Another failed vote to lift the debt ceiling could worry economists and Wall Street investors as the Treasury Department warns the nation could use up its borrowing capacity by October 18, or what is known as the X-Date.
“Let me clarify the task ahead: we need to have a debt limit bill on the president’s desk by the end of the week. Period, ”said Schumer in a letter to his colleagues on Monday morning, threatening to work through the weekend or cancel the break next week if the legislation does not end up in Biden’s hands.
“We don’t have the luxury of waiting until October 18,” said Schumer. “The consequences of even getting closer to the X-Date could be catastrophic to our economy, devastating to American families, increase the cost of borrowing for the average American, and hinder our economic recovery in the long term.”
But Democrats will have to start moving soon if they want to raise the debt ceiling through the reconciliation process or the same special budget process they use to pass Biden’s massive social spending plan. During his remarks on Monday, Biden signaled no interest in the concept and stressed that Republicans must stop walling up.
“What they are doing today is so reckless and dangerous in my opinion,” said Biden, adding that he cannot “guarantee” that the government will not default on its financial commitments during the stalemate.
“Not only are Republicans refusing to do their jobs, they are threatening to abuse their power, their power, to prevent us from doing our jobs and saving the economy from a catastrophic event,” he said.
However, it is unclear whether some Senate Republicans will feel the heat of business and financial markets if the stalemate continues. If the GOP simply refuses to give the necessary votes, several Senate Democrats have said the majority party will not allow the country to enter dangerous economic territory.
Senator Tim Kaine (D-Va.), A member of the Senate Budgets Committee, said last week he expected the Democrats to be “very committed” to the debt ceiling in the coming days. While a one-party approach to tackling the debt ceiling is “more complicated”, the Democrats will ultimately not allow default, he said.
“I don’t want to let it go until October 18th,” Kaine said last week, referring to the possible date the Treasury Department could run out of money.
In his letter on Monday, Schumer said the Democrats will discuss the debt ceiling at their party dinner on Tuesday. Treasury Secretary Janet Yellen has warned that if Congress waits until the last minute to lift the country’s borrower cap, it could “cause irreparable damage to the US economy and global financial markets.”
“Dems have all the levers,” said Kaine. “Even if the other side wants to flirt with the default,” Democrats won’t, he said.
Senate finance chairman Ron Wyden (D-Ore.) Said last week, “We will make sure the debt incurred is paid.”
“I just wish the Republicans were part of this solution, as we were during the Trump administration,” he said, referring to Congress raising the debt ceiling three times during President Donald Trump’s tenure.
Without action by Congress, a nation default means the Treasury Department will not be able to meet more than $ 1 trillion in financial commitments.
In this never-before-seen scenario, the government’s creditworthiness would deteriorate, interest rates would skyrocket, financial markets would collapse, and payments to Americans would jeopardize critical safety nets.