Dems dig in on debt as painful September looms

The borrowing fight is perhaps the most immediately consequential drama during a momentous fall for Biden and the Democratic agenda. In addition to raising the debt ceiling, Democrats must fund the government past Sept. 30, devise a likely multitrillion-dollar spending bill and put Biden’s infrastructure bill over the top in the House. Democrats will also make one last-gasp effort at passing voting rights legislation.

“The fall is complicated already. And the debt ceiling is going to make it even more so,” said Sen. Tim Kaine (D-Va.). Asked about his level of confidence in avoiding a default, he replied: “I’m not gonna use the word confident. I’m gonna use the word optimistic.”

Though Democrats could have excluded the GOP from discussions altogether, Speaker Nancy Pelosi and Senate Majority Leader Chuck Schumer want to test the credibility of debt protests from Republicans over the ambitious spending plans from Biden’s party. The smart money is still on Democrats tying a short-term debt ceiling lift to a stopgap funding bill in late September, challenging Republicans to vote to shut down the government and bring the nation to the cusp of default.

If that strategy falls through, Democrats could uncouple the debt ceiling from government funding and try a standalone vote closer to the default deadline, which is likely in October or November, according to aides. But that, too, might fall short with the GOP: Senate Minority Leader Mitch McConnell is leading the charge against Biden just as he did against former President Barack Obama, arguing that Democrats’ proposed spending plans are so large that Republicans can’t go along with increasing the debt limit.

Democrats are holding firm and betting the GOP will flinch before the U.S. defaults on its loans, a doomsday point expected to hit anytime between September and November. House Budget Chair John Yarmuth (D-Ky.) said simply: “As difficult as they can be, I can’t imagine there aren’t 10 Republicans who would vote not to default.”

Republicans retort that they are deadly serious, saying that the votes simply aren’t there to raise the debt ceiling and pass a spending bill together. Sen. John Cornyn (R-Texas) said there’s no path to 60 upper-chamber votes for raising the debt limit “unless there’s reforms associated with it.”

Democrats “had a way to solve the problem, and now they are creating one for themselves and for everybody else. Because they could have included it in their budget resolution and done it with 50 votes and the vice president,” Cornyn said. “Apparently they want the drama.”

While the nation has never defaulted, such a failure would diminish the country’s reputation as a borrower and stun the global economy. And Democrats could later revise their budget resolution and raise the debt ceiling without GOP support, something some in the party were pushing for earlier this summer.

Democrats aim to spend more than $6 trillion in total this year on coronavirus relief, infrastructure, social programs and climate change. Some of that money will be paid for with tax increases and enforcement; a good portion is deficit spending that Democrats argue will ultimately be both popular and pay for itself.

Biden’s party plans to deliver most of its spending via budget reconciliation, the arcane process that allows the majority side to skirt a filibuster in the Senate. After Republicans used reconciliation to slash taxes and increase the deficit in 2017, Congress went on to raise the debt ceiling — with Democratic support.

Now it’s the GOP’s turn to return the favor, Democrats insist.

“We can’t negotiate over it. We shouldn’t negotiate over it. And Republicans are going to have to answer if they choose not to pay America’s bills,” said Sen. Chris Murphy (D-Conn.).

“We have to stop playing games with this. I mean, we need to set a precedent that this is expected of you as a member of Congress to pay America’s bills,” Murphy added. “I understand the Republican talking point. But their massive $4 trillion tax cut is absolutely driving the high deficits and debt numbers.”

These days even moderate Republicans are signaling early unease with supporting a debt ceiling increase given the circumstances. Summing up the GOP position, Rep. Tom Cole (R-Okla.) said: “They’re the ones spending the money, without any Republican input, so why would Republicans vote for the debt limit?”

“It doesn’t make sense to me, other than that [Democrats] don’t want to have the link be made between the enormous amount of new spending of $3.5 trillion and the need to raise the debt limit,” said Sen. Susan Collins (R-Maine). “They’re trying to sever the two issues even though they are so obviously connected.”

Collins was one of four Republican senators to not sign the letter vowing to oppose a debt ceiling increase and has been one of the GOP’s most reliable votes for lifting the debt ceiling. During the last truly suspenseful debt vote, she and Sen. Lisa Murkowski (R-Alaska) held back their support to push party leaders to also increase the debt ceiling in 2014.

During the Obama administration, previous debt ceiling fights brought budget cuts and even a credit downgrade to the United States. Democrats say they have learned from those fights not to even engage in negotiations with the GOP.

Striking a deal to increase military funding has often built enough Republican support for debt limit action in the past. While Biden is calling for a roughly 1.5 percent increase in defense spending, Republicans have already recruited Democrats this year to support boosting the recommended Pentagon budget from $715 billion to over $740 billion.

“Whenever they’re talking about adding defense money, everything’s negotiable,” said Rep. Mike Rogers of Alabama, the top Republican on the House Armed Services Committee. “I would entertain it.”

While Democrats now say they will not barter with funding as a way to avert the debt cliff this year, their plan to tie debt limit action to the September government funding deadline will once again link the two pressure points. Because Congress is expected to agree only to a short-term patch next month that staves off a shutdown for a few more weeks or months, debt relief might only last for that short period of time.

Yarmuth said it is “entirely possible” Congress passes a short waiver of the debt limit this fall, along with a stopgap funding bill, merely moving the debt cliff into the winter.

Congress voted in late 2013 to waive the debt limit for three months, and then again for less than four months. Of course, that followed a 17-day full government shutdown — an episode few in Washington would like to relive eight years later.

Olivia Beavers contributed to this report.