“If that happened, the government would not be able to pay its obligations in full and would delay the payments of its activities, the default of its debt obligations or both,” the nonpartisan CBO said in a statement. He noted that this schedule could change depending on the pace of revenue collection and government disbursements.
Failure to resolve differences over whether public spending cuts should accompany an increase in the statutory debt limit, currently set at $ 28.5 trillion, could lead to a federal government shutdown, as has happened three times in the last decade, or even a debt default. .
President Joe Biden’s fellow Democrats closely control both the Senate and the House of Representatives. No senior Republican has mentioned a threat of closure in recent public statements. Democrats insist on a “clean” increase in the debt ceiling unfettered by a fight for spending cuts.
Senate Top Republican Mitch McConnell said Wednesday that his party members are unlikely to support an increase in the debt limit given the current Democratic push for a multi-trillion-dollar infrastructure investment bill.
“I can’t imagine there will be a single Republican vote to raise the debt ceiling after what we’ve been experiencing,” McConnell told the congressional-focused Punchbowl News.
McConnell suggested that Democrats address the debt cap in a second spending measure that they hope to pass without Republican votes in a maneuver called reconciliation.
Senate Majority Leader Chuck Schumer called McConnell’s remarks “brazen, cynical and totally political.” Schumer said Republicans raised no such concerns during Republican Donald Trump’s presidency and that some of the debt is related to emergency aid in response to the COVID-19 pandemic.
‘DO IT FAST’
Another prominent Democrat, Senate Finance Committee Chairman Ron Wyden, accused Republicans of trying to start a protracted debate on the cost of popular federal programs like Social Security to cloud the debt cap issue.
Wyden rejected McConnell’s suggestion that a debt cap bill be attached to a Democrats-only infrastructure investment bill that could move forward this fall, saying, “We will do it quickly” through more conventional procedures.
The Treasury Department on July 31 technically hits its statutory debt limit. Like the maximum on a personal credit card, the debt limit is the amount of money the federal government can borrow to meet its obligations. These range from paying military salaries and IRS tax refunds to Social Security benefits and even interest payments on debt.
Since the government spends more than it receives on revenue, it continues to operate by borrowing more and more.
For many years, the statutory debt limit was raised to a specific dollar level. More recently, Congress has set the limit to a specific date in the future.
Legislators often try to extend the authority to apply for loans beyond the next US election so that it does not become a campaign issue. Midterm elections that will determine whether Democrats retain control of Congress are scheduled for November 2022.
If Congress does not raise the debt ceiling from its current $ 28.5 trillion by the time the Treasury Department’s borrowing authority is exhausted, Treasury Secretary Janet Yellen is expected to take special steps to avoid a default on the government. These provisional measures are only effective for a short period.
Failure to raise the debt ceiling could lead to a repeat of government shutdowns that occurred in 2013, January 2018, and 35 days from late December 2018 to January 2019. Other factors were also at play during those disruptions.
In a sign of Wall Street concern over the looming limits, yields on short-term U.S. Treasury debt have risen to around 0.05%, after having been near zero since the early 1990s. pandemic.
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