15.4 C
London
Monday, October 25, 2021

U.S. House expected to pass bill to hike debt ceiling, avert default

An American flag flies outside of the U.S. Capitol dome in Washington, U.S., January 15, 2020. REUTERS/Tom Brenner

WASHINGTON, Oct 12 (Reuters) – The Democratic-controlled U.S. House of Representatives is expected to give final approval on Tuesday to a Senate-passed bill temporarily raising the government’s borrowing limit to $28.9 trillion, putting off the risk of default until early December.

Democrats, who narrowly control the House, were expected to maintain party discipline and pass the hard-fought, $480 billion debt limit increase, despite facing another deadline within weeks to avoid both a historic debt default and temporary government shutdown.

Looking past Tuesday’s vote, Democratic House Speaker Nancy Pelosi told reporters she hoped there could be a future bipartisan solution to the debt ceiling issue, despite top Senate Republican Mitch McConnell’s warning that his party will not help next time.

Pelosi said a Democratic proposal to allow the Treasury Department to lift the debt ceiling, with Congress having the ability to overrule it, “has merit.”

She also repeated that Democrats do not want to use a procedural maneuver called “reconciliation” to raise the ceiling. That is precisely what Democrats will need to do to get the December hike through the Senate if Republicans try to block them and no other solution is found.

The Senate’s vote last week to raise the limit – which had been more routine before the current era of fierce partisanship – turned into abrawl. Republicans tried to link the measure to President Joe Biden’s goal of passing multitrillion-dollar legislation to bolster infrastructure and social services while fighting climate change.

In fact, the debt ceiling vote is to cover past spending already approved by Congress, including during Republican Donald Trump’s presidency, which ended just nine months ago.

Pelosi said she is optimistic that Democrats can work out changes to reduce the cost of their social policy plans “in a timely fashion.” Asked if Democrats could do this by Oct. 31, she repeated that she was “optimistic.”

Biden earlier this month suggested a range of more like $2 trillion rather than the proposed $3.5 trillion. Pelosi said she would not bring legislation to the House floor if it cannot pass the Senate, where moderate Democrats Joe Manchin and Krysten Sinema both say they cannot support a $3.5 trillion cost.

The Senate on Thursday passed the bill raising the $28.4 trillion statutory debt limit with votes from every Democrat and 11 of the 50 Republicans, as the country crept closer to an estimated Oct. 18 deadline when the Treasury Department would no longer have the ability to make debt payments to lenders.

Pelosi cannot afford to have more than three members of her caucus vote against the debt limit increase and still prevail on Tuesday, if all Republicans oppose the rise as expected.

On Sept. 29, two Democrats out of 220 voted against a separate bill to raise the debt limit through the end of 2022, while only one Republican voted in favor.

That measure was blocked in the Senate, which then had to resort to the much shorter increase now moving through Congress.

EYE ON 2022 ELECTIONS

On Sunday, Treasury Secretary Janet Yellen characterized the debt limit increase as a “housekeeping chore” to cover payments for spending bills and tax cuts already enacted into law. read more

But it has turned into a far bigger thing.

The months-long fight over the debt limit is closely tied to the November 2022 congressional elections when Republicans are trying to gain majorities in both the House and Senate.

Democratic lawmakers fear that a Republican boycott of efforts to raise the debt ceiling will leave them exposed to political attack ads over the next year that accuse Democrats of fiscal malfeasance and disregard for the ballooning debt.

But Democrats in turn accuse Republicans of being willing to let the country default on its debts in order to score political points.

In a letter to Biden on Friday, McConnell wrote: “I will not be a party to any future effort to mitigate the consequences of Democratic mismanagement.”

During the Trump administration, the debt limit was raised three times with the support of Democrats, despite their uniform opposition to Republican initiatives that added to government debt like 2017 tax-cut legislation and Trump priorities like construction of a southwest border wall to keep out immigrants, all of which added to government debt.

Reporting by Richard Cowan and Susan Cornwell, additional reporting by David Morgan; Writing by Richard Cowan, Susan Cornwell and Patricia Zengerle; Editing by Scott Malone, Peter Cooney, Andrea Ricci and Cynthia Osterman

Our Standards: The Thomson Reuters Trust Principles.

Latest news
Related news

LEAVE A REPLY

Please enter your comment!
Please enter your name here

1 + 5 =