WASHINGTON, Sept.28 (Reuters) – Republicans in the US Senate blocked for the second day in a row an offer by Democrats by President Joe Biden to avoid a potentially crippling US credit default, as partisan tensions rocked a recovering economy of the COVID-19 pandemic.

With federal government funding set to expire Thursday and borrowing authority to run out around October 18, Democrats who tightly control the Senate and House of Representatives are working to avoid two tax catastrophes while trying to do so. advance Biden’s ambitious legislative agenda.

Republican Senate Leader Mitch McConnell insisted Democrats use a parliamentary maneuver to temporarily lift the government debt limit of $ 28.4 trillion without Republican votes, although Democrats note that around 5 trillion dollars in the country’s debt are the result of tax and spending cuts adopted during Republican Donald Trump’s tenure. presidency.

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

Biden canceled a trip scheduled for Wednesday to Chicago to promote the COVID-19 vaccine so he can continue negotiations with the moderate and progressive wings of the Democrats, who must act in unison to pass anything due to their very thin majorities.

“There is a strong feeling that progress is being made and the president remains to continue his engagement,” said an administrative source close to the talks.

Lawmakers now only have three days to avoid a possible government shutdown before midnight Thursday, the end of the current fiscal year. Failure to do so could result in time off for hundreds of thousands of federal workers in the midst of a public health crisis.

Collapsing tax policy has become a regular feature of American politics thanks to partisan polarization.

The government’s latest shutdown, which took place during Trump’s presidency, lasted 35 days before ending in January 2019.

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

Treasury Secretary Janet Yellen told lawmakers the government would have no options to service the debt by October 18.

Ahead of next year’s congressional election, a government shutdown or default would be a blow to Democrats, who have presented themselves as the party of responsible government after Trump’s chaotic presidency.

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

“We will see what the Senate sends us.… They are trying to send us something,” he told reporters.

U.S. Senate Republican Leader Mitch McConnell (R-KY) addresses reporters following the Senate Republicans’ weekly political luncheon at the United States Capitol in Washington, United States, September 28, 2021. REUTERS / Elizabeth Frantz

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“POTENTIALLY CATASTROPHIC”

The country’s largest lender, JPMorgan Chase & Co (JPM.N), has started planning scenarios of how a possible U.S. credit default would affect its operations, chief executive Jamie Dimon told Reuters on Tuesday.

“It’s like the third time we’ve got to do it. It’s a potentially catastrophic event,” Dimon said. “We should never even get that close.”

Senate Majority Leader Chuck Schumer proposed to hold a vote to raise the debt limit which could be exceeded with the sole support of the 48 House Democrats and the two independents allied to them as long as the Republicans agreed. to allow the vote.

“If Republicans are serious about seeing the debt limit raised without providing a single vote, I’m prepared to hold that vote,” Schumer told the Senate.

But McConnell insisted that the responsibility for the debt ceiling was Schumer’s, not his. “Its responsibility is to raise the debt ceiling,” McConnell said. “He has the responsibility. And trust me, he will.”

BIDEN LEGISLATIVE AGENDA

Democrats are also struggling to unite behind two pillars of Biden’s domestic policy agenda: a $ 1,000 billion infrastructure bill and a $ 3.5 trillion social spending program that executives say will probably need to be reduced.

The larger measure could take several weeks to pass Congress and reach Biden’s office, dangerously close to the debt deadline.

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

Left-wing party lawmakers have insisted that Congress must pass the social spending bill first.

“We made this position over three months ago, and today it is still unchanged,” Representative Pramila Jayapal, head of the Congressional Progressive Caucus, said in a statement.

Senate Budget Committee Chairman Bernie Sanders, a powerful voice among left-wing lawmakers, on Thursday urged his House allies to oppose the infrastructure bill, writing on Twitter that its passage would end to their influence in advancing the broader reconciliation plan.

Democratic Representative Jim McGovern acknowledged that the stakes in the negotiations were high, saying: “Failure of these two bills is not an option.”

Reporting by Richard Cowan, David Morgan, Jarrett Renshaw and Susan Cornwell; Editing by Scott Malone, Jonathan Oatis and Peter Cooney

Our standards: Thomson Reuters Trust Principles.


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