Biden's Democrats in Congress race to head off shutdown, default

[September 28, 2021]  By Richard Cowan and David Morgan

WASHINGTON (Reuters) - President Joe Biden's Democrats will seek on Tuesday to head off two looming dangers to the U.S. economy as they try to keep government operations funded beyond a Thursday deadline and avoid defaulting on its debt.

Democrats had hoped to dispatch both tasks with a single vote but were blocked on Monday by Senate Republicans, who said the two should be dealt with separately. Senate Democratic leader Chuck Schumer said more votes were likely, but did not say what course he would take.

Lawmakers now have just three days to avert a possible government shutdown by midnight Thursday. Failure to do so could furlough hundreds of thousands of federal workers in the middle of a national health crisis.

Congress will also have to find a way to raise the government's $28.4 trillion borrowing cap before the Treasury Department runs out of techniques to service the nation's debt, sometime in the second half of October.

Fiscal brinkmanship has become a fairly regular feature of U.S. politics over the past decade, as increasing polarization has made it harder for lawmakers to keep government checks flowing regularly.
 

The most recent shutdown in January 2019 lasted 35 days.

"This isn't your typical Washington fracas," Schumer said on the Senate floor after Monday's vote. "It has far more severe consequences than the typical political catfight."

Republicans maintain they want Democrats to lift the debt limit on their own, saying they do not want to support the Democrats' multitrillion-dollar spending plans. Democrats point out that much of the nation's new debt was incurred during the Trump administration.

A government shutdown - or worse, a default - would be a huge hit to Biden's Democrats, who have positioned themselves as the party of responsible government after Republican Donald Trump's chaotic presidency.

U.S. Senate Majority Leader Chuck Schumer attends a news conference at the U.S. Capitol in Washington, U.S., July 20, 2021. REUTERS/Elizabeth Frantz/File Photo

Democrats are also struggling to unite behind two pillars of Biden's domestic agenda - a $1 trillion infrastructure bill and a $3.5 trillion social spending package. With narrow majorities in both the Senate and the House of Representatives, they have little room for error.

Progressives worry that their plans to expand health and education benefits and fight climate change could fall by the wayside if Congress prioritizes spending on highways, broadband and other infrastructure.

Centrist Democrats have balked at the scale of the social spending package. The White House and top lawmakers may narrow some benefits to bring the price tag down, sources say, but they have yet to settle on a figure.

House Speaker Nancy Pelosi has set a Thursday vote for the infrastructure package, which the party's progressive wing has threatened to torpedo.

House Democrats emerged from a Monday night meeting confident they would ultimately unify behind the two bills.

"The Biden presidency depends on both of these things happening, and our democracy depends on the Biden presidency succeeding," Democratic Representative Tom Malinowski told reporters.

(Reporting by Richard Cowan, David Morgan and Mohammad Zargham; Writing by Andy Sullivan; Editing by Mary Milliken and Peter Cooney)

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