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Senate Republicans again block U.S. debt limit hike, shutdown looms

Stock MarketsSep 29, 2021 01:46AM ET
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2/2 © Reuters. FILE PHOTO: 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 2/2

By David Morgan and Susan Cornwell

WASHINGTON (Reuters) -U.S. Senate Republicans for a second day in a row blocked a bid by President Joe Biden's Democrats to head off a potentially crippling U.S. credit default, as partisan tensions rattled an economy recovering from the COVID-19 pandemic.

With federal government funding due to expire on Thursday and borrowing authority set to run out around Oct. 18, Democrats who narrowly control the Senate and House of Representatives are working to head off twin fiscal disasters while also trying to advance Biden's ambitious legislative agenda.

Senate Republican leader Mitch McConnell has insisted that Democrats use a parliamentary maneuver to temporarily lift the government's $28.4 trillion debt limit without Republican votes, although Democrats note that about $5 trillion of the nation's debt is the result of tax cuts and spending passed during Republican Donald Trump's presidency.

The two critical deadlines have added disarray to a complicated autumn for Democrats, who are deeply divided over a pair of bills worth some $4.5 trillion that form the core of Biden's agenda.

Biden canceled a planned Wednesday trip to Chicago to promote the COVID-19 vaccine so he can continue negotiations with the Democrats' moderate and progressive wings, which need to act in unison to pass anything due to their razor-thin majorities.

"There is a strong sense that progress is being made, and the president is staying to continue his engagement," said an administration source familiar with the talks.

Lawmakers now have just three days to avert a possible government shutdown by midnight Thursday, the end of the current fiscal year. Failure to do so https://www.reuters.com/world/us/what-happens-when-us-federal-government-shuts-down-2021-09-27 could results in furloughs for hundreds of thousands of federal workers in the middle of a public health crisis.

Fiscal brinkmanship has become a regular feature of U.S. politics thanks to partisan polarization.

The most recent government shutdown, which occurred during Trump's presidency, lasted 35 days before ending in January 2019.

A measure passed by the House last week would fund the government through Dec. 3. If Congress were to pass a measure on Wednesday with a similar timeline, it still would have to deal with providing the Treasury Department with additional borrowing authority.

Treasury Secretary Janet Yellen told lawmakers the government would run out of options to service the debt by Oct. 18.

Coming ahead of next year's congressional elections, a government shutdown or default would be a blow for Democrats, who have portrayed themselves as the party of responsible government after Trump's chaotic presidency.

No. 2 House Democrat Steny Hoyer said the chamber may vote on Wednesday on a resolution to continue funding the government.

"We’ll see what the Senate sends us. ... They're trying to send us something," he told reporters.

'POTENTIALLY CATASTROPHIC'

The nation's largest lender, JPMorgan Chase & Co (NYSE:JPM), has begun scenario planning for how a potential U.S. credit default would affect its operations, Chief Executive Jamie Dimon told Reuters on Tuesday.

"This is like the third time we've had to do this. It is a potentially catastrophic event," Dimon said. "We should never even get this close."

Senate Majority Leader Chuck Schumer proposed holding a vote to raise the debt limit that could pass with just the support of the chamber's 48 Democrats and the two independents allied with them as long as Republicans agreed to allow the vote to occur.

"If Republicans really want to see the debt limit raised without providing a single vote, I'm prepared to hold that vote," Schumer said on the Senate floor.

But McConnell insisted the responsibility for the debt ceiling was Schumer's and not his own. "His responsibility is to raise the debt ceiling," McConnell said. "He has the responsibility. And trust me, he will do it."

BIDEN'S LEGISLATIVE AGENDA

Democrats are also struggling to unite behind two pillars of Biden's domestic policy agenda: a $1 trillion infrastructure bill and a social spending package pitched at $3.5 trillion that leaders have said will likely need to be trimmed.

The larger measure could take several weeks to pass Congress and reach Biden's desk, dangerously close to the debt-limit deadline.

