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Mitch McConnell says GOP will not strike deal with Democrats to have US pay bills on time, increasing risk of derailing economic recovery

Senatorial Minority Leader Mitch McConnell, R-Ky., Does a cable interview before the start of a two-week hiatus at the Capitol in Washington on Wednesday, June 23, 2021. AP Photo / J. Scott Applewhite

  • McConnell has ruled out GOP cooperation with Democrats to raise the debt ceiling.

  • “I can’t imagine there will be a single Republican vote to raise the debt ceiling after what we’ve been through,” McConnell told Punchbowl News.

  • Treasury Secretary Yellen has warned of an “absolutely catastrophic” blow to the recovery if the debt ceiling is not raised.

  • See more stories on the Insider business page.

Senate Minority Leader Mitch McConnell has said he does not envision any Republican in Congress voting alongside the Democrats to renew the federal government’s authority to pay its bills.

This increases the chances of derailing the economic recovery if the debt ceiling is not raised quickly enough.

“I can’t imagine a single Republican in this environment we find ourselves in right now – this free for all on taxes and spending – voting to raise the debt ceiling,” McConnell told Punchbowl News, adding that Democrats should raise it alone in a party line bill that is taking shape.

The Kentucky Republican’s remarks represent a major warning to Democrats as they begin to assemble a $ 3.5 trillion reconciliation plan that is poised to wipe out Congress without GOP votes. This is the legislative way for certain bills to be approved with only a majority vote.

The federal government’s borrowing authority will end on July 30.

Treasury Secretary Janet Yellen urged lawmakers to lift it as she testified before a panel last month, sounding the alarm over an “absolutely catastrophic” blow to economic recovery if borrowing power government is not renewed. Raising the debt ceiling does not mean that federal spending will increase.

If the federal government defaults, Yellen said it could trigger a chain reaction of liquidity shortages starting with holders of US bonds which include individuals, businesses and foreign governments.

The Treasury Department can tap into emergency powers to keep payments outstanding until a certain date. But Yellen told Congress it was difficult to predict when those will run out this summer given the economic uncertainty resulting from the pandemic.

Republicans voted to suspend the borrowing limit in July 2019 for two years under President Donald Trump. Experts say Democrats could raise the cap in a reconciliation plan this fall. But that would force them to list a number due to the process’s strict fiscal rules, opening the door for the GOP’s political attacks on Democrats as big spenders as the national debt surpasses $ 28.5 trillion.

Republican Senator Lindsay Graham of South Carolina is scheduled to hold a press conference on Wednesday on “fiscal insanity and Democrats’ reckless spending.”

Read the original article on Business Insider

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