who hold a majority in the Senate, could raise the debt ceiling in a separate vote.
The debt-limit language is included in a version of the Medicare bill that will be considered by the House Rules Committee on Tuesday. As soon as Tuesday night, the full House could pass it.
Democrats can hold separate votes to raise the debt limit if both chambers of Congress pass the legislation. A source told CNBC that Democrats would raise the borrowing ceiling by $2 trillion.
Schumer said he was confident that Congress would stave off a default.
He said on the Senate floor that he was optimistic that the US would not default on its debt.
The proposal would give some relief to both parties. Republicans would not have to vote for a debt ceiling increase. Democrats would not have to include a borrowing limit hike in the budget reconciliation process they are using to pass a $1.75 trillion social spending and climate package.
Democrats would have to set a dollar figure for the debt ceiling in order for Republicans to use it as a political weapon.
The National Defense Authorization Act is an annual bill that sets defense spending levels and was considered adding the debt-ceiling language. They decided against it because it would have been more difficult for Senate Republicans who oppose the debt-limit maneuver and House Democrats who are against defense spending hikes.
Schumer and McConnell have been talking about how to prevent a default. It's not clear if enough GOP senators would sign off on the plan to succeed.
The strategy is expected to win enough Republican support, according to Sen. Roy Blunt.
Hospitals at home are telling people about the importance of fixing Medicare. He said that he hoped for a bigger vote.
The debt ceiling has been raised by both parties for decades. The Republicans argue that Democrats should increase it on their own this year as they push to pass their social spending and climate package.
New spending is not authorized by hiking the borrowing limit. Congress would have had to raise the debt ceiling regardless of the Democrats' actions this year.
CNBC's Ylan Mui contributed to the report.
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