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US politicsGOP plan to block House measure could trigger an unprecedented $28tn defaultOpposition from Mitch McConnell means the spending package is dead and the US faces a shutdown and default Hugo Lowell in Washington DCThu 23 Sep 2021 02.00 EDTLast modified on Thu 23 Sep 2021 02.30 EDTTop Republicans in the Senate are poised to block a key spending package advanced by Democrats in a move that could precipitate the dual fiscal crises of a government shutdown and an unprecedented US default on its colossal debt obligations.The House has approved a combined stopgap funding measure that would keep the federal government open until early December and suspend the debt limit until after the 2022 midterm elections, sending the legislation to the Senate.But the Senate minority leader Mitch McConnell swiftly announced that Republicans would sink the measure with a filibuster and prevent it from receiving the 60 votes needed to pass – causing a government shutdown on 1 October and a default weeks later.Biden knows fate of spending plan will show extent of his power – and define his legacy Read moreThe opposition from McConnell means the Democrats’ proposal is dead on arrival. And with no serious discussions to resolve the high-stakes showdown in sight, the US now faces the prospect of a shutdown government defaulting on $28tn of debt.At issue are the consequences of an unprecedented default on federal debt, which could plunge the economy into an immediate recession, trigger a meltdown in global financial markets and lead to the downgrading of America’s credit rating. Economists say a prolonged impasse could cost the US economy millions of jobs, wipe out trillions in household debt and send unemployment rates surging.The debt limit corresponds to the amount the US government can borrow to pay its bills. Most recently, Democrats joined Republicans to suspend it until the end of July, after which the Treasury Department has used emergency measures to finance obligations.The US has previously avoided defaults at the last minute but with Republicans entrenched in their refusal to tackle the debt limit problem in bipartisan fashion, the latest standoff is likely to come down to the wire, said sources familiar with the matter.Treasury secretary Janet Yellen reiterated the urgency of the situation in a recent letter to Congress, warning that the US was on track to default in mid-October and cause “irreparable harm” to the economy if Congress failed to take action.Alarmed at the deteriorating nature of discussions in the House and Senate, Yellen also held private discussions this month with McConnell and former Republican Treasury secretaries Steven Mnuchin and Henry Paulson, though those did not resolve the impasse.Democrats have long insisted that Republicans tackle both the government shutdown issue and the debt limit issue through a bipartisan vote, arguing that they joined Republicans in raising the debt ceiling when Donald Trump was president.The House speaker, Nancy Pelosi, and the Senate majority leader, Chuck Schumer, have also reiterated in recent days that it was mainly because of Republicans that the national debt increased by roughly $8tn during the previous administration.Pelosi said in a recent news conference that the need to suspend the debt limit stemmed in part because of tax cuts to the wealthy enacted during Trump’s time as president. “We’re paying the credit card, the Trump credit card,” Pelosi told reporters.But the Democrats’ plan to pair the stopgap spending bill with the debt limit suspension – and dare Republicans to block it – has now run headlong into Republican resistance led by McConnell that shows no sign of reversing course.McConnell has suggested for weeks that Democrats instead include the debt limit language in the $3.5tn infrastructure package that Schumer plans to pass with a fast-track procedure known as reconciliation that requires only a party-line vote.But House budget committee chairman John Yarmuth dismissed the proposal as unworkable on Wednesday, saying that his staff had determined that it was “virtually impossible” to tackle the debt limit through the infrastructure package or even as a standalone bill.The difficulty, according to sources familiar with the procedure, is that including the debt limit in the $3.5tn infrastructure package would require Democrats to return the bill to the House and Senate budget committees and then schedule votes in both chambers.Yarmuth told reporters there would not be enough time to re-run the entire process before the looming end-of-month deadline – meaning that without a reversal by Republicans, the US could drop off the proverbial fiscal cliff.