By decoupling government funding from the debt limit, many Republicans would be more willing to support a short-term government funding bill that includes billions of dollars in disaster relief for hurricane-ravaged red states in the Southeast, as requested by President Joe Biden.
That detachment of debt from government funding would rob Democrats of a potential messaging opportunity against the recalcitrant GOP. Democratic leaders have questioned whether to tie the two together, challenging Republicans to appeal a plan to avoid closure and debt while providing disaster relief.
But some Republicans have indicated they are willing to support only a stopgap solution, including hurricane and flood relief. Democrats should just drop their debt cap, GOP lawmakers say, giving up a huge leverage point and pushing a massive legislative headache into next month. The emergency finance law, which comes into effect next week, will run through December.
Treasury Secretary Janet Yellen has begged Congress to take action against the debt ceiling, and her desk will run out of money next month. She has warned that waiting until the last minute could cause “irreparable damage to the US economy”. Other experts estimate lawmakers have until mid-November to take action.
Republicans insist that Democrats can raise the debt limit themselves through reconciliation, or the special budget process they use to pass trillions of dollars worth of party priorities without GOP votes. But moderate Democrats are unlikely to support a debt ceiling hike, and the White House has said it wants to pursue a bipartisan solution, accusing Republicans of playing chicken with a typically bipartisan issue that could have disastrous consequences.
On August 1, a limit on the country’s ability to borrow money was reinstated. The Treasury Department has since implemented a number of temporary solutions to continue paying the government’s bills on time. Once those measures are exhausted, financial markets could be thrown into chaos and government credit could plummet, among other unparalleled consequences.