WASHINGTON (AP) – Senate Democrats on Wednesday accused Republicans of a “shameless and cynical” scheme that would hurt the economy and the government’s credit rating after the GOP House leader said his party would vote against raising the federal debt limit.
In the latest chapter of a broad budget battle likely to last until the fall, Democrats reacted a day after Senate Minority Leader Mitch McConnell, R-Ky., Said he believed that all Republicans would vote against renewing Washington’s ability to borrow money. The government, which has been running huge budget deficits for years, must constantly borrow money to pay its debts, but its legal authority to do so expires on July 31.
An expiration of the government’s borrowing authority could result in the federal government defaulting on payments, which has never happened. Analysts say a default could have a devastating impact on the economy, pushing up interest rates, lowering the federal credit rating and pushing up its borrowing costs.
“The leader’s statements on the debt ceiling are shameless, cynical and utterly political,” Senate Majority Leader Chuck Schumer, DN.Y., told the Senate. “This debt is Trump’s debt, it’s COVID debt,” he said, referring to a massive tax cut in 2017 passed under former President Donald Trump and the federal spending that went on. multiplied since the COVID-19 pandemic.
It is not uncommon for the deposed political party in the White House to threaten to oppose an increase in the debt ceiling as leverage to secure budget concessions.
The fight comes as the two sides also disagree over President Joe Biden’s multibillion-dollar proposals to bolster federal domestic spending and raise taxes for the wealthy and corporations to pay them.
Congress suspended the debt ceiling – the limit on federal borrowing – two years ago, but that suspension expires on July 31.
The Treasury Department can get by for short periods of time using accounting maneuvers, but it’s unclear when it would exhaust that option. Some have suggested the government could run out of money in August, when Congress is expected to be on vacation.
A Senate GOP obstruction of legislation raising the debt limit would mean the 50 House Democrats would need the backing of 10 Republicans – support that McConnell says will not be there.
McConnell told Punchbowl News on Tuesday, “I can’t imagine a single Republican in this environment we find ourselves in right now, this free of tax and free spending, voting to raise the debt limit.” Punchbowl News is a publication that covers Capitol Hill and politics.
One option would be for Democrats to include the language in a $ 3.5 trillion bill they plan to write to fund programs for the environment, health, education and the family. Democrats plan to use a budget maneuver to protect this bill from obstruction, but it may not be ready for months.
Senate Finance Committee Chairman Ron Wyden, D-Ore., Told reporters McConnell was trying to “hold the US economy hostage.”
“There is no compromise here. We don’t compromise with America paying its bills, ”said Senator Elizabeth Warren, D-Mass.