“We could start the process over with a separate budget-reconciliation bill that is devoted to just raising the debt limit – the law allows us to do that,” Yarmuth said. But he warned: “That’s a matter of weeks. So, you’re up against a potential deadline.”Democrats could still move to advance a ‘clean’ stopgap funding bill devoid of language to suspend the debt limit, which Republicans have privately suggested they would not filibuster, and take action on the debt limit in a subsequent standalone bill.But even though such a measure would avert the immediate calamity of a government shutdown on 1 October, it would still leave Congress with no path to lift the debt limit after Republican senator Ted Cruz confirmed he would block a standalone bill.Justin Goodman, a spokesperson for Schumer, criticized McConnell for refusing to join Democrats for what has in years past been regarded as a routine step that allows the US treasury to meet its debt obligations.“Every American will know that Senate Republicans are to blame,” Goodman said.TopicsUS politicsRepublicansDemocratsUS SenatenewsReuse this content More
Key events
Show
5.38pm EDT
17:38
Federal Reserve hints it will end pandemic stimulus programs
5.00pm EDT
17:00
Today so far
4.29pm EDT
16:29
Biden to consider ‘potential further executive actions’ after police reform talks fail
1.53pm EDT
13:53
Police reform negotiations come to a formal close, Bass says
12.54pm EDT
12:54
France to send ambassador back to US after Macron-Biden call
12.03pm EDT
12:03
Today so far
11.00am EDT
11:00
Biden to announce US will donate another 500m vaccine doses to other countries
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5.44pm EDT
17:44
Dominic Rushe
The latest Fed statement also showed that more members of the Fed committee now believe that interest rates should rise in the near future. Nine of the 18 officials expect to raise interest rates by the end of 2022, up from seven officials in June when a majority said they thought rates would rise in 2023.
US stock markets reacted favorably to the news, which suggests the economy is still recovering from the pandemic, albeit with uncertainties remaining. Investors have been spooked in recent days by news that troubled Chinese property developer Evergrande could default on its $300bn debts. The company’s woes could drag in investors worldwide, but on Tuesday the company said it would be able to meet some of its obligations.
Powell said the situation “seems particular to China which has very high debt for an emerging market economy.
“In terms of the implications for us, there is not a lot of direct United States exposure,” he said.
5.38pm EDT
17:38
Federal Reserve hints it will end pandemic stimulus programs
Dominic Rushe
The Federal Reserve signaled on Wednesday that it may start cutting its enormous pandemic stimulus programs as soon as November and could raise interest rates next year.
The US central bank left interest rates unchanged at near zero after its latest meeting. Rates were cut in March 2020 as the US economy reeled from the impact of the pandemic. But the Fed also indicated it may soon start pulling back on the $120bn in monthly asset purchases program that it started when the coronavirus hit the US.
“If progress continues broadly as expected, the Committee judges that a moderation in the pace of asset purchases may soon be warranted,” the Fed’s post-meeting statement said.
At a press conference Fed chair Jerome Powell said the jobs market was “very strong” and that while the central bank was trimming its forecasts for economic growth it still foresees “rapid growth” in the economy.
Powell said the pandemic was still having an impact and that bottlenecks and shortages were driving price inflation but he expected that situation to ease as long as the coronavirus pandemic is contained. “The path of the economy still continues to depend on the course of the virus,” he said.
Read more:
5.17pm EDT
17:17
Florida’s surgeon general Joseph Ladapo has issued a new emergency rule that parents can decide whether or not their children should quarantine after being exposed to someone who tested positive for Covid-19.
Governor Ron DeSantis announced that Lapado, who has been skeptical of research-backed public health measures like mask-wearing, lockdowns and vaccines to curb the spread of coronavirus, would be the state’s new surgeon general on Tuesday. The Republican governor has tried to ban schools from enforcing mask mandates.
The new rule states that parents rather than school administrations, must be the ones to decide asymptomatic kids who have been exposed to the virus should quarantine.
It was “important to respect the rights of parents”, Ladapo said.
The new emergency rule will replace a previous rule requiring students to quarantine for four days after being exposed.
Updated
at 5.33pm EDT
5.00pm EDT
17:00
Today so far
That’s it from me today. My west coast colleague, Maanvi Singh, will take over the blog for the next few hours.
