Posts tagged with "Recession"

Biden: Curbing filibuster to raise debt limit is ‘a real possibility’

October 7, 2021

President Joe Biden said on Tuesday, October 5, that Democrats are considering a change to Senate filibuster rules to bypass a Republican blockade over raising the debt limit, which has set the United States on a collision course with a government default, The New York Times reports.

“Oh, I think that’s a real possibility,” Biden said when asked if Democrats were considering the last-resort route, which would involve making an exception to allow for a debt ceiling bill to pass with a simple majority instead of the usual 60 votes needed.

Senate Democrats discussed carving out the exception at their weekly lunch on Tuesday. No conclusions were reached, but notably, according to participants, the two strongest opponents of filibuster changes—Senator Joe Manchin III of West Virginia and Senator Kyrsten Sinema of Arizona—did not speak up in protest. They also did not speak up in support.

However, on Wednesday morning, Manchin indicated that he would not support modifying the filibuster in order to deal with the debt ceiling.

The move, once nearly unimaginable in a chamber steeped in decorum, has come under discussion as the Biden Administration and congressional Democrats have explored ways to head off a government default without Republican support.

Treasury Secretary Janet L. Yellen has warned lawmakers of “catastrophic” consequences, including a recession and financial crisis, if Congress does not act before October 18, when the government is projected to be unable to pay its bills.

On Wednesday, the Senate was scheduled to vote on whether to take up legislation to raise the debt ceiling until December 2022. But with ten Republican senators needed to join Democrats in support, the vote is expected to fail.

Some Democrats have expressed hope that if curbing the filibuster is the only avenue left, the party could muster 50 votes for the rule change.

Biden’s remarks on Tuesday evening, made as he returned to the White House after a trip to Michigan to sell a bipartisan infrastructure package and expansive social spending bill, reflected the president’s increasingly confrontational approach to a divided chamber that has presented him with one legislative obstacle after another as he tries to pass his domestic agenda.

“As soon as this week, your savings and your pocketbook could be directly impacted by this Republican stunt,” Mr. Biden said during remarks at the White House on Monday, October 4—cautioning that a failed vote on Wednesday could rattle financial markets, sending stock prices lower and interest rates higher. “A meteor is headed for our economy,” he said.

The president has also bristled at the ultimatum put forth by Senator Mitch McConnell of Kentucky, the minority leader, who has said Democrats must use reconciliation—a more complicated process that could take a week or more to come together—if they want to overcome Republican opposition to raising the debt limit.

Research contact: @nytimes

White House warns states of potentially dire effects if government defaults

September 20, 2021

The White House is warning states that a default caused by failing to raise the federal debt limit could result in drastic cutbacks to disaster relief, Medicaid reimbursement, school funding, and other programs, reports CNN.

“If the US defaults and can no longer pay its obligations, billions of dollars in state aid and state-run but federal funded programs could be halted,” the White House warns in a fact sheet for local and state officials.

Preident Joe Biden has demanded that Republicans join Democrats in raising the debt ceiling, but so far, GOP lawmakers have resisted. The memo comes as Democratic leaders are seriously considering adding a debt limit increase to the stopgap funding bill.

A final decision on whether to make that move must come by Monday, September 20, when the House Rules Committee is slated to take up the short-term continuing resolution, or CR, to keep the government open past September 30. If Democrats add the debt limit hike to the CR, it will set up a showdown vote days before the shutdown deadline, since Senate Republicans are vowing to block it.

According to CNN, the U.S. Treasury has said extraordinary measures to avoid default will run out by October.

The memo outlines several key programs that would be halted if Congress fails to the Children’s Health Insurance Program, infrastructure funding, education, public healthcare, and child nutrition.

The memo also warned that “hitting the debt ceiling could cause a recession,” suggesting, “Economic growth would falter, unemployment would rise, and the labor market could lose millions of jobs.”

“If the U.S. defaults on its debt, cities and states could experience a double-whammy: falling revenues and no federal aid as long as Congress refuses to raise or suspend the debt limit. This means critical state services will be at risk for budget cuts, from education to healthcare to pensions,” the White House said.

It also warns that capital market volatility “could affect state assets,” which could impact state pension payout obligations.

The White House expressed confidence the matter would be resolved, but declined to say how.

“We have seen this done in a bipartisan way consistently. And the best way to do this is without a lot of drama, without a lot of self-inflicted harm to the economy and to our country. And that’s what we’re going to do, you know, there’s a lot of posturing on this issue, but we’re confident at the end of the day we’ll get this done,” National Economic Council Director Brian Deese said Friday, September 17, on MSNBC.

Research contact: @CNN