Democrats want to address the debt limit before this Congress — and likely their control in Washington — ends at the close of the year.
They’re aiming to strike a bipartisan deal to address the debt ceiling during the lame-duck period, which could ride on an omnibus spending package if lawmakers can get one done. But it’s unclear if enough Senate Republicans will accept a deal, and Democrats are also discussing using the budget reconciliation process to act on their own.
“Look, we’d like to get a debt ceiling done in this work period,” Senate Majority Leader Charles E. Schumer said in his post-lunch news conference Tuesday. “The best way to get it done — the way it’s been done the last two or three times — is bipartisan. And I intend shortly to sit down with the Republican leader and try to work that out.”
Lawmakers have time before Treasury is expected to run out of borrowing room under the current $31.4 trillion ceiling, a statutory limit set by Congress that restricts the federal government’s borrowing to meet existing obligations.
Debt subject to limit stood less than $200 billion below that cap as of Monday, though the Bipartisan Policy Center and other independent analysts estimate Treasury wouldn’t exhaust the “extraordinary measures” it could take to avoid running out of cash until sometime in the third quarter of 2023.
But Democrats are hoping to avoid a battle next year with a Republican-controlled House eager to use the opportunity to restrict future government spending, including possibly through caps, overhauls to the budgeting process or changes to mandatory spending like Social Security or Medicare. A prolonged fight on the debt limit could roil financial markets, or worse if Congress fails to act before Treasury hits the ceiling.
While control of the House remained too close to call Tuesday, the GOP was close to winning a narrow majority; Democrats will retain control in the Senate.
Senate Finance Chair Ron Wyden, D-Ore., said on a press call Tuesday that he wanted to avoid a repeat of debt limit showdowns toward the end of former President Barack Obama’s first term. He added his preference is a bipartisan option.
“I don’t want this to be an issue next year,” Wyden said. “I want to take it off the table.”
He told reporters later in the day that Democrats “feel very strongly about not gutting Social Security and Medicare.”
Fellow Democrats echoed hope for lame-duck action on the debt limit, and the issue came up at Senate Democrats’ weekly lunch on Tuesday afternoon.
If Senate Republicans aren’t interested in talks, Democrats’ only option would be moving on their own. They’d need at least 10 GOP votes in the Senate to overcome a filibuster, even if they tuck it into a broader package.
Senate Minority Leader Mitch McConnell cast doubt on his interest in a lame-duck debt deal Tuesday afternoon. “I don’t think the debt limit issue is until sometime next year,” he said at the GOP post-lunch press conference.
The Senate’s top Republican appropriator, Alabama Sen. Richard C. Shelby, also signaled a lack of interest. He said adding the debt limit would be a “negative wrinkle” on the ongoing negotiations for the omnibus spending package.
The No. 2 Senate Republican, John Thune of South Dakota, said midday Tuesday that Republicans had yet to hear about lame-duck debt limit options from Democrats but listed other must-do’s that would take priority.
“We’ll see what they put on the table,” Thune said, referencing a potential offer from Democrats.
Sen. Mitt Romney, R-Utah, said Monday that the increase needs to happen, and Democrats would be wise to pass a debt ceiling increase when their party still controls the House.
“I hope we’re able to get some limits on spending that would accompany that vote,” he said.
If the GOP doesn’t get on board, Democrats could dodge a filibuster by increasing the debt limit through reconciliation, which allows bills to pass the Senate with a simple majority. Sen. Richard J. Durbin, D-Ill., the majority whip, said he has discussed reconciliation as an option with Schumer and others, adding Democrats must weigh considerations like the time that could take up.
House Budget Chairman John Yarmuth, D-Ky., said using reconciliation in the lame duck is under consideration and could involve a broader bill.
“My sense is that if we could do it without, it would be better — if that’s the only thing that’s in reconciliation,” Yarmuth said. “Now I suspect if we do reconciliation, there will be a number of provisions in it and then it’s OK.”
He said Democrats would likely only turn to the reconciliation option if they can’t strike a bipartisan agreement on the debt limit or on other priorities the tax committees are negotiating across the aisle. He said a bigger reconciliation package could include extensions of expired tax provisions or child care policies Democrats favor.
Democrats are pressing to get an expansion of the child tax credit into a bipartisan year-end tax package that would likely ride on a potential omnibus. Other benefits for families with children could also be in the mix.
Asked whether reviving an expansion of a tax credit for child care and dependent care is on the table, House Ways and Means Chairman Richard E. Neal, D-Mass., said the benefit is “very popular” and pointed to women leaving and being unable to return to the workforce amid the COVID-19 pandemic due to a lack of affordable child care. He noted the workforce participation rate has recently ticked down.
And while they’re framing it as a Republican ask, many Democrats also support reviving a more generous deduction for companies’ research and development expenses.
Still, another bite at reconciliation faces a familiar obstacle for Democrats: possible opposition from Sen. Joe Manchin III, D-W.Va., who knocked a child tax credit expansion and child care subsidies out of the reconciliation bill that ultimately passed this summer.
Sen. Chris Van Hollen, D-Md., said after Democrats’ lunch Tuesday that passing a broader reconciliation package hasn’t come up among Senate Democrats, and they’ve only discussed topics like the child tax credit in the context of a year-end tax bill with Republican buy-in.
“We’re focused on trying to get all this done in a bipartisan way,” he said. “If not possible we’ll have to consider other options.”
Suzanne Monyak contributed to this report.