Congressional Democrats will try to suspend the federal government’s debt limit through 2022.
In 2019, Congress suspended the debt ceiling — a statute that stops the federal government from assuming a certain level of national debt — until August 2021. In July, Congress failed to vote on continuing the suspension or raising the debt ceiling; Treasury Secretary Janet Yellen was then forced to take “extraordinary measures” to fund the federal government.
Over the weekend, Yellen warned that the government could begin failing to make payments as soon as October without action from Congress.
Meanwhile, Republican leadership is forcing Democrats to own the higher debt ceiling alongside their $3.5 trillion social spending bill, which Democrats plan to enact by circumventing the Senate filibuster via budget reconciliation.
“I can’t imagine a single Republican in this environment that we’re in now — this free-for-all for taxes and spending — to vote to raise the debt limit,” Senate Minority Leader Mitch McConnell (R-KY) explained in an interview last month. “I think the answer is they need to put it in the reconciliation bill.”
Indeed, House Speaker Nancy Pelosi (D-CA) announced on Monday that Congress would fund Congress for a few more months and once again suspend the debt ceiling.
“This week, the House of Representatives will pass legislation to fund the government through December of this year to avoid a needless government shutdown that would harm American families and our economic recovery,” she said in a joint statement with Senate Majority Leader Chuck Schumer (D-NY). “Both Republicans and Democrats have priorities they want to see addressed in the regular order appropriations process for Fiscal Year 2022, and an extension of government funding through December will provide an appropriate amount of time for that bipartisan, bicameral process to come to completion.”
“The legislation to avoid a government shutdown will also include a suspension of the debt limit through December 2022 to once again meet our obligations and protect the full faith and credit of the United States,” the statement continued.
Earlier this year, Fitch Ratings — one of the “Big Three” rating agencies on Wall Street — issued a “Negative Outlook” on the United States’ creditworthiness due to expanding federal debt. Though the United States maintained its “AAA” rating, Fitch said that the outlook “reflects ongoing risks to the public finances and debt trajectory.”
The current national debt is $28.8 trillion.