While infrastructure negotiations continue on Capitol Hill, another major issue looms: the debt ceiling. US Treasury Secretary Janet Yellen has said the US government will run out of money Oct.18, when it will hit the borrowing ceiling set by Congress.
Senior White House officials explored whether the US could unilaterally continue payments should the debt ceiling be breached in mid-October but ultimately concluded it would not be possible to avoid default and economic catastrophe, a person with direct knowledge of the matter told CNN.
The conclusion came as part of a review, first reported by the Washington Post, of potential options the administration may have as the US barrels toward an Oct. 18 debt ceiling deadline with no clear idea of how Congress will reconcile how to avoid the first default in US history.
White House officials conducted the review as diligence to map out or test the viability any potential contingencies or theories as Republicans have continued to block Democratic efforts to suspend the debt limit, the person said. Among the theories explored, but dismissed as unworkable either due to legal, political or economic hang ups, was whether there were constitutional grounds to continue payments, as well as the idea of minting a trillion dollar coin, the person said.
The review itself is not out of the ordinary. During the Obama administration, officials reviewed whether alternatives were available to congressional action to raise the debt ceiling during high stakes showdowns between Democrats and Republicans. They ultimately concluded alternatives would not be viable.
The White House has concluded the same.
“There is only one viable option to deal with the debt limit: Congress needs to increase or suspend it, as it has done approximately 80 times, including three times during the last administration,” White House spokesperson Mike Gwin said in a statement to CNN
It’s a reality that only serves to underscore the heightened risk facing financial markets and the US economy in this moment.
Senate Republicans have blocked all Democratic efforts to move forward on a debt ceiling suspension up this point, pressing Democrats to move through the budget reconciliation process to get the job done. The process itself is likely to take at least two weeks, creating an increased level of urgency for lawmakers as the calendar moves toward the deadline
Yet Sen. Mitch McConnell staked out an unyielding position of opposition in July and, driven by a combination of not wanting to give GOP votes to the increase and embracing the ability to slow or create chaos at the same time Democrats are straining to pass their domestic agenda, has received unified back up from the members of his conference.
Democrats have tried multiple avenues to force McConnell to yield, though up to this point have not broken through. Another vote on a stand-alone suspension of the debt limit, which the House passed this week, is scheduled for next week.
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