Congress is caught in a familiar stalemate that could have major economic repercussions
Congress has less than 10 days to pass laws to prevent further partial government shutdowns, and Democrats hope to use deadline pressures to force Republicans to help them get a critical suspension of the federal government Adopt credit limit.
Republican leaders flatly rejected this plan, leaving Congress in a familiar political stalemate over spending and debt that could have serious economic repercussions.
The Democrats are moving forward with a bill that would both extend current spending levels through December 3 and suspend the national debt ceiling until the end of 2022.
The legislation also provides a total of $ 28.6 billion for communities recovering from natural disasters in the past 18 months and $ 6.3 billion in aid to Afghan refugees.
The House of Representatives voted on the bill on Tuesday evening and passed the measure according to party lines – 220 Democratic votes in favor and 211 Republican votes against.
The Democrats had enough votes to pass the bill with no Republicans in the House of Representatives. But the bill’s fate is far less certain in the Senate, where GOP leaders have vowed to oppose it over objections to the Democrats’ broader spending ambitions.
Democrats are hoping for strong approval of the package by arguing ahead of time that if they vote against it, Republicans would be responsible for the far-reaching economic damage.
“The House of Representatives will not allow the United States government to default on its commitments for the first time in American history,” said Hakeem Jeffries, DN.Y., chairman of the House of Representatives Democratic caucus. “We hope that Senate Republicans are doing the right thing too and stop playing politics around the debt limit.”
Republicans show no signs of giving in
Senate GOP Leader Mitch McConnell, R-Ky., Said Republicans would support a spending bill that includes basic government funding coupled with disaster funding and money for Afghan refugees – but not if the bill addresses the debt ceiling.
“We don’t have a divided government. Democrats don’t need our help,” McConnell said in a statement. “They have every tool to tackle the debt ceiling themselves: the same party process they used in March to ram inflation spending and are already planning to use them again this fall.”
The Democrats ignore McConnell’s warning and continue with their strategy. They argue that Republicans helped drive up debt with both partisan policies like the 2017 tax cuts and bipartisan spending on COVID relief.
Senate Majority Leader Chuck Schumer, DN.Y., insists that both parties must take responsibility for the debts already incurred.
“The Republicans are doing a dine-and-dash of historic proportions that is damaging the American people and our country,” Schumer said in the Senate on Monday. “Both sides must come together in the near future so that the federal government can fulfill its most important task: pay the bills and honor our outstanding obligations.”
Raising the debt ceiling is a well-known political struggle
Democrats insist that raising the debt ceiling is a routine part of governance. It’s a cap that Congress sets on how much the government can borrow, and it usually applies to debt payments for expenses already made.
Congress has voted to adjust the credit limit 17 times in the past 20 years, making it an almost annual legislative task.
But many of these changes only happened after intense party disputes.
Nadeam Elshami was a top advisor to House Speaker Nancy Pelosi, California, in 2011 when the credit agency Standard and Poor’s downgraded the country’s credit in a similar stalemate.
Elshami, who is now policy director at the Brownstein Hyatt Farber Schreck lobbying firm, says both parties should have learned the lesson that even the threat of default can seriously damage the economy.
A downgrade would affect everything from mortgage rates to the market value of pension funds.
“You are risking the United States economy, you are risking the full belief and credit of the United States, you are risking another downgrade,” Elshami said. âSay you are a teacher who has a pension fund – that will go down. You will pay more for a car. That is the ripple effect. ”
This year, Democrats are sticking to the message that Republicans should follow earlier precedent and help Democrats suspend the cap by December 2022.
Pelosi told reporters earlier this month that raising the debt ceiling is usually bipartisan.
“The Democrats supported raising the debt ceiling because it was the responsible thing,” Pelosi said. “I would like Republicans to act in a similarly responsible manner.”
But McConnell was unaffected by the argument. He has said for months that he and other Republicans will not help break the debt ceiling while the Democrats have a plan for more than $ 3 trillion in new spending.
Those who know McConnell best say he won’t budge, and neither do the other Senate Republicans. Rohit Kumar was McConnell’s assistant chief of staff and now co-directs the national tax practice of PricewaterhouseCoopers.
“There’s this feeling that he’s bluffing or there is 10 votes without his blessing and I think that’s just wrong,” Kumar said in an interview. “I think people misunderstood him at their own risk.”
Kumar said the political controversy over credit policy was both predictable and bad for the economy. Both sides have used the critical question since at least the 1980s to force the other party to make political concessions.
Democrats argue with precedent
This recent political dispute over debt enrags Democrats like New York Senator Kirsten Gillibrand. Democrats voted to raise the credit limit under then-President Donald Trump even as debt skyrocketed as Republicans approved costly tax cuts and partisan spending priorities.
“It’s pretty rich to come from a party and Trump’s party that made $ 1.5 trillion in tax cuts and didn’t pay a dime,” Gillibrand said in an interview with NPR.
Democrats have said Republicans must take responsibility for the debt they helped create – through both partisan law and when Congress voted for bipartisan COVID aid spending under Trump.
Republicans say it’s not that easy.
Over the past few years, Trump’s Democrats have seen some debt ceiling hikes, but often while the two parties worked out bipartisan priorities like avoiding spending caps.
The current political environment is different. Democrats are hoping budget rules will allow more than $ 3 trillion in spending without Republican votes, and Republicans are responding by seizing the political moment.
Democrats like Elshami say that voting to raise the debt ceiling should be about protecting the economy, not political bickering.
“You can’t ask the Democrats for help and then turn your back on the other Congress,” he said.
NPR political reporter Alana Wise contributed to this story.
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