Senate Careens Toward High-Stakes Game of Chicken on Debt Limit
The Debt

Senate Careens Toward High-Stakes Game of Chicken on Debt Limit

Reuters/Bryan Woolston

This right here is exactly what the facepalm emoji was made for: It’s looking ever more likely that Republicans and Democrats are headed for a September showdown over raising the debt ceiling.

A two-year suspension of the borrowing limit expired at the end of July and the Treasury Department has started employing “extraordinary measures” to enable the government to keep paying its bills and avoid breaching the ceiling. Those extraordinary measures may be exhausted shortly after Congress returns from recess in September, Treasury Secretary Janet Yellen has warned. Other estimates suggest lawmakers could have several weeks longer.

Republicans have insisted that they won’t vote to raise the borrowing limit if Democrats push ahead on a partisan basis with their $3.5 trillion reconciliation package. They’ve also demanded that a debt limit hike be accompanied by structural budgeting reforms along the lines of the spending caps imposed after a similar showdown in 2011. Some Republicans have also called for a bipartisan commission on entitlement reform.

“You can’t keep increasing the debt limit over and over again without some kind of reform that starts to address the fundamental issue, and that is deficit spending that goes out as far as we can see,” Sen. Steve Daines (R-MT) told Punchbowl News. “So the most responsible thing that can be done is to attach some kind of [budget] reform that we can get agreement as a condition of raising the debt ceiling.”

Senate Majority Leader Mitch McConnell (R-KY) reiterated the GOP position on Thursday. “If our colleagues want to ram through yet another reckless taxing and spending spree without our input, if they want all this spending and debt to be their signature legacy, they should leap at the chance to own every bit of it,” he said. “Let me make something perfectly clear: if they don’t need or want our input, they won’t get our help. They won’t get our help with the debt limit increase that these reckless plans will require.”

McConnell has suggested that Democrats include a provision to raise or suspend the debt limit in their budget package, which could pass with only Democratic votes. But some moderate Democrats are concerned about the political optics of going that route, preferring to raise the debt ceiling as part of bipartisan legislation to fund the government. Democrats also point out that they didn’t play debt ceiling politics when Donald Trump was president and Republicans added nearly $2 trillion to the debt with their 2017 tax cuts, so they don’t want to reward GOP brinksmanship now.

“The rules that existed under Donald Trump, that we weren’t going to mess with the full faith and credit of the United States of America, was the appropriate and prudent thing,” Sen. Mark Warner (D-VA) said, according to Punchbowl. “To create a fake crisis at this moment, with this much going on in the world, with this much going on in this country, coming out of Covid and dealing with the variant, would be the epitome of irresponsibility.”

That sets up a high-stakes game of chicken, with most Republicans opposed to extending the debt limit as part of a stop-gap spending bill called a continuing resolution.

The bottom line: Whether we see a debt limit showdown this fall should become clear within days as Democrats decide if they’ll include a provision to address the issue in the budget resolution they expect to take up next week.