Stock Groups

Biden pushes Congress to raise debt limit this week, slams GOP


U.S. President Joe Biden gives remarks from the State Dining Room of White House Washington, U.S. Oct 4, 2021.

Jonathan Ernst | Reuters

President Joe BidenOn Monday, Republicans were blamed for blocking attempts to increase or suspend the U.S. borrowing cap and avoid a first default ever on the nation’s debt.

President Trump rebuked the GOP for their hypocritical behavior. They added nearly $8 trillion to U.S. national debt under Trump’s administration, and then refused to pay tax cuts or spending increases that had been approved.

Biden stated that Republican leaders refused to allow a White House request to forgo filibuster in favor of allowing Democrats to pass legislation raising the ceiling by a simple majority with a margin of 60 votes.

This plan could theoretically allow any GOP senators to approve a ceiling rise while also allowing Democrats not to include a borrowing limit measure in their reconciliation bill, which seeks to overhaul America’s social safety net.

Biden declared from the White House, that Republicans won’t vote for increasing the debt in order to finance their spending. They are not only refusing to perform their duties, but they threaten to stop us from performing our jobs: Saving the economy and avoiding a catastrophe.

“It’s dangerous, hypocritical and shameful,” he said. You should just get out of my way.”

CNBC’s inquiry regarding Biden’s comments by Senator McConnell was not promptly answered by the office of McConnell.

Last week, Treasury Department warned that lawmakers should address the debt ceiling before Oct. 18The so-called “drop dead” date, when officials believe the U.S. has exhausted emergency efforts to repay its bond payments.

Economists can only guess at the economic consequences an unprecedented U.S. default would have, but many — including Treasury Secretary Janet Yellen — say they would be “catastrophic.”

Yellen, D-Calif. has made it clear to Nancy Pelosi that a decrease in Washington’s ability to pay its IOUs on schedule would likely cause a spike in interest rates across all the economies, tarnish Washington’s status as the global reserve currency, and shock financial markets.

Political leaders from both sides agree that the debt ceiling needs to be increased. Otherwise, economic catastrophe is possible. Republicans and Democrats differ on the best way to raise the debt limit. Each side tries to make the issue a political point.

Republicans are frustrated at the reckless spending plans of Democrats and say that Pelosi, Senate Majority Leader Chuck Schumer (D-N.Y.), should suspend ceilings in their broad-ranging climate and social policy bill.

To pass billions of dollars to increase and improve education and climate, Democrats have used a unique process called budget reconciliation. This would give the party the ability to pass this bill in the Senate with just a simple majority instead of the required 60 votes.

McConnell, R.Ky. has said that no member in his caucus would support raising the ceiling. McConnell argues that the responsibility lies with Democrats who control Congress, the White House, and Congress.

Biden was reminded of this commitment Monday by the minor leader.

CNBC Politics

See more coverage of politics by CNBC:

McConnell said that Republicans had made it clear since mid-July that Democrats would need to increase the debt limit. “Bipartisanship cannot be a switch Speaker Pelosi, Leader Schumer might flip to borrowing money and then spend it,” McConnell wrote.

McConnell stated, in reference the reconciliation, “For two-and-a half months we have just warned that your party wants to govern itself, and it must also handle the debt limit.”

McConnell as leader of Senate GOP caucus wants to defend his fellow Republicans in advance of 2022 midterm election. Republicans who vote for a debt ceiling or suspension — despite its economic necessity — are vulnerable to attacks from a primary challenger who could spin a borrowing limit increase as an endorsement of more even more spending.

Suspending or increasing the debt limit does not allow for new spending by the government. However, it allows the Treasury Department the ability to repay debts and interest incurred from previous spending. Yellen, along with other economists, compare the process to a rise in the credit card borrowing limit.

Even if no spending was passed by the Biden administration, legislators would still have to approve a suspension of limit increases in order for Treasury to cover the nation’s debts.

However, with Democrats pressing to reduce their $3.5 trillion Social Safety Net Bill, Republicans see a vote for raising the ceiling to be an implicit endorsement.

On Tuesday, Senator Pat Toomey of Pennsylvania wrote on Twitter that “The Democrats want to see the GOP raise the debt limit higher than it would otherwise be necessary to pay for their $3.5-$5 Trillion spending spree.” If the Democrats fail to raise the debt limit is just as disastrous as they claim, then they will resort to the same method they are using to move their tax-and spending spree and raise the debt ceiling. That’s reconciliation.

Democrats believe that raising the limit must be done bipartisanally and point out that they had supported increased ceilings under the former president Donald Trump. The party is also wary that they will include the debt ceiling as part of their reconciliation bill, given the extent to which the legislation must be improved before moderates and progressives can agree.

In a Monday letter, Schumer informed colleagues that the chamber would attempt to pass a debt ceiling bill by week’s close.

He wrote, “Let’s be very clear: We must send a bill to President Obama by Friday dealing with the debt limit.” “We cannot wait to October 18th. As it is our responsibility, we must reassure the world that the United States fulfills its obligations promptly and that full faith and credit are not in doubt.”