No Agreement as the Debt Ceiling Deadline Approaches

by Wall Street Rebel | Michael London | 11/29/2021 9:55 AM
No Agreement as the Debt Ceiling Deadline Approaches

Observers in Congress believe that Treasury Secretary Janet Yellen will find a way to extend the deadline for expanding the nation's borrowing power until January or February, despite the standoff.

 

Senators Charles Schumer (D-NY) and Mitch McConnell (R-KY) are just a few weeks away from the December 15 deadline for raising the federal debt ceiling. They don't seem to be any closer to reaching an agreement.

Democrats are confident that Schumer will not eat up a week of Senate floor time to increase the debt ceiling with solely Democratic votes via the budget reconciliation procedure.

Furthermore, Republicans claim that McConnell will be unable to muster the necessary 10 Republican votes to override an anticipated filibuster by conservatives such as Sen. Ted Cruz (R-TX) and enable Democrats to approve debt-limit legislation with a simple majority under normal procedure.

While at the same time, both leaders are anxious to prevent a new stalemate that may jeopardize the nation's credit rating, and they have toned down the harsh language they used in September and early October.

On November 18, McConnell and Schumer met in person for the first time since Democrats won control of the Senate in January, according to a press release.

According to senators and Senate aides, the biggest difficulty is no straightforward solutions to the situation.

Toomey (R-PA) has recommended that Democrats increase the debt ceiling via the budget reconciliation process. In this case, Republicans would "give back time and not drag it out," allowing the debt ceiling to be raised in a matter of days rather than months.

The problem with this approach is that it would take two lengthy series of votes on amendments, known as vote-a-ramas, to first change the 2022 budget resolution to form a new reconciliation instruction and then approve the vehicle that would enhance the nation's borrowing capacity.

Expediting the process or bypassing one or both of the vote-a-ramas would need the unanimous consent of all 100 senators, which is unlikely to happen.

Republicans like Cruz, Sen. Rand Paul (R-KY), and Sen. Mike Lee (R-UT) are unlikely to enable Democrats to proceed fast when their next step would be to attempt to pass the $2 trillion Build Back Act the end of the calendar year.

McConnell may also allow Democrats to move long-term legislation under regular procedure but insisting that the legislation increase the debt ceiling to a particular level rather than just deferring it until after the 2022 midterm elections.

Conservatives believe that using the budget reconciliation procedure would compel vulnerable Democrats like Sens. Raphael Warnock (GA) and Mark Kelly (AZ) to vote to raise the debt limit rather than defer it until a later date, which would be more politically advantageous for them.

The benefit to Schumer is that he would avoid having to go through the time-consuming budget reconciliation process. It would allow him to fulfill his demand that the debt limit is raised on a bipartisan basis because Republicans would have to agree to allow the Senate to proceed to a final up-or-down vote on raising the debt limit.

Cruz, Paul, and Lee — or any other conservative — may reject any request to allow the debt ceiling measure to final approval, which would be a significant hazard with this second alternative.

That means it would be on to McConnell to pick up another ten Republican votes to carry the package past the 60-vote procedural hurdle.

When 11 Republican senators, including McConnell, did so in October, it sparked an outpouring of criticism, notably from former President Trump, who accused Senate GOP leaders of giving up influence to thwart President Biden's legislative agenda.

"McConnell is already receiving a lot of flak for giving in on the debt ceiling the previous time," said Brian Darling, a Republican strategist and former Senate staffer who is critical of McConnell.

When it comes to spending, "he is going to be embarrassed if he doesn't get anything out of Democrats, particularly when we're looking at the Build Back Better measure may be passing the Senate in some form."

Democrats have made it clear since the 2011 debt limit standoff and the impasse over the 2012 "fiscal cliff" that they will not use the debt limit as a bargaining chip in spending negotiations. A third option would be for Schumer to agree to some spending reforms as part of a deal to raise the debt limit.

In their remarks, Democrats point out that the expenditure changes agreed upon in the 2011 Budget Control Act were preceded by months of talks.

It's challenging to envision Democrats agreeing to spend changes in the next several weeks on the spur of the moment. This opens the door to the possibility that McConnell may agree to another short-term debt ceiling extension if Democrats vow to engage in longer-term deficit reduction discussions starting in 2022.

Earlier this year, Senate Minority Whip John Thune (R-SD) stated that Republicans would be willing to allow debt limit legislation to proceed if it included provisions for future spending reforms.

When asked about a realistic way to approach it in the manner of the Budget Control Act, he replied, "That would be great." He was referring to the Budget Control Act. I believe that our members would support a number of budget reforms if they were to be put forward in the context of a vote on the debt ceiling.

Observers in Congress believe that Treasury Secretary Janet Yellen will find a way to extend the deadline for expanding the nation's borrowing power until January or February, despite the standoff.

When asked about the December 15 deadline, Sen. Mitt Romney (R-Utah) said, "It's not a realistic drop-dead date." Yellen announced the deadline to congressional leaders in a letter to them on November 16.

According to a senior Senate Republican aide, Yellen will keep the United States government running to allow Schumer and McConnell more time to come up with a solution to the shutdown.

Suppose the Treasury Department cannot come up with further "special measures" to keep the government financed through the middle of December. In that case, legislators will likely be forced to hurry to escape the prospect of a national default, which may take up to a week of floor time.

Schumer doesn't have much extra time on his hands as he tries to finish off work on President Biden's climate and social spending plan.

Democratic leaders, on the other hand, are pushing back against the Republican claim that Yellen has the flexibility to extend the deadline into January or February.

The legislation approved in October to increase the debt ceiling by $480 billion did not reset the extraordinary measures that Federal Reserve Chair Janet Yellen employed to prevent the United States from defaulting on its financial commitments the previous year.

Also, this month, Yellen cautioned policymakers that enactment of the $1 Trillion Infrastructure Investment and Jobs Act had left her with less room to maneuver since it required a payment of $118 billion to the Highway Trust Fund by December 15.

The Bipartisan Policy Center's Bill Hoagland, a longtime Senate Republican aide who has specialized in budget matters, said that Democrats could vote to overrule the parliamentarian and declare that a debt limit increase is not subject to a filibuster, or they could include it in the budget reconciliation vehicle that Democrats will use to pass President Joe Biden's climate and social spending package, he said.

However, doing so would be a direct attack on the Senate's filibuster rule. Moderate senators such as Joe Manchin (D-WV) and Kyrsten Sinema (D-AZ) have said on many occasions that they do not favor reducing the filibuster rule.

In a Senate with a 50-50 split, their votes would be required to modify the rules.

 

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