Key House Democrat Floats Two-Track Path to Speed Debt-Limit Work
House Budget Chair Presses Democratic Leaders for U.S. Debt-Limit Fix
(Bloomberg) -- House Budget Chair John Yarmuth said that he urged Speaker Nancy Pelosi and other party leaders to act quickly to raise the federal debt ceiling after Treasury Secretary Janet Yellen said a default is possible after Dec. 15.
Democrats, Yarmuth said, need to decide how to tackle the debt ceiling before Dec. 1 to ensure Congress can act before the deadline. He suggested the House pursue a “parallel track” process of putting a debt ceiling suspension in one regular bill while also using the budget reconciliation process -- which bypasses a Republican filibuster in the Senate -- to increase the limit.
Senate Majority Leader Chuck Schumer has resisted using the reconciliation process, arguing that raising the debt limit should be a bipartisan action. But GOP leader Mitch McConnell has said Democrats must do it on their own.
“It is up to the Senate,” Yarmuth, of Kentucky, said.
The Treasury has since last month been using so-called extraordinary measures to help avoid running out of cash. Yellen’s Tuesday letter to congressional leaders warning of the default date raised the pressure on Congress to act after the debt limit took a back seat to the negotiations on President Joe Biden’s economic plans.
Goldman Sachs Group Inc. estimates the Treasury will exhaust its resources before the end of next month.
That’s about when Democratic lawmakers may be wrapping up their social-spending bill, which they are advancing via the reconciliation process. The debt limit potentially could be added to that bill, Goldman economist Alec Phillips said.
“While pairing the issues could have some political downside, the potential benefit might be to set a hard deadline for passage of the BBB legislation just before Congress adjourns for Christmas,” Phillips wrote in a note to clients Tuesday.
Investors are beginning to demand more yield to hold the U.S. government’s shortest-maturity debt, which is perceived to be at risk of delayed repayment if the debt ceiling isn’t suspended or raised in the coming few weeks.
The No. 2 Republican in the Senate, John Thune of South Dakota, said Tuesday the leaders of the two parties are beginning to discuss how the process will play out.
“I don’t know at this point exactly how it’s going to be transacted,” Thune said. “We’ve said before, and the Democrats say this, they have to deliver the votes for it and they know that. What that process looks like remains to be seen.”
Using the reconciliation process to add a debt ceiling increase to the existing legislative package encompassing most of Biden’s agenda or as a stand-alone measure would clear the way for it to pass the 50-50 Senate without any Republicans. But it would take as much as two weeks.
Suspending the debt ceiling in a separate bill would subject it to Senate filibuster rules, which would require at least 10 Republicans to agree to move forward.
McConnell on Tuesday said he wasn’t concerned about the looming deadline.
“We’ll figure out how to avoid default,” he said. “We always do.”
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