President Biden on Monday urged Congress to raise the debt ceiling, blaming Republicans for the impasse and warning of a potential economic calamity if the U.S. defaults on its financial obligations for the first time in history.
“The United States is a nation that pays its bills and always has from its inception,” Mr. Biden said in remarks from the White House.
The U.S. is fast approaching the Oct. 18 deadline to raise the cap on the maximum amount of money the government is allowed to borrow to pay its bills. Those bills cover previous government spending — including funding for social programs, national debt and service members’ salaries — but not new costs.
Senate Republicans have vowed not to raise the borrowing limit, saying it would only encourage Mr. Biden and Democrats to embark on their massive new spending plans.
Earlier Monday, Senate Minority Leader Mitch McConnell, Kentucky Republican, urged Mr. Biden to put pressure on Democratic leadership to raise the debt ceiling on their own.
“I respectfully submit that it is time for you to engage directly with congressional Democrats on this matter,” Mr. McConnell wrote in a letter to the president just moments before his speech. “Your lieutenants in Congress must understand that you do not want your unified Democratic government to sleepwalk toward an avoidable catastrophe when they have had nearly three months’ notice to do their job.”
Since the U.S. has never defaulted on its obligations before, economists are largely guessing how catastrophic the fallout could be if the debt ceiling is not raised. But most economists agree it could be devastating.
Moody’s Analytics estimates that even a delay in raising the debt ceiling would cost nearly 6 million jobs, increase the unemployment rate from 5.2% to 9% and cause the stock market to lose about a third of its value.
White House officials last week explored whether the U.S. could continue to make payments should the debt ceiling be breached, but concluded that would not be possible without economic chaos.
Treasury Secretary Janet Yellen last week told Congress that failure to raise the debt ceiling could quickly deplete the U.S. Treasury’s resources.
Congressional Democrats in recent weeks have focused their energy on passing Mr. Biden’s roughly $4 trillion economic agenda, taking their eye off the debt limit fight.
Republicans, meanwhile, are seeking to deny Mr. Biden a victory on the debt fight and insist the Democrats have enough votes to raise the debt limit without their help by using a special budget process known as reconciliation.
By forcing Democrats to extend the debt ceiling through reconciliation, Republicans believe it will force Democrats to lift the ceiling to a specific number, which would be tougher to pass through congress.
Democrats so far have refused to go down that path.
Republicans have twice blocked Democrats from raising the debt ceiling.
The first time was when Democrats sought to extend the debt limit as part of a stopgap measure that would have avoided a looming shutdown. The second time was when
Senate Majority Leader Charles E. Schumer, New York Democrat, tried to bypass a GOP filibuster and set up a stand-alone bill to suspend the debt ceiling.
Republicans approved three increases to the debt ceiling during the Trump administration, which increased the national debt by roughly $8 trillion.