Here’s where the day stands so far:
Joe Biden announced the US will donate another 500 million Pfizer coronavirus vaccine doses to other countries. The announcement means the Biden administration has now committed to sending more than 1.1 billion vaccine doses abroad. “Put another way, for every one shot we’ve administered to date in America, we have now committed to do three shots to the rest of the world,” Biden said at a virtual Covid summit today.
Emmanuel Macron is sending the French ambassador to the US back to Washington, after he and Biden had a conversation today about France’s outrage over the Aukus defense deal. The French president also plans to meet with Biden in Europe next month.
Bipartisan talks over a police reform bill have officially collapsed, after months of back-and-back between the negotiators. Democratic congresswoman Karen Bass blamed the failure on Republicans involved in the negotiations, saying in a statement, “Every time, more was demanded to the point that there would be no progress made in the bill that we were left discussing.” Biden said he would consider “potential further executive actions” to address police reform after the talks collapsed.
House Democrats passed their spending bill to keep the government funded and suspend the debt ceiling until December. However, the legislation faces bleak prospects in the evenly divided Senate, where Republican leader Mitch McConnell has pledged to oppose any effort to raise the debt ceiling.
The select committee investigating the Capitol insurrection is considering issuing a number of subpoenas to former Trump administration officials. Former White House chief of staff Mark Meadows, deputy chief of staff Dan Scavino and former Trump campaign manager Brad Parscale are among those who are likely to get subpoenaed by the committee.
Maanvi will have more coming up, so stay tuned.
4.44pm EDT
16:44
House speaker Nancy Pelosi said the chamber is “on schedule” to hold a vote on the bipartisan infrastructure bill on Monday.
Asked whether the House will also be ready to vote on the reconciliation package by Monday, as progressive lawmakers have demanded, Pelosi did not give a concrete answer.
Zak Hudak
(@cbszak)
“We’re on schedule, let’s put it that way,” Speaker Pelosi says of the bipartisan infrastructure deal slated to reach the floor next wk. She wouldn’t say when the reconciliation package would be considered but said, “We’re calm and everybody’s good.” pic.twitter.com/H6hZa8sigz
September 22, 2021
“We’re calm, and everybody’s good, and our work’s almost done,” Pelosi told reporters on Capitol Hill.
The Democratic speaker met with Joe Biden at the White House this afternoon, as progressives threaten to block the infrastructure bill over their concerns about the reconciliation package.
4.29pm EDT
16:29
Biden to consider ‘potential further executive actions’ after police reform talks fail
Joe Biden said he will consider “potential further executive actions” to address police reform after the bipartisan team of congressional negotiators failed to reach a deal on a bill.
“The murder of George Floyd is a stain on the soul of America,” the president said in a new statement addressing the collapse of the negotiations. “It spurred the nation to collectively demand justice, and we will be remembered for how we responded to the call.”
Biden said he was “deeply grateful” to congresswoman Karen Bass and Senator Cory Booker for working to reach an agreement over the past several months.
“Regrettably, Senate Republicans rejected enacting modest reforms, which even the previous president had supported, while refusing to take action on key issues that many in law enforcement were willing to address,” Biden said.
The president noted he still hoped to sign police reform legislation, but he said he would soon explore additional steps to determine what executive action he may be able to take on the issue.
“In the coming weeks, we will continue to work with Senator Booker, Congresswoman Bass, and other members of Congress who are serious about meaningful police reform,” Biden said.
“The White House will continue to consult with the civil rights and law enforcement and civil rights communities, as well as victims’ families to define a path forward, including through potential further executive actions I can take to advance our efforts to live up to the American ideal of equal justice under law.”
4.11pm EDT
16:11
The White House shared a photo from Joe Biden’s phone call with French President Emmanuel Macron earlier today.
“Today I spoke with President Emmanuel Macron of France, and reaffirmed the importance of French and European engagement in the Indo-Pacific region,” Biden said in a tweet that included the photo.
“I look forward to a process of in-depth consultations and to meeting with him in October.”
