- McConnell ruled out GOP cooperation with Democrats to raise the debt ceiling.
- “I can’t imagine there will be a single Republican voting to raise” it, McConnell said.
- The Treasury secretary said the recovery could take a huge hit if the debt ceiling wasn’t raised.
- See more stories on Insider’s business page.
Senate Minority Leader Mitch McConnell said he didn’t envision any congressional Republicans voting alongside Democrats to renew the federal government’s authority to pay its bills.
That raises the prospect of derailing the economic recovery if the debt limit isn’t raised quickly enough.
“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,” McConnell told Punchbowl News, adding that Democrats would have to raise it alone in a party-line bill that’s taking shape.
The Kentucky Republican’s remarks represent a major warning to Democrats as they begin assembling a $US3.5 ($AU5) trillion reconciliation plan that’s poised to clear Congress without GOP votes. That’s the legislative pathway for certain bills to be approved with only a majority vote.
The federal government’s borrowing authority is set to end on July 30.
Treasury Secretary Janet Yellen urged lawmakers to raise the debt ceiling as she testified before a panel last month, raising alarm about an “absolutely catastrophic” hit to the economic recovery if the government’s borrowing authority wasn’t renewed. Raising the debt limit doesn’t mean federal spending will increase.
If the federal government defaults, Yellen said it could trigger a chain reaction of cash shortages, starting with US bond holders, which include people, businesses, and foreign governments.
The Treasury Department can tap into emergency powers to keep payments flowing until a certain date. But Yellen told Congress it was tough to predict when those would be exhausted this summer, given the economic uncertainty stemming from the pandemic.
On Wednesday, the nonpartisan Congressional Budget Office forecast the Treasury would “probably” run out of cash sometime in October or November.
Republicans voted to suspend the borrowing limit in July 2019 for two years under President Donald Trump. Experts say Democrats could raise the ceiling in a reconciliation package sometime this fall. But that would require them to list a numerical figure because of the process’ strict budgetary rules, which would open the door for GOP political attacks on Democrats as big spenders as the national debt has topped $US28.5 ($AU39) trillion.
On Wednesday, Republican Sen. Lindsey Graham of South Carolina is set to hold a press conference about what he says is Democrats’ “reckless tax and spending spree.”