In a speech from the White House, Biden put the blame on Republicans for refusing to join with Democrats in raising the debt limit to pay for debts incurred in the past. Congressional Republicans are steadfastly refusing to supply any votes to raise the debt limit, Biden said they should vote on bipartisan basis to pay for bills for which both parties are responsible.
“Not only are Republicans refusing to do their job, but they’re threatening to use their power to prevent us from doing our job — saving the economy from a catastrophic event. I think quite frankly it’s hypocritical, dangerous and disgraceful,” Biden said.
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. When asked by a reporter if he could guarantee the US won’t hit the debt ceiling, Biden said, “No I can’t — that’s up to Mitch McConnell. … I can’t believe that that would be the end result, because the consequences are so dire. I don’t believe that, but can I guarantee it? If I could, I would, but I can’t.”
Republicans, led by Senate Minority Leader McConnell, 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.
But as the deadline fast approaches, Democrats need to make a decision soon if they are going to use the budget reconciliation process.
“A failure to raise the debt limit will call into question Congress’ willingness to meet our obligations that we’ve already incurred — not new ones — we’ve already incurred. This is going to undermine the safety of US Treasury securities and will threaten the reserve status of the dollar as the world’s currency, that the world relies on,” Biden said.
The President continued: “The American credit rating will be downgraded, interest rates will rise for mortgages, auto loans, credit cards, and borrowing.”
Biden said minutes before delivering his remarks he received and read a letter from McConnell about the debt ceiling and said he planned to talk to the Republican leader about it.
“I hope we can have some intelligent and honest conversation about what he is proposing. I think the easiest way to do this, and if the Republicans would not use the filibuster, would be to let us vote on what is already in the Senate right now, passed by the house, to raise the debt limit. And we could do that in the next several days,” Biden said.
Biden said part of the reason Congress needs to raise the debt limit is because of what he described as “reckless tax and spending policies” under the Trump administration.
“Republicans in Congress raised the debt three times when Donald Trump was President, and each time with Democrats’ support. But now they won’t raise it even though they’re responsible for more than $8 trillion in bills incurred in four years under the previous administration,” Biden said.
The President said in the days ahead, the American people may see the value of their retirement accounts shrink, interest rates go up and their mortgage and car payments increase.
“As soon as this week, your savings and your pocketbook could be directly impacted by this Republican stunt. It’s as simple as that,” Biden said.
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.
This story has been updated with additional information from Biden’s speech.