President Biden
(@POTUS)
Today I spoke with President Emmanuel Macron of France, and reaffirmed the importance of French and European engagement in the Indo-Pacific region. I look forward to a process of in-depth consultations and to meeting with him in October. pic.twitter.com/MouVMCBgDR
September 22, 2021
Asked about the two leaders’ conversation during the White House press briefing, Jen Psaki said the call was “friendly” and lasted around 30 minutes.
“It was one where we’re hopeful and the president is hopeful this is a step in returning to normal,” Psaki said of the phone call.
Psaki did not explicitly say whether Biden apologized to Macron for failing to give him advance notice about the Aukus defense deal, instead telling reporters, “He acknowledged that there could have been greater consultation.”
3.55pm EDT
15:55
Civil rights attorneys Ben Crump and Antonio Romanucci, who have represented the family of George Floyd, expressed “extreme disappointment” over the collapse of police reform talks in Congress.
“In the last year and a half, we have witnessed hundreds of thousands of Americans urging lawmakers to bring desperately needed change to policing in this country so there can be greater accountability, transparency, and ultimately trust in policing,” the lawyers said in a statement.
“We can not let this be a tragic, lost opportunity to regain trust between citizens and police.”
Crump and Romanucci urged Senate Democrats to bring the George Floyd Justice in Policing Act, which passed the House in March, to the floor “so Americans can see who is looking out for their communities’ best interests”.
3.39pm EDT
15:39
In his own statement on the collapse of the police reform negotiations, Democratic Senator Cory Booker said the talks failed because there was “too wide a gulf with our negotiating partners”.
“We made it clear from the beginning of our negotiations that a bill must ensure true accountability, transparency, and the policing standards necessary to bring an end to horrific incidents of violence Americans are routinely seeing — like the murder of George Floyd,” Booker said.
“After months of exhausting every possible pathway to a bipartisan deal, it remains out of reach right now, even after working collaboratively with and securing the support of policing groups like the Fraternal Order of Police and International Association of Chiefs of Police for our proposals.”
Echoing fellow Democratic negotiator Karen Bass, Booker said the time had come to “explore all other options to achieve meaningful and common sense policing reform”.
“I will not stop fighting until we achieve change that keeps our communities and police officers safe,” Booker concluded.
3.20pm EDT
15:20
Jen Psaki said Joe Biden was “disappointed” that the bipartisan negotiations over the police reform bill collapsed without a deal today.
“Unfortunately, Republicans rejected reforms that even the previous president had supported and refused to engage on key issues that many in law enforcement were willing to address,” Psaki said.
The press secretary noted Biden was “greatly appreciative” for congresswoman Karen Bass and senator Cory Booker’s efforts in the negotiations.
Psaki said Biden would be meeting with members of Congress, law enforcement groups and civil rights advocates in the weeks to come to discuss a path forward, “including potential executive actions” that he can take on police reform.
3.03pm EDT
15:03
Jen Psaki said the White House is “certainly” concerned about the possibility of the government shutting down next week if a funding bill is not approved.
“Until a [continuing resolution] has passed that funds the government, we’ll certainly have a concern,” the White House press secretary said. “But our goal and our focus is on preventing that from happening.”
Noting that the House has already passed a bill to fund the government and suspend the debt ceiling until December, the press secretary expressed hope of the situation being resolved soon.
However, the House-passed bill faces dim prospects in the evenly divided Senate, where Republican leader Mitch McConnell has vowed to block any effort to raise the debt ceiling.
2.48pm EDT
14:48
Jen Psaki was asked about Joe Biden’s meetings today with members of Congress to discuss the bipartisan infrastructure bill and the $3.5tn reconciliation package.
One reporter pressed Psaki on whether this marks a “make or break” moment for the two bills, which encompass much of the president’s economic agenda.
The press secretary declined to characterize the meetings in that way, instead saying, “This is an important moment. We are in a pivotal period in our negotiations and discussions.”
2.32pm EDT
14:32
One reporter asked Jen Psaki whether Joe Biden apologized to Emmanuel Macron for how the Aukus deal was announced.
“He acknowledged that there could have been greater consultation,” the White House press secretary said. “There was agreement that we wanted to move forward in our relationship.”
