Latest News

Washington Watch: Democrats weigh end run around Republicans to raise debt limit

0

U.S. lawmakers this week are back to work in Washington, D.C., after a break for the midterm elections,  and one action that Democrats in Congress are considering is trying to raise the debt limit before year’s end.

That’s as control of the House of Representatives remained not yet called in the wake of the midterms, but Republicans were favored to win, while Democrats were projected to retain their hold on the Senate. Republicans were on the cusp of retaking control of the House on Wednesday morning, just one victory shy of the 218 seats the party needs to secure a majority, according to the Associated Press.

Analysts have been predicting that Republicans seizing just partial control of Congress would heighten the risk of a debt-ceiling showdown next year that could rattle markets
SPX,
+0.87%
,
and GOP comments in late October reinforced the view that party leaders could use the issue to force spending cuts.

So what could Democrats do before the start of the 118th Congress in January?

“Democrats should fight back by making this lame-duck session of Congress the most productive in decades,” said influential Democratic Sen. Elizabeth Warren of Massachusetts in a New York Times op-ed over the weekend.

“We can start by lifting the debt ceiling now to block Republicans from taking our economy hostage next year,” she added

Democrats can raise the debt limit “by using the last unused tool for a majority vote in the Senate: the fiscal year 2023 reconciliation bill,” said The American Prospect, a progressive media outlet, last week. It also said “the need to prevent a debt limit hostage” is one priority that “shines above everything else.”

In a similar vein, Roll Call reported earlier this month that top Democrats have been privately discussing the possibility of using the budget reconciliation process in the lame-duck session to hike the debt limit.

However, the Biden White House has largely given up hope of Congress raising the nation’s debt limit during the lame-duck session, according a Politico report on Wednesday. Senior administration officials see little chance of attracting any Republican votes for it, and they don’t believe they have the 50 Democratic Senate votes needed for the reconciliation process.

During a 2011 fight over the debt limit, S&P downgraded the U.S. credit rating for the first time in history.

Read more: Breaching the U.S. debt ceiling would be a ‘disaster’ for Americans, expert says, as possible showdown looms if Republicans win midterms

Other issues that could see action before year’s end are Democratic Sen. Joe Manchin’s permitting package for the energy sector
XLE,
+1.05%
,
as well as a bill that seeks to protect banks that work with the cannabis industry
MSOS,
+3.70%
.

In addition, Washington needs to approve a funding bill in order to avoid a partial government shutdown after Dec. 16, and lawmakers are aiming to address an annual defense bill and trade-related issues.

U.S. stocks
SPX,
+0.87%

on Wednesday were poised to open higher, as signs of cooling inflation continued to energize bulls.

Robert Schroeder contributed to this article.

Need to Know: The market loved the CPI and PPI data, but here are four worrying signs that inflation may linger

Previous article

Economic Report: Retail sales jump in October in sign of economic strength. Too much for the Fed?

Next article

You may also like

Comments

Leave a reply

Your email address will not be published. Required fields are marked *

More in Latest News