The United States faces a default sometime between December 21 and January 28 if Congress does not act to extend or suspend it. debt ceiling, a Washington think tank warned on Friday.
The projection from the think tank, the Bipartisan Policy Center, had a narrower window than the one provided last month, and the nonpartisan group suggested that the actual deadline, or X-date, could be towards the earlier end of that range. .
Democrats and Republicans seem to have tempered their tone this time around to raise the debt limit. While lawmakers haven’t settled on a way to lift the borrowing limit, they are exploring a range of ways to raise it, including some that could ultimately hand the White House more power to avoid that kind of impasse. which has crippled Washington on a regular basis.
Republicans publicly insist that Democrats should act alone to address the issue, while Democrats have maintained that raising the borrowing limit is a shared responsibility, as both political parties have held large positions over the past several years. Have taken loans.
“Those who believe that debt limits can be safely pushed behind December’s legislative stack are misinformed,” said Shai Akbas, director of economic policy at the Bipartisan Policy Center. “Congress would be flirting with financial disaster if it went out for a holiday break without addressing the debt ceiling.”
Treasury Secretary Janet L. Yellen Warned MPs in November that the United States may be unable to pay its bills immediately after December 15. During testimony before the Senate Banking Committee this week, she underscored the urgency of the matter.
“I cannot overstate how important it is that Congress addresses this issue,” Ms Yellen said, “America must pay its bills on time and in full. If we don’t, we will end our current reform.”
In September, Ms. Yellen Demand to abolish loan limit, explaining that it has become a disastrous policy that has posed unnecessary risk to the economy. After approaching the first default in US history, Congress raised the statutory debt limit to $480 billion in October, with the Treasury Department estimating the government will continue to borrow into early December.
Congress leaders are quietly discussing ways to address the debt limit after warnings from Republicans they would help Democrats clear the 60-vote limit needed to break the Republican filibuster against legislation to raise the borrowing limit. won’t help.
Senators Chuck Schumer of New York, Majority Leader, and Kentucky’s Mitch McConnell, Minority Leader, have spoken repeatedly about the issue in recent weeks, but they have remained publicly silent about possible solutions. .
Former President Donald J. The debate is further complicated by his continued influence on Trump and the Republican Party. He has repeatedly raided Mr McConnell and other Republican senators who backed a procedural vote in October that cleared the way for Democrats to raise the debt limit.
But Mr McConnell, pushing for Democrats to raise the borrowing limit without the help of his convention, pledged this week that a default would be avoided.
“I assure everyone that the government will not default, as it never did,” McConnell said on Tuesday. Emphasizing further, he said, “we are having fruitful discussions about the way forward.”
Cuts from a $1.9 trillion coronavirus relief package passed in March and a $2.2 trillion climate, tax and spending plan that Democrats are trying to push through the Senate, Republicans slammed Democrats for debts incurred by both sides. Refused to help adjust. Even if leaders of both parties signed off on that spending, that helped the debt balloon.
In turn, Democrats have pushed back on Republican demand to use a fast-track process known as budget reconciliation to raise the debt limit without Republican votes. Democrats used the process to pass a coronavirus relief package and they are using it again for climate, tax and spending planning, but they have argued Republicans should help save the government from defaults.
Understand the US date ceiling
What is the loan limit? credit limit, also known as credit limit, is a limit on the total amount that the federal government is authorized to borrow through US Treasury bills and savings bonds to meet its financial obligations. Since the US is in a budget deficit, it will have to borrow huge sums of money to pay its bills.
Allies on both sides cautioned that no solution had been reached, adding that party leaders have so far avoided publicly trading blame on the issue.
As a way of navigating the impasse, some officials have discussed the possibility of handing the administration the authority to raise the debt limit, while giving Congress the ability to reject the decision with only a simple majority.
However, some lawmakers may not be willing to delegate that power to the White House or to lose the cuddle often used by a minority party to pressure, especially when ending a filibuster in the Senate. 60 votes are required to do so.
Other officials have attached legislation raising the debt limit to the huge annual defense policy bill, the last major urgent piece of legislation lawmakers plan to approve in December.
But it is unclear whether such a plan would be successful: attaching an increase to the debt ceiling could threaten the Republican votes needed to counter the faction of moderate Democrats who are usually opposed to military spending on defense bills. oppose. Representative Kevin McCarthy, a California Republican and minority leader, warned Friday that such maneuvers could pass the entire package.
The bipartisan policy center said this year there was additional uncertainty around the loan limit due to the pandemic and various economic relief programs which are still ongoing.
December 15 is a particularly important date because the Treasury Department is required to pay $118 billion to the Highway Trust Fund. If corporate tax receipts due that day are weak, the Treasury may face a cash crunch and the United States may be unable to meet all of its obligations, such as paying Social Security and military paychecks. to finance
Congressional Budget Office said this week It was expected that the Treasury would run out by the end of December if Congress failed to act. The Budget Office suggested, however, that the Treasury may be able to defer some of the Highway Trust Fund payments that were mandated in a recently passed infrastructure law, potentially closing in on default sometime in January.
Along with its updated launch, the bipartisan policy center unveiled a new proposal to tackle the debt ceiling, though this time is unlikely to help lawmakers.
Proposal, Which is being introduced by Representatives Jody C. Arrington, Republican of Texas, and Scott Peters, Democrat of California, would establish a process giving the president the authority to suspend debt limits through the next fiscal year until Congress agrees. does not pass a resolution blocking the move within 30 days. The president would then have to propose a debt reduction for Congress to consider separately.