Democrats immediately rejected the settlement offer
Sen. Susan Collins suggested this week that some Republican MPs can support an effort to raise the loan limit if Democrats agreed to drop a massive $3.5 trillion tax and spending bill, most of which President Bideneconomic agenda.
“Some Republicans would vote to raise the debt limit if they knew Democrats were going to drop the $3.5 trillion package, which seems impossible, but it is a compromise,” the Maine Republican told reporters on Monday.
Democrats – who are expected to dramatically expand the social safety net in their partisan bill – immediately rejected the settlement offer. Although details of the multitrillion-dollar measure are still being negotiated, it is expected to eventually include billions in expanding Medicare, setting up free community college, providing paid family leave and tackling climate change. .
“I will not negotiate with anyone whether or not they are going to destroy the full trust and credit of the United States of America,” Sen. Brian Schatz, D-Hawaii, wrote on Twitter.
For weeks, lawmakers have been at a standstill over debt limits: Democrats are pressuring Republicans to support an effort to raise or suspend the ceiling, adamant they won’t put it in a reconciliation bill. But Senate Minority Leader Mitch McConnell, R-Ky., has rejected the Treasury Secretary’s appeal. Janet Yellen To raise the ceiling, arguing that Democrats have the ability to go it alone.
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Gridlock worsened this week, with Biden lashing out at Republicans for blocking an effort to raise the debt limit, calling them “reckless” and “outrageous.”
“A meteor is poised to crash into our economy,” Biden said. “Democrats are willing to do all they can to stop this. Republicans just have to let us do our job. Just get out of the way. You don’t want to help save the country? Get out of the way so you don’t destroy.” Give“
If the US fails to raise or suspend the debt limit, it will eventually have to temporarily default on some of its obligations, which could be serious and negative. Economic Meaning. Interest rates are likely to rise, and demand for treasuries will decline; Even the risk of default can lead to an increase in the cost of borrowing.
Moody’s, a financial analysis firm, has warned that a failure to raise the limit could result in a 4% drop in economic activity, the loss of nearly 6 million jobs and an unemployment rate near 9%.
The Treasury Department began implementing so-called extraordinary measures to keep the government running after a debt limit of about $22 trillion was restored in August – about $6 trillion less than the actual level. Yellen told Congress The federal government will run out of cash to pay its bills by October 18.
The fight to raise the government’s borrowing limits poses major risks for state and local officials: With debt totaling $28.5 trillion, the government will be forced to reduce federal programs unless the cap is suspended or removed. goes.
The US has never defaulted on its debt before, although it came to a close in 2011 when House Republicans refused to pass a debt-limit increase, prompting rating agency Standard & Poor’s to lower the US debt rating a notch. inspired.