Thursday, October 07, 2021

The 5 Possible Outcomes Of The Debt Limit Crisis


The United States government will reach its mandated debt limit in about two weeks. Unless the debt limit is raised, the government will not be able to pay its bills (money Congress mandated be spent in the past). If that happens, it would be disastrous for the U.S. economy. It would also negatively affect the economies of many other nations. It could actually trigger a recession.

Normally, the two parties in Congress agree to raise the debt limit, or at least not block the majority party from raising it. The thought of the government defaulting is just too serious to mess with -- until now!

But this time, the Republicans (led by Minority Leader McConnell) have decided to play politics with the debt limit. They are filibustering the Democratic effort to raise the limit. They are lying -- saying they don't want to let the Democrats spend more money. Evidently, they think the American people are stupid, and don't know that raising the limit would not allow more spending (but would just allow the government to pay for debt already incurred -- much of it by Republicans).

What is going to happen? Nobody knows at this time, but we must hope that politicians come to their senses and raise the limit to avoid the impending disaster. 

NBC News has five possible outcomes of the current political mess caused by Senate Republicans. Here are the five outcomes:

1. Republicans blink and allow a vote

The fastest way to resolve the issue would be for Republicans to back off the filibuster and let the Senate hold a vote at a simple majority threshold. Democrats could pass it with their 50 members and the tie-breaking vote of Vice President Kamala Harris.

But just one senator can object and force a "cloture" vote, and Sen. Ted Cruz, R-Texas, told NBC News on Tuesday he would do so. It would then take 60 votes to overcome that. That means a minimum of 10 Republicans — and for now, there are no takers.

Senate Majority Leader Chuck Schumer, D-N.Y., has set up a procedural vote on Wednesday to test the GOP's will to maintain its filibuster.

"If Republicans don't get out of the way and let the Senate take action now, our government will in all likelihood enter default for the first time ever," he said.

2. Democrats blink and use budget process

This remains an option for Democrats. But it'd be more time-consuming. They'd have to revise the budget resolution for their multitrillion-dollar economic package, hold a "vote-a-rama" to allow Senate amendments and pass the same measure in both chambers before they can write a debt limit bill.

President Joe Biden and Schumer have rejected this route. Biden on Monday called it an "incredibly complicated, cumbersome process." Schumer called it "a drawn out, convoluted and risky process."

Senate Minority Leader Mitch McConnell, R-Ky., said this week that he had called on Democrats to use the budget process months ago and that they should "get moving."

"The majority doesn’t need our votes," he said. "They just want a bipartisan shortcut around procedural hurdles they can clear on their own."

3. Democrats pierce the filibuster

If Republicans maintain their filibuster, some Democrats have called for using the so-called nuclear option to change the rules and create a legislative exception to the ability to block a debt limit hike.

"I think we ought to have that conversation," Senate Majority Whip Dick Durbin, D-Ill., told reporters.

"The idea that you can filibuster the debt ceiling is outrageous. That to me discredits the argument that the filibuster is in fact the way to get bipartisanship. Baloney," he said.

But that option would require all 50 Democrats. Schumer did not say Tuesday whether it's an option.

Sen. Joe Manchin, D-W.Va., threw cold water on that idea on Monday.

"The filibuster has nothing to do with the debt ceiling. We have other tools that we can use. And if we have to use them we should use them," Manchin told reporters. "We can prevent default."

Sen. Kyrsten Sinema, D-Ariz., another filibuster proponent, did not respond when asked Monday at the Capitol whether she wants to use reconciliation to lift the debt ceiling.

4. A trillion dollar coin?

Some say Biden can resolve the issue with executive action.

One idea is for the Treasury Department to mint a platinum coin worth $1 trillion. Another is for the administration to invoke the 14th Amendment to say the debt limit statute is unconstitutional and continue borrowing to pay the country's bills.

But White House press secretary Jen Psaki dismissed both ideas.

"We obviously look at a range of options and none of those options were viable, either because they wouldn't be accepted by the Federal Reserve, by the guidance of our Treasury secretary, or just by legal restrictions," she said Monday. "So we know that the only path forward here is through Congress acting."

5. Debt limit breach

This is the doomsday scenario the Treasury Department has warned of, setting Oct. 18 as the day of reckoning that, without action, could spark a financial crisis and plunge the economy into recession.

"Failing to increase the debt limit would have catastrophic economic consequences," the department said. "It would cause the government to default on its legal obligations — an unprecedented event in American history."

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