Debt ceiling bill stalls again in Senate as pressure grows

Democrats seek ways around GOP filibuster as Treasury secretary sets new debt limit deadline

Speaker Nancy Pelosi speaks with Rep. Alma Adams, D-N.C., right, during a Build Back Better for Women rally on the House steps of the Capitol on  Sept. 24.  (Tom Williams/CQ Roll Call)
Speaker Nancy Pelosi speaks with Rep. Alma Adams, D-N.C., right, during a Build Back Better for Women rally on the House steps of the Capitol on Sept. 24. (Tom Williams/CQ Roll Call)
Posted September 28, 2021 at 1:25pm, Updated at 8:20pm

Senate Democrats on Tuesday began preparing to pass a stopgap funding measure to keep the government running separately from a debt limit suspension, after Republicans blocked the latter for the second time in as many days.

As a partisan fiscal standoff deepened, Democrats said they were determined to avoid a shutdown when the new fiscal year begins Friday. To that end, Senate leaders began checking with members of their respective parties to see if anyone would object to quick approval of a stopgap spending bill through Dec. 3.

The package would be similar to the continuing resolution the House passed last week on a party-line vote but without the debt limit suspension, according to a source familiar with the plan. The House-passed measure did not include $1 billion requested for Israel's Iron Dome rocket defense system after progressives protested the provision.

But the House quickly passed a separate bill to fund Iron Dome by the lopsided margin of 420-9. And Senate leaders were hoping to expedite passage of that bill as soon as this week.

"Hopefully we'll get enough votes to get a [continuing resolution] passed," said Sen. Jon Tester, D-Mont. "And then hopefully the debt ceiling will be increased. We've got to pay our bills, for God's sakes. This is stupid."

House leaders, meanwhile, said they could take up separate bills to suspend the debt limit and provide stopgap funding as early as Wednesday. But Majority Leader Steny H. Hoyer, D-Md., said the House was likely to wait for the Senate to send it a funding bill, instead of trying to pass its own measure, "because then, when we get it, we can send it right to the president."

The change in Senate strategy came after Democrats made their second unsuccessful attempt to suspend the debt limit this week.

Within hours after the Treasury warned it won’t be able to pay all its bills on time after Oct. 18 without debt limit relief, Senate Majority Leader Charles E. Schumer, D-N.Y., sought unanimous consent to take up a debt limit suspension that he said Democrats would pass with a simple majority vote without GOP support.

“If Republicans want to vote to not pay the debts they helped incur, they can all vote no,” Schumer said on the floor in offering his bill. “We’re just asking Republicans: Get out of the way.”

But Minority Leader Mitch McConnell, R-Ky., objected to the motion, pointing to Democratic plans for a $3.5 trillion reconciliation package that Republicans oppose: “Democrats will not get bipartisan help borrowing money so they can immediately blow historic sums on a partisan tax and spending spree.”

Democrats said the debt limit must be lifted to pay for financial obligations already incurred, regardless of what happens with their reconciliation package.

McConnell sought to offer an alternative plan allowing Democrats to use the partisan budget reconciliation process to suspend the debt limit on their own, with an agreement from Republicans to take up the measure on the floor without delay. But Schumer objected, saying McConnell’s plan “doesn’t change a darn thing.”

Earlier Tuesday, House Democrats mulled their own plans for suspending the debt limit that includes the option of passing stand-alone legislation for a debt limit suspension, instead of wrapping it into the stopgap funding measure as previously attempted.

“It’s among our plans,” Speaker Nancy Pelosi, D-Calif., told reporters after a private caucus meeting. “We spent a good deal of time in our caucus talking about lifting the debt ceiling and how Republicans refused to cooperate on this. They are jeopardizing the full faith and credit of the United States, which is guaranteed in the Constitution, the 14th Amendment.”

It’s not clear what the legislation would do exactly or how a stand-alone bill would advance in the evenly divided Senate, where bipartisan support is required for the 60-vote procedural hurdle — unless unanimous consent is granted to drop that requirement.

House leaders later notified lawmakers that the unspecified debt limit measure was slated for "possible consideration" on Wednesday, along with a separate stopgap funding bill, presumably shorn of debt limit language.

