WASHINGTON (Reuters) — Tensions between Democrats and Republicans ratcheted higher on Monday as the U.S. federal government had about two weeks to reach a deal on its $28.4 trillion debt ceiling or face severe economic consequences, with Senate Majority Leader Chuck Schumer urging a vote this week.
"We must get a bill to the president’s desk dealing with the debt limit by the end of the week. Period. We do not have the luxury of waiting until Oct. 18," Schumer said in a letter to lawmakers.
Senate Republicans have twice blocked action to raise the debt ceiling, saying that Democrats can use a parliamentary maneuver known as budget reconciliation to act alone.
Late last month the House of Representatives passed and sent to the Senate a bill to suspend the limit on Treasury borrowing through the end of 2022. Schumer was expected to hold a vote on that measure this week.
Moody's last month warned that a failure to act could cause a nearly 4% decline in economic activity, the loss of almost 6 million jobs, an unemployment rate of close to 9%, a sell-off in stocks that could wipe out $15 trillion in household wealth and a spike in interest rates on mortgages, consumer loans and business debts.
President Joe Biden plans to accuse Republicans of voting directly to let the United States default, according to the White House.
"The president will deliver remarks on the need for Congress to fulfill its shared responsibility and address the debt ceiling, after Senate Republicans voted twice last week to default and continue to block Democratic efforts to avoid default," the White House said ahead of Biden's Monday remarks.
Senate Minority Leader Mitch McConnell — who has said for weeks that his caucus will not vote to raise the limit — shot back at Biden with a letter accusing leadership of allowing Democrats to "sleepwalk" toward catastrophe, Politico reported.
"Your lieutenants in Congress must understand that you do not want your unified Democratic government to sleepwalk toward an avoidable catastrophe when they have had nearly three months’ notice to do their job," Politico reported McConnell as writing.
Treasury Secretary Janet Yellen last week warned lawmakers that the nation was close to exhausting its federal borrowing capabilities, now set for Oct. 18.
Schumer said the Senate will have to stay in session through the weekend and possibly into a planned recess next week if no progress is made on raising the debt limit.
Last week, the Senate's parliamentarian ruled that Schumer could use the reconciliation process to bring a debt limit bill to the Senate floor, according to a source familiar with the ruling. This would allow the bill to pass by a simple majority instead of the 60 votes normally needed for most legislation.
According to the parliamentarian, doing so would not jeopardize Democrats' efforts to bring a second bill to the Senate floor under reconciliation. That is the multitrillion-dollar bill embracing Biden's domestic agenda expanding social services and addressing climate change that Democrats are now developing.