Democrats search for Plan B as debt stalemate threatens US economy
Washington (AFP) - Democrats are expected to be thwarted Wednesday in a vote to overcome a Republican roadblock on suspending the US debt limit -- with just 12 days left to avoid a cataclysmic credit default.
The vote, a procedural hurdle for moving forward on House-passed legislation to lift the debt ceiling, needs 60 senators to pass, but all 50 opposition Republicans in the evenly divided upper chamber are expected to block it.
"Republican obstruction on the debt ceiling over the last few weeks has been reckless, it's been irresponsible," Chuck Schumer, the Senate's Democratic leader, told lawmakers.
US Treasury debt is considered the world's benchmark safe asset and its interest rates are the basis for the pricing of financial products and transactions across the planet.
Even the threat of a default can spook financial markets and damage the economy.But a first-ever default would be a "devastating blow" felt by Americans and the global economy for decades, sparking a worldwide financial crisis.
"As a result, tens of millions of people would quickly, even overnight in some cases, face the prospect of losing the regular Federal payments that help them to make ends meet," the White House's Council of Economic Advisers tweeted.
The government's ability to provide for national defense, the Covid-19 pandemic response and day-to-day services would also likely be severely impeded, the council warned.
With the deadline approaching, the administration has upped its campaign to educate voters on the dangers of a default, with President Joe Biden rebuking Republicans over the standoff in a nationwide address on Tuesday.
Biden will seek to reassure captains of industry he is due to meet at the White House later Wednesday, including from Citi, Raytheon, JPMorgan Chase, Intel and Bank of America, along with representatives of America's 50 million seniors.
Meanwhile, Defense Secretary Lloyd Austin warned he could lose the authority to ensure that service members, civilians, or contractors were paid, while benefits for nearly three million veterans would be imperiled.
"A default risks undermining the international reputation of the United States as a reliable and trustworthy economic and national security partner," he said in a statement.
Despite the looming threat, Republicans have been saying since July that they won't help the majority party with a "reckless" spending and borrowing spree.
They have been urging Democrats to lift the debt limit via reconciliation, an arcane legislative tool allowing some budget-related bills to advance with a simple majority rather than having to pass a 60-vote threshold.
Democrats have publicly ruled this out, however, saying there isn't enough time before October 18, after which the United States is expected to run out of funds to meet its obligations to creditors.
"It's not clear whether the Democratic leaders have wasted two-and-a-half months because they simply cannot govern, or whether they are intentionally playing Russian roulette with the economy to try to bully their own members into going back on their word and wrecking the Senate," Senate Republican leader Mitch McConnell told lawmakers.
Biden said Tuesday that making an exception to the "filibuster" rule that requires support from 60 senators to raise the debt limit -- effectively achieving the same goal as reconciliation -- was "a real possibility."
The last resort procedural move would require the assent of every Democratic senator, however, and moderates Joe Manchin and Kyrsten Sinema have come out against the option.
And McConnell has vowed to retaliate to such a move by turning the Senate into a "scorched-earth" legislative body with no cooperation between warring parties.
The feuding appears not to be playing well with ordinary Americans, with both sides in Washington viewed negatively in a new Gallup poll showing 55 percent unfavorability for Democrats and 56 percent for Republicans.
"Party favorable ratings often provide clues as to how upcoming elections might go and will be an important indicator to watch as the 2022 midterm elections draw near," Gallup said.