Congress is locked in a standoff that has big economic effects
The US Congress is now dealing with two huge tasks for this month – increasing the debt ceiling and funding the US government.
While Congress has less than 10 days to pass the bill to avoid any government shutdown from occurring, the Democrats are hoping that the Republicans will agree and help them pass the impending suspension of the debt ceiling.
The lawmakers have a deadline to halt the debt ceiling until October. As Treasury Secretary Janet Yellen already warned that unprecedented measures should be in place to stave off the debt ceiling.
Janet Yellen is saying that Congress needs to raise the US Treasury’s debt ceiling to avoid “catastrophe.” Try calling your credit card company up and using the same argument. How about Congress stops spending to avoid “catastrophe.”
— Brian Wesbury (@wesbury) September 20, 2021
While not increasing the debt ceiling would lead to inadequacy, failure to fund the government will result in a shutdown.
Even though the Republicans have rejected the plan of the debt limit, letting Congress in a political draw doesn’t help at all. With the bickering between the two parties, acting out accordingly might produce serious economic consequences.
The Democrats will delay the debt limit until the end of 2022. They will pass a bill that will increase spending levels until the 3rd of December.
Debates are still ongoing over the capping of the debt. The continuous argument is whether they should pay for the spending they have already authorized, and debt limits arguments seem to be backward-looking.
As daunting as a government shutdown looks like, everyone forces that failure to act upon the debt ceiling to be an indisputable disaster. The debt ceiling is the amount of debt the US government is legally allowed to have.
While the impending bill includes a budget of $6.3 billion worth of aid for Afghan refugees, a total of $28.6 billion for natural disaster recovery is also allotted.
House Dem Caucus Chairman Hakeem Jeffires: "Kevin McCarthy voted to raise the debt ceiling. We don't expect that he's going to do it this time around, because he's just playing politics."
— Kyle Griffin (@kylegriffin1) September 21, 2021
On Tuesday evening, the House voted on the bill passing on the measure. The results have 211 Republican votes who are against and 220 Democratic votes in agreement.
While the Democrats’ votes are sufficient to pass the bill, the fate is still less certain in the Senate as the GOP leaders have flatly vowed in opposing the bill over their disagreement on the Democrats’ spending ambitions.
The Democrats are now strongly arguing that to blame the Republicans for an impending economic disaster if they vote against it. The Congress still has the last say.
Rep. Hakeem Jeffries, chairman of the House of Democratic Caucus, said, “The House will not allow the United States government to default on its obligations for the first time in American history. We hope that Senate Republicans will also do the right thing and stop playing politics around the debt limit.”
No signs of approval from the Republicans
Senate GOP leader Mitch McConnell said, “We don’t have a divided government, and Democrats do not need our help. They have every tool to address the debt limit on their own: the same party-line process they used to ram through inflationary spending in March and already plan to use again this fall.”
Democrats control the Senate, the House, and the White House. If they want to ram through another reckless taxing and spending spree that hurts working families and helps China without any Republican input, they will need to raise the debt limit on their own. pic.twitter.com/ykLnrVkil9
— Leader McConnell (@LeaderMcConnell) September 21, 2021
Amidst McConnell’s warnings, the Democrats are still head-on with their strategy. They dispute that the Republicans helped push the debt up due to their partisan policies. They’re referring to the spending on the COVID-19 relief and the 2017 tax cuts.
At this point, everyone can agree with what Senate majority Leader Chuck Schumer implied. He insists that both of the parties need to be responsible for the already existing debt. This is beyond the Congress decisions.
Schumer said on Monday, “The Republicans are doing a dine-and-dash of historic proportions that hurts the American people and hurts our country. In the immediate future, both parties will have to come together to allow the federal government to continue its most important responsibility – paying the bills and making good on our outstanding obligations.”
An increase in the debt limit is part of the political routine.
While the Democrats are firm on raising the debt limits, Congress still sets the limit on how much the government is allowed to borrow. This normally applies to debt payments for already existing expenditures.
Just wanted to remind you that Republicans added $7 trillion to the national debt under the former guy, which is most of the debt now requiring a higher debt ceiling.
— Robert Reich (@RBReich) September 21, 2021
In the past 20 years, Congress has adjusted the borrowing limit 17 times, making it an almost yearly legislative duty. Nevertheless, those major changes only occurred after intense bickering.
Looking through the threat of default, it will greatly affect and harm the economy. While a downgrade can impact the market value of retirement funds, it can also affect the interest rates of mortgages.
It looks like the Democrats aren’t budging and will stick with their outlook. They believe that the Republicans should follow past endeavors. Also, that they should support the Democrats in delaying the debt limit until December 2022.
Pelosi told the reporters, “ Democrats supported lifting the debt ceiling because it’s the responsible thing to do. I would hope the Republicans would act in a similarly responsible way.”
No argument would affect McConnell. For months, he has been saying that he and fellow Republicans will not agree to pass a debt ceiling. Moreover, if the Democrats are pursuing a spending plan of more than $3 trillion.