Justin Bullock, FISM News
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Under former President Trump’s administration in 2019 the US Senate reached a bipartisan agreement that would suspend the US debt ceiling until July 31, 2021. That date is quickly approaching and Senate Republicans are indicating that they will refuse to raise the debt ceiling in order to combat President Biden’s plans to spend an astronomical amount on his infrastructure bill. However, if the debt ceiling is not raised by July 31 then the US would likely default on its debts resulting in a catastrophic economic panic and collapse around the world.
The Senate is split down the middle, 50-50, with the Democrats having the ultimate tiebreak by holding the Vice Presidency. Therefore, in order to raise the debt ceiling, Democrats would need to convince ten Republican Senators to vote with them. Republicans, cognizant of this fact, plan on filibustering any debt ceiling initiative unless the Democrats make a number of legislative and fiscal concessions.
A similar scenario played out in 2011 during former President Obama’s tenure in the White House. At that time, Republicans continued to filibuster until Democrats made concessions a few days before the US would have defaulted. In response major credit rating agencies that monitor the global economy reduced the US’s credit rating from AAA to AA+, which is a significant step. If an agreement isn’t reached by the deadline, the Congressional Budget Office estimates that the US Treasury would be able to shuffle funds around until October or November at which point default would occur.
Democrats have an option of attaching a debt ceiling provision in their planned $3.5 trillion bill. Thus far Democrats have indicated a willingness to pass this bill that would reform infrastructure and immigration policy in the US by way of Senate reconciliation rules, which only require a simple majority vote. The only problem with such a plan is that it could significantly hurt Democrats in the upcoming midterm elections, as Republicans would be able to blame Democrats entirely for unprecedented reckless spending and unilaterally raising the US debt. Indeed, Republicans would be able to blame Democrats for historic fiscal irresponsibility which would have substantial electoral consequences for years to come.