A vote on the nation’s debt ceiling was suspended in the Senate on October 6th as the political parties continue to disagree over how the federal government’s borrowing authority should be addressed. It is not clear when or if this vote will occur.
The suspension occurred on a procedural vote for legislation that has already passed the House and extends federal borrowing into December 2022. Today’s vote was to be on whether the Senate should take a final vote on the legislation. Sixty votes will be required to advance the legislation to a final vote.
The debt ceiling will likely be addressed, eventually. But how it occurs could affect the budget reconciliation bill that includes tax and spending increases and is currently stalled in Congress.
Eye on Debt Ceiling:
The Treasury Department has estimated that its borrowing will hit its limit around October 18th. This means that Congress has roughly two weeks to address the debt ceiling before the federal government experiences its first-ever “technical default,” which essentially means that bond payments are postponed so the federal government can pay other bills, like salaries for federal workers.
To offer a short-term fix, Senate Republicans today vowed to not block legislation that would extend the debt limit to a fixed dollar amount and cover spending into December. Democrats are opposed to applying a specific dollar figure to the debt limit because it could be used against them in ads running during the 2022 election season. Senate Democrats have yet to accept or reject the offer.
The more attention lawmakers spend on addressing the debt ceiling, the less time they have to breathe new life into the $3.5 trillion tax and spending bill. Based upon current negotiations, there appears to be some agreement among Democrats to reduce the bill’s total cost to somewhere between $1.9 trillion to $2.9 trillion.
Democrats would like an agreement on the tax and spending bill by October 31st. That being said, no decisions have been made on the bill’s actual cost, what provisions will remain in the legislation and how long those provisions will last. These negotiations are ongoing as congressional leaders try to avoid the federal government’s first default, technical or otherwise.
Lawmakers have consistently said that they can walk and chew gum at the same time (i.e., do two things at once). That mantra is being put to the test.
Options to Address the Debt Ceiling:
Aside from today’s offer, Senate Republicans have been steadfast in their opposition to address the debt ceiling, and have repeatedly told Senate Democratic leaders to use the budget process called “reconciliation” to fiddle with the country’s borrowing authority.
The budget reconciliation process is what was used to create the sure-to-shrink $3.5 trillion tax and spending bill. This budget procedure is fraught with procedural hurdles that can be very time consuming. Its most rewarding attribute is that reconciliation bills only require a simple majority to pass the Senate, which Democrats can do on their own.
Congressional Democratic leaders have so far ruled out using reconciliation to address the debt ceiling. Using this process would require Democrats to increase the debt ceiling to a specific number, which would be trillions of dollars and (as state above) politically unseemly. They would rather suspend the debt ceiling so there would be no exact number attached to their actions.
Another option Democrats have to adjusting the debt ceiling is changing its filibuster rule. Doing so would end procedural votes that require 60 votes to overcome and Democrats could successfully address the debt limit on their support alone. However, it is not clear if there is enough support within their party to end the filibuster for the debt ceiling.
Not Killing the Filibuster:
If Democrats don’t go the kill-the-filibuster route, the only other path to address the debt ceiling is through reconciliation if Senate Republican opposition persists.
Again, Democrats have said that they won't take this route, but below is how things could shake out if they do.
Democratic congressional leaders have two options when it comes to using reconciliation to advance their legislative priorities. One: a stand-alone reconciliation bill that only addresses the debt ceiling. Two: address the debt ceiling in the $3.5 trillion tax and spending bill that is currently stalled in Congress.
Currently, Democratic lawmakers are more likely to create a stand-alone debt ceiling reconciliation bill. They would have less than two weeks to complete all the procedural hurdles involved with advancing such legislation. Some budget experts say all hurdles could be cleared in less than ten days. However, in the past, it has taken Congress months to advance reconciliation bills.
If Democratic lawmakers address the debt ceiling by adding it to the $3.5 trillion tax and spending bill, the procedural hurdles will likely remain the same, but they would kill two birds with one stone.
Under this scenario, the tax and spending provisions would become a part of must-pass legislation because the debt ceiling must be addressed. Action on the debt ceiling must also be addressed by October 18th, according to Treasury. This means that any tax provisions included in the bill would also become law by then.
If Democrats don’t take this route, and the $3.5 trillion bill remains separate from the debt ceiling legislation, it is unclear if Democratic lawmakers will settle all disagreements over the bill's tax and spending provisions before the October 31st deadline.
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