Time and again, fights over the debt ceiling have been defused long before the U.S. risked a dangerous default. But this year’s fight has a different feel for some lawmakers, who predict trouble.
To resolve that stalemate, Congress passed and President Barack Obama signed the Budget Control Act. The bill temporarily allowed borrowing to resume, set new spending limits and created a bipartisan “supercommittee” to recommend at least $1.2 trillion more in deficit reduction over 10 years. Republicans and Democrats on the panel failed to compromise, however, triggering automatic reductions in spending.
“President Biden is not President Obama, right?” said Rep. Scott Perry, R-Pa., the leader of the hard-right House Freedom Caucus. “His poll numbers are in the tank and they’re going to keep going down.” “Some of these people are substituting belief for empirical evidence and don’t accept the warnings of economists, Wall Street, Janet Yellen,” Connolly said.Breaching the debt ceiling is different than a federal government shutdown. The government can continue to operate once the Treasury has exhausted its cash-on-hand. But outgoing payments would be limited to incoming revenue. Not all payments could be made on time and in full.
GOP leadership in the Senate has also voiced support for McCarthy’s efforts. But some Senate Republicans say spending fights should be relegated to the annual spending bills that Congress passes to fund government agencies. An increase in the debt limit doesn’t authorize new federal spending — it only allows borrowing to pay for what Congress has already approved.
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