As the partisan standoff continues, time is running out. In a letter to lawmakers Tuesday, Yellen warned the government would be unable to pay its bills on time by Oct. 18.

"At that point, we expect Treasury would be left with very limited resources that would be depleted quickly,” Yellen wrote. “It is uncertain whether we could continue to meet all the nation’s commitments after that date.”

She added that waiting until the last minute to act could have negative consequences for financial markets and business and consumer confidence.

Waiting for Plan B

Republicans have been goading Democrats to revise their fiscal 2022 budget resolution to insert reconciliation instructions to raise the debt ceiling, enabling them to pass it on a party-line vote in the Senate. Democrats have rejected that option as too time-consuming, given it would lead to several additional procedural steps and two more "vote-a-ramas" in the Senate.

“Going through reconciliation is risky to the country and is a nonstarter,” Schumer said at his weekly news conference.

Some have speculated Democrats could attempt to change Senate rules by simple majority to lower the filibuster threshold for must-pass legislation like the debt ceiling. But with Democrats Joe Manchin III of West Virginia and Kyrsten Sinema of Arizona opposed to the "nuclear option" for legislation, it's not clear party leaders would have the 50 votes they need plus Vice President Kamala Harris.

Hoyer told reporters Tuesday that reconciliation might still be on the table as a last resort, though he suggested House Democrats would try first to pass a debt limit bill through the regular process. He said that measure would likely be attached to a "message bill," or a vehicle that's gone through both chambers with amendments, to avoid the Senate having to go through a motion to proceed.

After a previous two-year suspension in 2019, the debt limit was reinstated Aug. 1 at $28.4 trillion. But that borrowing cap will now be breached in a matter of weeks, according to Yellen and several private-sector forecasts.

A similar standoff in 2011 led to a downgrade in the U.S. credit rating, as nervous investors worried about Treasury not being able to meet its obligations to bondholders and others. To avoid such a risk in the future, Democrats have discussed changes to debt limit policies.

House Budget Chairman John Yarmuth, D-Ky., has said he would favor abolishing the debt limit altogether, because it has done nothing to curb deficits but can unnerve financial markets.

Pelosi said Democrats discussed other long-term options Tuesday as an alternative to future debt limit suspensions. She said Rep. Brendan F. Boyle, D-Pa., has proposed giving the Treasury secretary the power to raise the debt limit administratively.

“Congress would have the authority to reject that, but that would require an act of Congress and the signature of the president of the United States,” Pelosi said.

That's a similar process Congress agreed on with the Obama administration in 2011 and 2013. But since it's effectively giving the administration a license to raise the debt limit, some observers are skeptical Republicans would allow the resolution of disapproval option to pass this time.

Pelosi cited other long-shot options for dealing with the debt limit in the future, including Judiciary Chairman Jerrold Nadler's contention that Treasury should use an obscure provision of the fiscal 1997 omnibus appropriations law to mint a $1 trillion dollar platinum coin.

Her comment about the 14th Amendment to the U.S. Constitution, which states that "the validity of the public debt of the United States … shall not be questioned," drew some interest from reporters. When asked if she'd counsel Biden to invoke the 14th Amendment to disregard the debt ceiling, Pelosi didn't really answer.

"I'll let you know soon," she said. "No, I mean, the point is, it's in the Constitution, we really do not have to go through this all the time."

Shutdown days away

The House-passed stopgap funding measure that's awaiting Senate action would extend federal agencies' budget authority through Dec. 3, buying more time for a deal on fiscal 2022 appropriations. A partial government shutdown would begin Friday if Congress hasn't acted.

Absent the debt ceiling provision, Republicans support that underlying bill, which contains $28.6 billion in aid to natural disaster victims, $6.3 billion for Afghan evacuees being resettled in the U.S. and $2.5 billion for unaccompanied children who crossed the border illegally.

Hoyer said if the debt limit and continuing resolution aren't dealt with this week, his chamber may need to revise the schedule that currently calls for no floor votes next week. "I hope it’s in the next couple of days, but if it’s not, then next week we’ll have to be on call," Hoyer said. "We may well have to be back here next week."

Lindsey McPherson contributed to this report.