Democrats Face Uncertain Path To Avoid Fiscal Calamity

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House Speaker Nancy Pelosi, D-Calif., at the U.S. Capitol on Wednesday. The House of Representatives passed a bill to keep the government funded and suspend the debt ceiling, but Republicans are expected to block it in the Senate. / AP

Democrats in Washington are working against a rapidly approaching deadline to end a standoff with Republicans that could force a partial government shutdown and a panic over the nation's credit rating.

"We're calm and everybody's good and our work's almost done," House Speaker Nancy Pelosi, D-Calif., said as she returned from a meeting with the president at the White House. "We're in good shape."

Leaders chose to tie an extension of the federal borrowing limit to a bill to extend routine government funding that runs out at the end of the September. Republicans have insisted for months they will not support that plan, meaning a shutdown and default could be imminent.

The confrontation comes as Democrats are also struggling to manage serious rifts within their own party over a roughly $3.5 trillion spending plan that contains the bulk of President Biden's agenda.

Biden called nearly two dozen Democrats to meet Wednesday at the White House as the fate of all three measures remains in doubt.

Ahead of his White House meeting, Senate Majority Leader Chuck Schumer, D-N.Y., delivered a speech on the Senate floor blaming Republicans for the looming fiscal crisis.

"Every American family will suffer from the Republican desire to play political games and send our nation into default," Schumer said. "The full faith and credit of the United States isn't a game. It's the bedrock upon which our economy stands."

Congress is facing another shutdown threat

House Democrats voted Tuesday night to extend government funding through Dec. 3, suspend the debt limit until December 2022 and provide financial aid for natural disasters and Afghan refugees.

Senate Minority Leader Mitch McConnell, R-Ky., has said Republicans won't support increasing borrowing limits while Democrats try to push ahead with a partisan spending package.

"The American people don't want it," McConnell said on the Senate floor. "And Senate Republicans won't support it."

Democrats, who control 50 seats in the Senate, plan to use a budget tool known as reconciliation to pass the spending plan without any Republican votes. Reconciliation allows for certain tax and spending-related bills to pass without the 60 votes required for most legislation.

McConnell wants Democrats to use the same tools to address the debt limit.

But Democrats insist that the debt limit, which is the cap Congress sets on how much the federal government can borrow, should be not be a partisan issue. They said Democrats voted several times to increase the borrowing limit under former President Donald Trump and they said the current plan to suspend the borrowing cap would allow the government to pay off debts that resulted from spending on bipartisan COVID-19 relief.

Sen. Richard Shelby of Alabama, the top Republican on the Senate Appropriations Committee, said Democrats are prematurely panicking about the debt and should focus on preventing the government from shutting down next week.

"Treasury has a lot of options; they always sound the alarm, which they should, but I think there's time," he told reporters at the U.S. Capitol. "I'd like to go ahead myself and pass the continuing resolution to fund the government."

Democrats are facing struggles on spending

Republicans have signaled for months they are willing to risk the confrontation over debt and spending as a way to object to Democrats' broader spending plans.

McConnell has signaled since at least July that he would not back a debt limit hike so long as Democrats were moving ahead with plans to use reconciliation to avoid a GOP blockade of Biden's spending plan. He has repeatedly insisted that Democrats use reconciliation to increase the debt limit, but Democrats chose to ignore his demands.

Republicans are correct that Democrats could still amend the rules for reconciliation to include a debt limit increase, but such a move creates serious risks for Democrats.

As a practical matter, adding the debt limit to the spending bill would take considerable time. Democrats insist they can't wait to suspend the limit without risking the potential for serious harm to the economy.

Even if they could speed things along, Democrats do not currently have the votes to pass the reconciliation proposal. Adding the debt limit to that package likely would not guarantee passage, leaving Democrats solely responsible for any possible default.

Moderate members, such as Sens. Joe Manchin, D-W.Va., and Kyrsten Sinema, D-Ariz., oppose the top-line spending target as well as some of the underlying policies backed by progressives.

Most Democrats said they're operating on the expectation those disagreements will be resolved despite little evidence that either faction of the party is willing to relent.

Sen. Tim Kaine, D-Va., said Democrats are proud of the partisan COVID-19 relief bill approved earlier this year and have to build on that success.

"We've had a pretty robust first stretch of the Biden administration, where Democrats, with no Republican votes, did massive good for the American public," Kaine said. "We may have to do massive good with very few Republican votes in the next stretch, but I think we'll get there."

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