The Democrats may have bitten off more than they can chew in trying to ram through a $3.5 trillion partisan spending measure before the end of the month. Their problem rests with the fact that they are going to be very busy in September passing a bill to raise the debt ceiling while also passing a temporary spending measure to keep the government going after September 30.
Indeed, the Treasury Department can cook the books and move decimal points around for a couple of months, but inevitably Congress is going to have to pass a budget. How long the money would last is an open question, but word on the Hill is that the Democrats will try for a short-term funding bill that would last until about Christmas.
Then there’s the politically loaded question of raising the debt limit. The limit was suspended in 2019 but was reinstated at $28.5 trillion. Again, the Treasury Department can play games with the numbers, but the debt ceiling needs to be reauthorized eventually.
Republicans don’t want anything to do with raising the debt ceiling, which can’t pass the Senate without at least 10 GOP votes. The Republicans figure that if Biden wants to spend another $6 trillion, then the Democrats can damn well take responsibility for having to raise the limit.
Democrats argue — quite rightly — that Republicans fail to note the trillions in bipartisan pandemic spending passed during the Trump years.
“No one should be playing a game of chicken with the debt ceiling,” said Sen. Chris Van Hollen (D., Md.), a member of the Senate’s budget and appropriations committees. Mr. Van Hollen said he thought a debt-limit increase should be added to the short-term spending measure, in part because it isn’t entirely clear when Congress will be forced to act to avert any repercussions in financial markets.
That’s exactly the kind of legislative gambit the Republicans want to avoid. They want the Dems to own the coming financial crisis and won’t lift a finger to help with the debt celing.
Republicans think that the Democrats should include the increase in the debt limit in their hyper-partisan $3.5 trillion social spending monstrosity. That way, Republican hands would be clean.
At least, as clean as far as forgetting about the other trillions of dollars Republicans voted for last year.
Policy developments in coming months “are likely to play a big role in financial markets and in our judgment risks are higher than most market participants believe,” analysts at research firm Cornerstone Macro wrote in a note to clients Wednesday, noting the government funding deadline and borrowing limit, as well as the expected votes on spending measures. “We’re headed toward a stalemate on the debt ceiling, and the risks of a default are higher than at anytime since 2011,” they warned.
House Democrats are going to have to debate and approve the $1 trillion bipartisan infrastructure bill by September 27 or the Democratic moderates will blow up Biden’s multi-trillion spending bill. Congress will also have to pass the debt limit increase and a temporary budget fix.
It’s a full plate and with the Labor Day holiday around the corner, there won’t be a lot of legislative days to pass everything they want.