- Mitch McConnell blocked Senate Democrats’ attempt to raise the debt ceiling on their own on Tuesday.
- McConnell has remained adamant that raising the debt limit is something only Democrats must do.
- The federal government is now on the verge of both defaulting on its debt and shutting down.
- See more stories on Insider’s business page.
On Tuesday, Senate Minority Leader Mitch McConnell rejected Majority Leader Chuck Schumer’s request for a vote to suspend the debt limit, leaving the government closer to a debt default and shutdown.
“Democrats won’t get bipartisan help paving a path to partisan recklessness,” McConnell wrote on Twitter.
-Leader McConnell (@LeaderMcConnell) September 28, 2021
Since June, McConnell has been insistent that Democrats must raise the debt ceiling on their own, saying that Republicans should not play a role in funding the opposing party’s $US3.5 ($AU5) trillion social-spending bill. But even when Schumer attempted to do just that, requesting unanimous consent on Tuesday to suspend the debt limit – something Democrats could accomplish on their own – McConnell objected and said Democrats should use the reconciliation procedure to raise the limit instead.
This comes after McConnell, alongside all Senate Republicans, blocked a measure that would have averted a government shutdown and debt default on Monday; it had passed the House last week.
Treasury Secretary Janet Yellen told Congress on Tuesday that it has until October 18 to raise or suspend the debt limit, after which the government’s money will run out and it will be forced to default on its debt. Earlier this month, she projected the money will run out sometime in October, but even now, with a specific date, Yellen urged lawmakers to not wait until the last minute given economic uncertainty from the pandemic.
Democrats now have more time to prevent a debt default, but they have been reluctant to address the issue through reconciliation because it would take too long to go back and amend, and debate on, the legislation. Schumer told reporters on Tuesday that going that route is a “non-starter.”
“It’s very, very risky,” he added. “We’re not pursuing that.”
The consequences of failing to act promptly on prevent a debt default are dire. Yellen said last week that allowing a default would lead to “economic catastrophe,” delaying Social Security payments and increasing unemployment, and White House expressed the same concerns, warning in a memo to state and local governments that a government default could lead to potential big cuts in measures like Medicaid and free school lunches.
On Tuesday, Yellen told Congress it would be a worst-case scenario for the dollar, which is the bedrock of the international financial system.