The Democrats originally planned to handle the social spending bill, championed by the party's left wing, in tandem with the infrastructure package, which has drawn bipartisan support. But they have scheduled a House vote on the infrastructure bill on Thursday even though the spending package is still being negotiated.

Lawmakers on the party's left insisted that Congress must first pass the social spending bill.

"We articulated this position more than three months ago, and today it is still unchanged," Representative Pramila Jayapal, leader of the Congressional Progressive (NYSE:PGR) Caucus, said in a statement.

Senate Budget Committee Chairman Bernie Sanders, a powerful voice among left-leaning lawmakers, urged his House allies to oppose the infrastructure bill on Thursday, writing on Twitter (NYSE:TWTR) that its passage would end their leverage to move forward on the larger reconciliation package.

Democratic Representative Jim McGovern acknowledged that the stakes of the negotiations were high, saying: "Failure on both these bills is not an option."

Senate Republicans again block U.S. debt limit hike, shutdown looms
 

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Comments (24)
Vi Ma
Vi Ma Sep 29, 2021 2:25AM ET
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Democrats , both Bush Presidents and Greenspan , are responsible guilty parties for taking US to the top of the hill, from which only a fall is the possible outcomes that shall break the back of not just the western developed economies but literally of 80% of the population with savings less then 2000$ per person. Thankfully, China is doomed bcoz of their communism , which might just help US keep it's dominance over the next 2 to 3 decades, but Russia might finally emerge victorious though hot unscratched as their biggest GDP contributor, export of natural gasses, to customers in the EU, will not be able to afford the usual gas consumption as bankrupt from what's to happen. And then shall be the real rise of emerging economies like India , as the next stabilizing force against an evil CCP. This is all going to lay out before end of this decade in 2020's
perplexed76 .
perplexed76 . Sep 29, 2021 2:21AM ET
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tax cuts for giant corporations was a greatest deal of trump. Now these guys sit with thrillions even after buybacks.
Kaveh Sun
Kaveh Sun Sep 29, 2021 2:09AM ET
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Who cares. Dems can pass everything without a Gop vote via reconcillation. Reuters write a hit pcs as usdual.
Ferdinando Riboni
Ferdinando Riboni Sep 28, 2021 11:38PM ET
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BLM needs more Money yo
Steve Austin
Steve Austin Sep 28, 2021 9:43PM ET
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Democratic counties represent 70% of US gdp. They should be able to spend their money how they see fit.
Steffen vdm
Steffen vdm Sep 28, 2021 9:43PM ET
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US means United States. United, like in "together". Americans together
IceIce Baby
IceIceBaby Sep 28, 2021 9:43PM ET
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North US would be better off without South.
Vlad Lozovskiy
Vlad Lozovskiy Sep 28, 2021 8:38PM ET
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After putting pressure on Trump not to cut spending, now democrats say it is Trump's fault we added 5 trillion of debt.
Steve Austin
Steve Austin Sep 28, 2021 8:38PM ET
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tax cuts for the elite
Josh Davis
Josh Davis Sep 28, 2021 8:38PM ET
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Steve Austin fyi tgats not how that works
palmer gossett
palmer gossett Sep 28, 2021 8:09PM ET
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Since this site won't report on today's senate hearings on the Afghanistan pullout debacle. Just want to let you know that all three generals threw your lame president under the bus. What cowards!
Jeff Paper
Jeff Paper Sep 28, 2021 7:30PM ET
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This not left vs. right, Dem vs. Rep. This is collectivist vs. individualist. Look at all of the freedoms we have lost in the last 18 months.
Jeff Paper
Jeff Paper Sep 28, 2021 7:26PM ET
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Why do you all make this about politics? This is about control. Both parties are the same. Stop blaming Biden, Trump, Obama, etc... They are all the same evil This is known as planned chaos. Pick up a history book and get off social media. The United States is the world reserve currency and the Fed is printing money at a rate faster than anytime before. At this rate the debt to GDP ratio is going to hit 170-200% in no time. The world debt to GDP is almost $350 at the time of writing this. How can any economy sustain when we are spending 3.5x as much as we are bring in? Like I said....planned chaos.
