President Biden on Monday urged Congress to raise the debt ceiling, blaming Republicans for the impasse and warning of a potential economic calamity if the U.S. defaults on its financial obligations for the first time in history.
“The United States is a nation that pays its bills and always has from its inception. We have never defaulted,” Mr. Biden said in remarks from the White House.
Mr. Biden accused Senate Republicans of playing “Russian roulette” with the economy by threatening to use their filibuster power to block Democrats from raising the debt limit. The president described the Republicans’ position as “hypocritical, dangerous and disgraceful.”
The U.S. is fast approaching the Oct. 18 deadline to raise the cap on the maximum amount of money the government can borrow to pay its bills. Those bills cover previous government spending — including funding for social programs, national debt and service members’ salaries — but not new costs.
Senate Republicans say a higher borrowing limit would only encourage Mr. Biden and congressional Democrats to embark on massive spending plans.
Earlier Monday, Senate Minority Leader Mitch McConnell, Kentucky Republican, urged Mr. Biden to pressure Democratic leaders to raise the debt ceiling on their own.
“I respectfully submit that it is time for you to engage directly with congressional Democrats on this matter,” Mr. McConnell wrote in a letter to the president. “Your lieutenants in Congress must understand that you do not want your unified Democratic government to sleepwalk toward an avoidable catastrophe when they have had nearly three months’ notice to do their job.”
On the Senate floor, Mr. McConnell said Democrats “just want a bipartisan shortcut around procedural hurdles they can actually clear on their own.”
“Now, they want that shortcut so they can pivot right back to partisan spending as fast as possible,” he said. “This unified democratic government is having trouble governing. They couldn’t even pass the bipartisan infrastructure bill which the president negotiated and the speaker of the House promised would pass last week. Democrats need to tackle the debt limit.”
Mr. Biden said he read Mr. McConnell’s letter and planned to reach out to him.
Because the U.S. has never defaulted on its obligations, economists are mainly guessing how catastrophic the fallout could be if the debt ceiling is not raised. Most agree it could be devastating.
Moody’s Analytics estimates that even a delay in raising the debt ceiling would cost nearly 6 million jobs, increase the unemployment rate from 5.2% to 9% and cause the stock market to lose about one-third of its value.
“This will undermine the safety of U.S. Treasury securities and threaten the reserve status of the dollar as the world’s currency,” Mr. Biden said. “American credit rating will be downgraded, interest rates will rise for mortgages, auto loans and credit cards.”
Speaking with reporters, Mr. Biden said he can’t guarantee that the U.S. won’t default on its debt obligations if Congress doesn’t act.
White House officials last week explored whether the U.S. could continue to make payments should the debt ceiling be breached, but concluded it would be impossible without economic chaos.
Treasury Secretary Janet Yellen told Congress last week that failure to raise the debt ceiling could quickly deplete the Treasury’s resources.
Congressional Democrats took
their eye off the debt limit in recent weeks and focused on passing Mr. Biden‘s roughly $4 trillion economic agenda.
Republicans, meanwhile, are trying to deny Mr. Biden a victory on the debt fight. They say Democrats have enough votes to raise the debt limit without their help by using a special budget process known as reconciliation.
Reconciliation could force Democrats to lift the ceiling too high to pass easily through Congress.
Democrats so far have refused to go down that path.
Senate Majority Whip Richard J. Durbin, Illinois Democrat, dismissed calls for hiking the debt ceiling along party lines using reconciliation. He said the process governing reconciliation is convoluted and would likely extend past the Oct. 18 deadline.
“I’m not going to [say] anything’s impossible, but the consistent message from the [Democratic] caucus is that would take additional time, a series of votes and delay,” said Mr. Durbin, “which is exactly what McConnell wants.”
The Senate parliamentarian, Elizabeth MacDonough, announced last week that Democrats could hike the debt ceiling unilaterally in a matter of weeks. Mrs. MacDonough, who is responsible for ensuring the reconciliation process abides by the Senate‘s rules, said Democrats could offer a separate budget resolution dealing with the debt ceiling.
Democratic leaders are wary of using the process to deal with the debt ceiling because, under reconciliation rules, they would have to give a specific number for the nation’s borrowing limit. The amount, which would be above the current limit of $28.8 trillion, would open vulnerable Democrats to attack during next year’s midterm election campaigns.
“Democrats want to raise the debt ceiling with no new guardrails,” said Stephen Moore, who was an economic adviser to President Trump. “Democrats need these guardrails removed if they are to blow the roof off government spending with these [new] spending bills.”
Republicans have twice blocked Democrats from raising the debt ceiling.
The first time was when Democrats sought to extend the debt limit as part of a stopgap measure that would have avoided a looming shutdown. The second time was when Senate Majority Leader Charles E. Schumer, New York Democrat, tried to bypass a Republican filibuster and set up a stand-alone bill to suspend the debt ceiling.
Mr. Schumer said Monday that Republicans “ought to get out of the way and let the Senate pass the legislation.”
“We don’t have the luxury of waiting until Oct. 18,” Mr. Schumer said. “Every day we delay, we increase the chances of doing damage to our global financial system.”
The president urged Republicans to work with Democrats to extend the debt ceiling. He said their resistance would “take our economy over a cliff” and noted that much of the debt incurred over the past four years resulted from Mr. Trump’s spending.
Republicans approved three increases to the debt ceiling during the Trump administration, which increased the national debt by roughly $8 trillion.
“Republicans just have to let us do our job. Just get out of the way,” Mr. Biden said. “You don’t want to help save the country, get out of the way so you don’t destroy it.”
Republicans said Mr. Biden‘s spending plans would cause more economic devastation than a U.S. default on its obligations. Mr. Biden has proposed two massive spending bills to rebuild the nation’s infrastructure and expand the social safety net.
“The dishonesty from Biden and the Democrats about their wasteful tax-and-spending spree won’t cover up the fact that his agenda will hurt American workers, cause prices to skyrocket even further, and raise taxes on working families,” Emma Vaughn, a Republican National Committee spokesperson, said in a statement.