With Treasury Secretary Janet Yellen warning lawmakers that the debt ceiling needs to either be raised or have its suspension extended before August 1, Democrats are considering two approaches to the problem, Politico’s Caitlin Emma reports.
In one scenario, Democrats make a deal with at least 10 GOP senators and raise the debt ceiling in a bipartisan piece of legislation. In a second scenario, they avoid the threat of a Republican filibuster by using the reconciliation process to raise the debt ceiling at the same time they pass all or part of President Biden’s multi-trillion infrastructure spending plan.
“Neither option is especially easy or palatable,” Emma says. Republicans are expected to demand reforms including spending reductions as part of any bipartisan agreement, while moderate Democrats may balk at the prospect of raising the debt ceiling on a partisan basis.
One obvious risk is that the debt ceiling could get bogged down with the effort to pass infrastructure legislation. If that process hits a snare, it could increase the risk that Congress fails to address the debt ceiling in time, causing a default on U.S. debt payments – which Yellen warned this week would be “catastrophic.”
Democratic lawmakers say they are aware of the situation and some have downplayed the severity of the risk. Sen. Tim Kaine (D-VA) said that a reconciliation package would likely include revenue increases, making it easier for Democrats to vote to raise the debt ceiling. “For me, it’s not a hard vote to raise the number, which is a meaningless number, if I feel like there’s a debt management strategy that makes sense,” Kaine said.
Still, there is no clear plan right now, and the clock is ticking. “It has to be done,” Senate Budget Committee member Patty Murray (D-WA) told Politico. “I don’t know the path yet. Everybody is aware that it needs to be done. We have to pay our bills.”