Steve Austin
Steve Austin Sep 28, 2021 7:26PM ET
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Republicans are fundamentalist
Marcus Berntsson
Marcus Berntsson Sep 28, 2021 7:26PM ET
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Because a big credit expansion needs an even bigger credit expansion, or it will go bust...that's the fractional reserve system.
Josh Davis
Josh Davis Sep 28, 2021 7:26PM ET
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Steve Austin you cant see the forest for the trees
Ac Tektrader
Ac Tektrader Sep 28, 2021 6:39PM ET
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apparently Mr edwards doesn't understand how politics works in America. And becuse America, at least for now, is a Democratic Republic, how easy a large minority of power mad Republicans can *****up America.
Ac Tektrader
Ac Tektrader Sep 28, 2021 6:24PM ET
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on Jan6 the repubs, in Trump's name, tried to overthrow Democracy in America, that didn't work, so now they'll try burning down America's financial system.... with that kind of financial carnage and the effects on our society, they may finally get what the want the destruction of liberal democracy, the American Constitution, and the implimentation of strongman control.
Steve Austin
Steve Austin Sep 28, 2021 6:24PM ET
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Republican fundamentalist have a lot in common with the Taliban. They want to overthrow the government and restrict women's rights.
MuraliKrishna Brahmandam
MuraliKrishna Brahmandam Sep 28, 2021 4:57PM ET
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Make Kamala Harris the villian of the decade
MK MK
MK MK Sep 28, 2021 4:13PM ET
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Good move, destroy those silly bulls
Me comment
Me comment Sep 28, 2021 3:01PM ET
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vote repos out, vote repos out. lock them up, lock them up the are a clear and present danger to the United States and are a national security risk.
Llewellyn Kruger
Llewellyn Kruger Sep 28, 2021 2:39PM ET
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Tough situation.
Sam Jennings
Sam Jennings Sep 28, 2021 2:22PM ET
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The Communist-Democrats are hellbent on wrecking America, with debt.
carol ruszin
carol ruszin Sep 28, 2021 2:22PM ET
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Trump already did that with his rich tax cut.
Steve Austin
Steve Austin Sep 28, 2021 2:22PM ET
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carol ruszin tax cut for elites
Phil Ht
Phil Ht Sep 28, 2021 2:11PM ET
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Lunatic leadership
Honey Badger
Honey Badger Sep 28, 2021 1:08PM ET
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No plans to reduce deficit instead want to raise it again and again. what a joke 😳
Keith Wilson
Keith Wilson Sep 28, 2021 11:49AM ET
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Lol "Scramble to prevent shutdown" They don't have to scramble, they have everything they need to raise debt limit on their own, but they want it to be bipartisan so they can put some of the blame for spending on the Republicans. They want to olay their own games but cry and whine when the focus is put on them
Raymond Pasillas
Raymond Pasillas Sep 28, 2021 11:22AM ET
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Stop socialism in its tracks before we end up like Venezuela.
Lord Kuber
Lord Kuber Sep 28, 2021 9:23AM ET
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White House under Democrats, Congress under Democrats, Senate under Democrats. But who's not at fault here according to the article by Reuters? Someone not mentioned here! Buck stops there! :D
Terry Barker
Terry Barker Sep 28, 2021 8:01AM ET
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Just say no!
Josh Davis
Josh Davis Sep 28, 2021 7:33AM ET
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Rueters is literally laying their hand in front you. Trulp chaotic presidency and democrats the responsible party? At what time did journalism turn to propaganda and ad like for one party? If this doesnt show they are bought andnpaid for then indont know what will.
Bill Pulak
Bill Pulak Sep 28, 2021 7:27AM ET
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Democrats are just sick sick people!! The majority of the spending is from Trump?? Cmon man. Its 3.5 trillion of progressive BS pork! But he figures the public will just take what he states as fact and go back to seeing what everyone else on Fakebook is up to. Such a pathetic society abd even more pathetic leadership. US superpower…to 3rd world country we go. Sad
 
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