Biden to push Congress to raise debt ceiling ahead of fast-approaching deadline

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By Kate Sullivan, CNN

President Joe Biden in a speech on Monday is set to push Congress to raise the debt ceiling to avoid the US defaulting on its debt for the first time ever, which could send the entire global economy reeling.

Congress has until October 18 to increase the country’s borrowing limit, Treasury Secretary Janet Yellen warned lawmakers last week, a date that is now just two weeks away. Republicans, led by Senate Minority Leader Mitch McConnell, have steadfastly opposed raising the debt ceiling, despite pleas and warnings from officials and watchdogs about the disastrous consequences of inaction.

Republicans argue that Democrats should handle the debt ceiling on their own by using a special budget process known as reconciliation, which would not require Republicans to vote on it. But House Speaker Nancy Pelosi and Senate Majority Leader Chuck Schumer have said they are opposed to that idea and they believe it is Republicans’ responsibility to help pay down debts that were incurred by both parties.

Democrats need to make a decision soon if they are going to use the budget reconciliation process, and the President’s speech on Monday could shed light on how Democrats are going to proceed.

Failure to raise the debt ceiling in time could halt payments that millions of Americans rely on, including paychecks to federal workers, Medicare benefits, military salaries, tax refunds, Social Security checks and payments to federal contractors. It could cause job losses, a shutdown of tens of billions in Covid-19 economic recovery aid still set to be delivered, a near-freeze in credit markets and gross domestic product taking a tangible hit that could last for multiple quarters.

Senior White House officials explored whether the US could unilaterally continue payments should the debt ceiling be breached, but ultimately officials concluded it would not be possible to avoid default and economic catastrophe, CNN reported last week.

The standoff over raising the debt ceiling comes at a chaotic time in Washington. Last week, Congress avoided a government shutdown just before the deadline and Democrats were also forced to punt on their infrastructure and social safety net agenda.

House Democratic leaders put off plans to vote on a trillion-dollar infrastructure plan amid sharp disagreements between progressive and moderate Democrats over the size and scope of the President’s sweeping domestic agenda. Senior White House officials went up to Capitol Hill last week to broker an agreement but were unsuccessful in hammering out a framework that both progressive and moderate Democrats would sign on to.

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CNN’s Matt Egan and Phil Mattingly contributed to this report.