High anxiety hits Senate over raising debt ceiling

Senators are growing anxious that they might have to vote to raise the nation’s debt ceiling in a matter of weeks given new estimates that the government could hit its borrowing limit earlier than expected.

The debt limit was exceeded earlier this year, and the Treasury Department is now taking steps known as “extraordinary measures” to prevent the government from going over its borrowing limit.

Lawmakers had hoped they would be able to avoid the politically painful vote to raise the debt ceiling until the fall — and that it could be packaged with other legislation to fund the government and set budget caps on spending.

{mosads}But that could be much more difficult if Treasury’s ability to prevent the government from going over its borrowing limit ends in mid-September — just days after lawmakers would be set to return from their summer recess.

“I think we need to hustle to a caps deal as soon as we possibly can and include the debt limit in it, no doubt,” said Sen. Shelley Moore Capito (R-W.Va.), a member of the Senate Appropriations Committee.

The debt limit has been far from the front page and has been essentially put on the back burner as lawmakers debate the treatment of migrants at the border and battle over nominations and spending bills.

Members of the Appropriations Committee on Tuesday were openly skeptical about whether their colleagues would jump on the issue.

“The question is, will anybody act until the urgency is on top of us?” said Senate Appropriations Committee Chairman Richard Shelby (R-Ala.). “We need to avoid the brink.”

Failing to raise the debt ceiling would be a catastrophic move that could roil worldwide financial markets.

Shelby said the mere possibility that the debt ceiling could be breached in September should give “more sense of urgency” to Congress taking quick action, while Capito said it was not in “anybody’s best interest to have that fight in September up against the debt limit.”

A study released this week by the Bipartisan Policy Center said there was a “significant risk” that the government could reach its debt limit in early September unless Congress raises the cap. The estimate was a shift from its previous forecast, which estimated the debt limit could be reached in October or November, which would give Congress more breathing room.

The earlier timeline comes after Treasury Secretary Steven Mnuchin told Congress in May that the debt ceiling increase could happen in “late summer.”

Sen. John Thune (S.D.), the No. 2 Senate Republican, said it would be “preferable” for Congress to deal with the debt ceiling before leaving for the August recess, adding that a mid-September deadline “puts a lot of pressure” on lawmakers to act. 

“We could write a caps deal and attach the debt limit to it, to kind of get those issues resolved before August, which I think would be in everybody’s best interest,” Thune said.

{mossecondads}Getting a deal done this month leaves little room for error, and few are optimistic such a timeline will be met. The House is scheduled to leave town on July 26, while the Senate is set for vacation on Aug. 2.

Lawmakers would return after Labor Day, on Sept. 9, which could give them less than a week to cobble together a deal.

Speaker Nancy Pelosi (D-Calif.) on Tuesday didn’t rule out action on the debt ceiling this month.

“We’ll see how those conversations go. We certainly do not want any default on the part of the full faith and credit of the United States of America,” she said. “That’s never been what we’ve been about, but there are those on the Republican side who have embraced that again and again. So, we’ll see.”

Senate Majority Leader Mitch McConnell (R-Ky.) appeared confident during a weekly leadership press conference that lawmakers wouldn’t let the United States default on its debt, but he didn’t offer a clear pathway to approving a debt ceiling increase.

“Time is running out, and if we’re going to avoid having either short- or long-term CR or either a short- or long-term debt ceiling increase, it’s time that we got serious on a bipartisan basis to try to work this out and not have the kind of chaos that goes along with our inability to come together on these important issues,” McConnell said. A CR, or continuing resolution, would fund the government at current spending levels.

Asked if Congress had to raise the debt ceiling before the August recess, McConnell sidestepped the question, saying lawmakers are in close contact with Mnuchin about the timeline but that he doesn’t “think there’s any chance that we’ll allow the country to default.”

Broader budget talks on the debt ceiling and government funding unraveled last month, with the White House floating a one-year CR and debt ceiling hike. Senate Republicans are hoping to jumpstart the negotiations with new meetings as soon as this week, though nothing was on the books as of Tuesday afternoon.

The spending deal is also crucial, as spending cuts triggered by an earlier budgetary law would snap into effect in January if Congress does not approve new spending levels. The debt ceiling fight has always had an earlier deadline, but the new estimates are moving it up further.

Shelby argued that it makes sense to link the two issues but didn’t rule out that the debt ceiling could get a stand-alone vote, or be attached to another must-pass bill, in a time crunch.

“The path is a good question,” Shelby said. “You could raise the debt ceiling without getting a caps deal, but it makes more sense to me that if you can run them parallel, they are two big issues staring us in the face.”