© Reuters. FILE PHOTO: The dome of the U.S. Capitol is seen at sunset on Capitol Hill in Washington, US, July 26, 2019. (Reuters) / Irene Scott / File Photo
Written by Richard Kwan
WASHINGTON (Reuters) – The U.S. Congress faces approaching deadlines to fund the government and address the country’s $28.4 trillion debt ceiling that will require tough maneuvering by Democrats led by President Joe Biden over the next few weeks.
The first is a September 30 deadline to continue funding federal agencies or face a second partial government shutdown in three years, which would be embarrassing as Washington continues to battle the coronavirus pandemic and boost the economy.
In late October or early November, the US Treasury will run out of money to pay its obligations, meaning the government faces the risk of a historic default if Congress takes no action.
Here are the ways in which both measures can take effect to become law in the coming weeks:
What does it take to fund the government?
Congress has until September 30 to avoid starting government services shutdowns, which could mean closing some national parks, reducing airport security checks, interruptions to public health services during the COVID-19 pandemic, and eventually interruption in benefits checks for veterans and retirees and keeping national parks open.
Democrats and Republicans basically agree on the need to move quickly to keep the government running and the House has already approved a bill.
While Democrats have slim majorities in both houses of Congress, Republicans can block the bill under Senate rules that require 60 of 100 members to approve most legislation. Republicans say they oppose the bill because it includes a temporary suspension of the debt limit, and while they oppose allowing the US government to default, they want Democrats to suspend the debt limit without their vote.
The Senate could vote on the bill as early as Monday.
What if Senate Republicans block the bill?
If Senate Republicans carry out their threat to block the bill, Democrats won’t have time to act before the government starts shutting down.
They can simply remove the debt limit clause from the bill and rush to pass the amended law in the House and then the Senate.
That could be achieved in just hours, depending on how close lawmakers are to midnight, the September 30 deadline and whether the parties agree. But even one Republican senator can slow things down by stalling.
What about debt limits?
Democrats have two potential ways to suspend the debt limit and allow it to rise for a set period of time as Congress spends more and more money with insufficient revenue to cover the bill. Economists at Goldman Sachs (NYSE) wrote in a note last week that the current standoff is “the most dangerous debt limit deadline in a decade.”
Former Treasury secretaries and Federal Reserve officials urged Republicans to support the increase. Democrats note that they have supported increasing Republican priorities during previous Republican administrations.
Democrats could present a stand-alone debt-reduction increase as a gamble, as there would be so much pressure on Republicans to move forward that they would either vote for the bill or refuse to “disable” it in the Senate. The latter would allow the bill to pass by a simple majority of 48 Democrats, two independents and a tie-breaking vote by Vice President Kamala Harris.
What about budget adjustment?
The budget compromise is a maneuver that bypasses the regular Senate requirement of 60 votes to introduce a bill. It’s the technique the chamber’s top Republican, Mitch McConnell, used to pass a sweeping tax-cutting bill that was funneled to the wealthy when his party controlled the Senate in 2017. Now in the minority, Democrats want to use this to tackle debt. That Republicans don’t have to vote and take responsibility for raising the debt limit even if they wanted to.
But it’s complicated.
Democrats could try to put language on the debt ceiling in Biden’s $3.5 trillion social spending bill. But the party is deeply divided on this bill and it is not clear that moderates and progressives can agree on a timely settlement package to avoid default.
Another option is to write a settlement bill that focuses on the debt ceiling only. This is also a waste of time as bills lead to a despised process called “rama voting” with hundreds of amendments possible. The Senate has held several all-night sessions of this nature over the past year.
An independent debt ceiling increase using the conciliation process would likely be approved by the Senator since there are strict restrictions on its use.
Meanwhile, the Bipartisan Policy Center now estimates that the Treasury will fully exhaust its borrowing capacity sometime between October 15 and mid-November. Unless Congress takes timely action, the US government will likely fall into default.