The House cleared a temporary debt limit bill Tuesday that will buy lawmakers a little more time to negotiate a longer-term solution and potentially remove the threat of a self-inflicted economic calamity before the midterm elections next November.
Lawmakers voted 219-206 to adopt a rule for floor debate on unrelated legislation that "deemed" the Senate-passed debt limit bill as having cleared the House. That maneuver sent the bill, which would increase the Treasury Department’s borrowing authority by $480 billion to nearly $28.9 trillion, to President Joe Biden's desk where he's expected to sign it this week.
Treasury Secretary Janet L. Yellen had told lawmakers the agency wouldn't be able to meet all U.S. financial obligations starting shortly after Oct. 18 unless Congress took action. The new borrowing room is intended to last at least through early December, though some independent forecasters say it could give Treasury the ability to keep paying its bills in full through the end of this calendar year or perhaps slightly past the start of 2022.
The shaky agreement between Senate Majority Leader Charles E. Schumer, D-N.Y., and Minority Leader Mitch McConnell, R-Ky., came together last week after months of partisan brinkmanship. The Senate passed the compromise bill on a 50-48 party-line vote Thursday after 11 Republicans voted for cloture, which requires at least 60 senators to advance the bill to final passage.
'Beyond the pale'
The "deem and pass" procedural tactic is not new, though it frustrated Rules Committee ranking member Tom Cole, R-Okla., who said Democrats using the maneuver on the debt limit bill was “beyond the pale.”
“When directly voting on something might be too tough on Democratic members, just wave a magic wand and deem it passed,” Cole said.
Rules Chairman Jim McGovern, D-Mass., said Democrats weren’t trying to hide anything, but were trying to be “efficient” by using the rule to clear the Senate’s amendment to the House’s original bill.
The procedure, formally called a "self-executing rule," is common for adopting amendments to underlying bills in the House, but it's rarer for passing actual legislation.
House Democrats considered self-executing changes made by the Senate to what ultimately became the 2010 health care law, but ultimately backed off that strategy. House Republicans used it in 1996 to send President Bill Clinton a bill granting him line-item veto authority, which was later invalidated as unconstitutional.
In August, the House deemed the fiscal 2022 budget resolution adopted when the House adopted a rule setting debate parameters for a Senate-passed infrastructure bill and voting rights legislation. In 2019, the House deemed an overall spending ceiling for appropriators to be adopted when they adopted a rule for debate on separate spending caps legislation that ultimately didn't get a vote.
The House also has had rules that allow for deeming debt limit legislation as having passed that chamber after adoption of a budget resolution. Democrats revived a modified form of that rule in 2019 after it was repealed in 2011 by the then-GOP majority.
House Democrats' original longer-term debt limit bill would have suspended the debt limit through Dec. 16, 2022. The House passed it in late September on a mostly party-line vote with Rep. Adam Kinzinger, R-Ill., joining almost all Democrats to support it. Democrats Kurt Schrader of Oregon and Jared Golden of Maine voted against that bill, though both voted for the temporary measure Tuesday. Kinzinger voted "no" on the rule and the short-term debt ceiling legislation, which went to Biden's desk on a straight party-line vote.
The short-term patch could be the last of its kind, with Senate Republicans furious at Schumer for giving a floor speech just ahead of Senate passage last Thursday saying they “played a dangerous and risky partisan game.” McConnell responded the next day with an unusual letter to Biden, in which he called Schumer’s speech a “tantrum” that “escalated a pattern of angry incompetence.”
Schumer and Speaker Nancy Pelosi, D-Calif., have so far ruled out using the budget reconciliation process to raise the debt limit for a longer period of time, as McConnell has insisted on, arguing the debt is the result of decisions made by both parties.
Pelosi said Tuesday that she still hopes Congress can approve a longer term measure in a “bipartisan way.”
Pelosi also discussed ways for Congress to avoid regularly voting to raise or suspend the debt limit in the future, saying that a bill that would move the responsibility from Congress to the Treasury secretary has “merit.”
That's similar to a process lawmakers used in 2011 and 2013, which gave Congress the option of voting to disapprove of a debt limit increase initiated by the president. But it would still require 60 senators to vote for cloture — unless Democrats change the filibuster rules, as they hinted last week was an option before backing off amid opposition from Sen. Joe Manchin III, D-W.Va.
A holiday special?
It's not clear when Treasury would run out of borrowing authority. Wrightson ICAP, an investment advisory firm that tracks Treasury finances, said late December or early January at the latest was likely, given Treasury needs to use a chunk of its new borrowing room to pay back government trust funds it suspended investments in to stay under the old limit.
Donald Schneider, a policy analyst at Cornerstone Macro, said Treasury could potentially make it later into January. The former House Ways and Means chief economist, a Republican, said he's still crunching the numbers. But he said “it seems possible" that the government could get through the high borrowing months of October, November and December before arriving in the usual surplus month of January.
“Then you may be riding on low cash balances, but you could make it through January” before having to raise the debt limit in February, he said.
Former aides said it’s hard to predict how the next debt limit fight will play out. The window for increased borrowing authority will start to close roughly around the same time the stopgap appropriations extension expires Dec. 3, potentially marrying the two in negotiations.
Democrats could also still be in the midst of consolidating support for passage of the bipartisan infrastructure bill and Democrats-only reconciliation bill.
Several scenarios are possible:
- Senate Republicans hold out against facilitating a debt limit increase, and Democrats opt to use a revised budget resolution and the reconciliation process to raise the debt limit.
- Republicans find it problematic to sustain their opposition as they did this time, and choose to kick the can down the road again by letting another short-term debt limit increase pass.
- The debt limit disapproval process Pelosi alluded to that would allow the borrowing ceiling to be raised without a vote while permitting Congress to reject it.
- The multitrillion-dollar reconciliation bill falters, making Republicans willing to support a longer-term debt limit increase that gets both parties past the November 2022 elections.
- Amid negotiations to reach a fiscal 2022 appropriations deal, Republicans agree to fold a debt limit increase into any agreement that is reached. As the end of the calendar year approaches, other issues including the outcome of the Virginia gubernatorial election, inflation and Biden’s polling numbers may have shifted attention away from the debt limit.
Schneider said Republicans might stick with McConnell’s pledge to try to force Democrats to use reconciliation. “I think the statements from members suggest that they are going to be firmer in their position from December and Democrats will not have the same excuse” about not having time to use reconciliation to raise the debt limit, he said.
A former Democratic aide speaking on condition of anonymity said McConnell “blinked” because “he knew that he wasn’t going to send the country over the cliff on a process argument that nobody was buying or that they weren’t buying enough to say that that should be the reason why we default.”
The aide guessed McConnell "wants to run the same play again in December," but that there's little reason to believe he'll be successful the next time.
Another option is waiving the filibuster rules, though Manchin has repeatedly ruled that out. As a result, it continues to be anyone's guess how the nation's credit will be preserved later this year or early next.
Chuck Conlon contributed to this report.