Senate Democrats accused Republicans on Wednesday of a “shameless, cynical” ploy that would damage the economy and the government's credit rating after the chamber's GOP leader said his party would vote against raising the federal debt limit.
In the latest chapter of a broad budget battle likely to linger well into autumn, Democrats reacted a day after Senate Minority Leader Mitch McConnell, R-Ky., said he believes all Republicans will vote against renewing Washington s ability to borrow money. The government, which has been running huge budget deficits for years, needs to borrow cash constantly to pay its debts, but its legal authority to do that expires July 31.
An expiration of the government's borrowing authority could lead to a federal default, which has never happened. Analysts say a default could have a devastating impact on the economy, driving up interest rates, lowering the federal credit rating and driving up its borrowing costs.
“The leader's statements on debt ceiling are shameless, cynical and totally political,” Senate Majority Leader Chuck Schumer D-N.Y., said on the Senate floor. “This debt is Trump debt, it's COVID debt,” he said, a reference to a massive 2017 tax cut enacted under former President Donald Trump and federal spending that has mushroomed since the COVID-19 pandemic.
It is not unusual for the political party out of power in the White House to threaten to oppose a debt ceiling increase as leverage to exact budget concessions.
This fight comes as the two parties are also at odds over President Joe Biden's multitrillion-dollar proposals for bolstering federal domestic spending and raising taxes on the wealthy and corporations to pay for it.
Congress suspended the debt ceiling — the limit on federal borrowing — two years ago, but that suspension expires July 31.
The Treasury Department can get by for short periods using accounting maneuvers, but it is unclear when it would exhaust that option. Some have suggested the government could run out of cash during August, when Congress is scheduled to be on recess.
A Senate GOP filibuster of legislation raising the debt limit would mean the chamber's 50 Democrats would need support from 10 Republicans — support that McConnell suggested will not be there.
On Tuesday, McConnell told Punchbowl News, “I can’t imagine a single Republican in this environment that we’re in now, this free-for-all for taxes and spending, to vote to raise the debt limit.” Punchbowl News is a publication that covers Capitol Hill and politics.
One option would be for Democrats to include the language in a $3.5 trillion bill they plan to write financing environment, health, education and family programs. Democrats plan to use a budget maneuver to shield that bill from a filibuster, but it may not be ready for months.
Senate Finance Committee Chairman Ron Wyden, D-Ore., told reporters McConnell is trying to “hold the American economy hostage." He said Democrats would deal with the problem “quickly" but offered no specifics.
“There is no compromise here. We don’t compromise with America paying its bills," said Sen. Elizabeth Warren, D-Mass.