‘Real possibility’ Democrats might change Senate rules for debt hike, says Biden

President Joe Biden said on Tuesday that his Democrats might make an exception to a US Senate rule to allow them to extend the government’s borrowing authority without Republican help, which could head off an economically crippling debt default.

As a stalemate between Republicans and Democrats showed no sign of abating, Biden said there was a “real possibility” that his party would bypass the long-standing supermajority voting requirement known as the filibuster for dealing with the debt limit.

That would allow Democrats, who hold a razor-thin Senate majority, to suspend the federal government’s US$28.4 trillion borrowing cap without Republican votes.

Asked if Democrats would remove the filibuster solely to raise the debt limit, Biden said: “Oh I think that’s a real possibility.”

Many Democrats have argued that the Senate should dump the filibuster entirely, saying it prevents progress on climate change, voting rights and other priorities.

Centrist Democratic senators including Joe Manchin and Kyrsten Sinema have said they are not willing to do so, leaving the party short of the votes they need to change the rule.

But Democrats now are considering dropping the filibuster just for dealing with the debt limit, several senators said. Manchin declined to comment when asked about that possibility on Tuesday prior to Biden’s statement.

Biden made the comment as the Democrats were due to try for a third time to suspend the debt ceiling on Wednesday, which Republicans are expected to block.

Senate Republican Leader Mitch McConnell is urging Democrats to raise the debt ceiling on their own using a more convoluted approach called reconciliation that would require no Republican votes.

“They have the time to do it. And the sooner they get about it, the better,” McConnell said at a news conference.

‘Danger zone’

Biden and other Democrats say that process would take too long and push the country too close to an unprecedented default. Economists say that would roil the global financial system, raise borrowing costs and eliminate millions of jobs.

Treasury Secretary Janet Yellen has said the government will exhaust its borrowing capabilities by about Oct 18 if Congress does not raise the country’s US$28.4 trillion borrowing authority by then.

The Democratic-controlled House of Representatives voted last week to suspend the debt ceiling until the end of 2022.

But Democrats need at least 10 Republican votes to overcome a filibuster in the Senate, which is evenly divided between the two parties. Republicans blocked two other efforts to raise the debt ceiling last week.

“If Republicans want to vote ‘no’ tomorrow, if they really want to be the party of default, that’s their choice,” Schumer said on the Senate floor.

Republicans have said the unpleasant task of increasing the debt limit should be the responsibility of the party in charge. If they succeed in forcing Democrats to do so on their own, the issue would likely be fodder for attack ads against Democratic candidates in the 2022 congressional elections.

Biden and Schumer have rejected reconciliation as too convoluted and risky and have warned of economic catastrophe unless Republicans change course. But Schumer did not rule it out at a news conference on Tuesday.

Without a quick resolution, some government services might be suspended, such as delivering Social Security benefit checks to the elderly.

Even a close call would likely be damaging. A 2011 debt ceiling dispute, which Congress resolved two days before the borrowing limit was due to have been reached, caused stocks to tumble and prompted a first-ever credit downgrade for US debt.

Moody’s Investors Service said on Tuesday it expects Washington will raise the debt limit.

Democratic Senator Mark Warner said Congress was already risking US creditworthiness. “We’re in the danger zone right now,” he told reporters.

Using reconciliation could consume the attention of Congress, slowing Biden’s efforts to reach agreement on his multitrillion-dollar social agenda and potentially undermining his support among moderate and progressive Democrats.

Another potential advantage of pursuing a filibuster exception is that the reconciliation process would require Democrats to adopt a specific dollar figure for a new, higher debt ceiling on their own, rather than simply postponing the issue until after the November 2022 elections.