Asked if Biden held national security adviser Jake Sullivan responsible for the dust-up with France, Psaki replied, “He holds himself responsible.”
Updated
at 4.38pm EDT More
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US politicsFears of US government shutdown as debt ceiling game of chicken beginsIf neither side budges, US risks default on debt and lowered credit rating, which would cost billions Hugo Lowellin WashingtonSun 19 Sep 2021 04.00 EDTTop Democrats are expected to dare Republicans to block a stopgap funding measure, which would trigger the double-barreled fiscal crisis of the US defaulting on its mammoth debt and a shutdown of the federal government, according to two sources familiar with the proposal.The plan being considered by the House speaker, Nancy Pelosi, and the Senate majority leader, Chuck Schumer, involves suspending the debt ceiling past the 2022 midterm elections in a stopgap bill that would keep the government funded through early December, the sources said.Democrats want to then dare Republicans to block the stopgap funding measure with a filibuster and prevent it from receiving 60 votes needed to pass the Senate – which could cause a government shutdown on 1 October and leave the US unable to pay its bills.The US has almost always avoided defaults and the sources said they expected some resolution on this occasion, too, even if negotiations, like in years past, continued until the 11th hour.But economists say a failure to raise or suspend the debt limit when tied to the stopgap funding measure would be particularly catastrophic as the US would be unable to service its debt obligations in the midst of a potentially non-functional federal government.Resolving the impasse – which typically becomes a political football under a Democratic president as Republicans criticize their spending – now requires one party to blink.The strategy to tie the potentially catastrophic prospect of the US defaulting on its $28tn of debt with a government shutdown could put Republicans in a difficult position after their repeated refusal to raise the debt limit in a bipartisan fashion.It also underscores the extent of the dysfunction of Congress, as Republicans decline to back measures from voting rights legislation to police reform to a 9/11-style commission to investigate the deadly 6 January attack on the Capitol.The high-stakes showdown over the debt ceiling is accelerating after the treasury secretary, Janet Yellen, said recently the US could default in mid-October and cause “irreparable harm” to the economy if Congress failed to take action.In a letter to Pelosi, Yellen said the extraordinary measures the treasury department had been employing to finance the government on a temporary basis after the nation’s debt hit its statutory limit on 1 August would be exhausted next month.“Once all available measures and cash on hand are fully exhausted, the United States of America would be unable to meet its obligations for the first time in our history,” Yellen wrote.That meltdown could affect the US credit rating, which raises the specter of increased treasury interest rates, which could cost the government billions and lead to higher borrowing costs for American businesses, since their rates are benchmarked to treasury rates.Democrats have insisted for months that Republicans join them in taking action on the debt ceiling, arguing that it was mainly because of Republicans that the national debt increased by roughly $8tn over the course of the Trump administration.Pelosi added in a recent news conference that the need to suspend the debt ceiling stemmed in part from Republican tax cuts to the wealthy. “We’re paying the credit card, the Trump credit card,” Pelosi said.But the Senate Republican leader, Mitch McConnell, has remained adamant that Republicans will not support Democrats in raising the debt ceiling as part of a standalone bill, and that it should instead be included in a sprawling infrastructure package that can be passed on a party-line vote.“Let’s be clear,” McConnell said in a tweet on Wednesday. “With a Democratic president, a Democratic House and a Democratic Senate, Democrats have every tool they need to raise the debt limit. It is their sole responsibility.”Both Pelosi and Schumer have also noted that Democrats joined Republicans to handle the debt limit when Trump was president and believe the Republicans should now return the favor – rather than leave vulnerable Democrats open to attack ads if the ceiling is raised on a party-line vote.In pressing the point, Pelosi said that Democrats would not include a provision to raise the debt ceiling in the $3.5tn budget resolution for Biden’s infrastructure agenda that they intend to pass with the reconciliation process, to avoid a filibuster.Instead, top Democrats are moving forward with a plan to add such language in the stopgap funding measure that would keep the government funded through either 3 December or 10 December, the sources said, and hope to persuade 10 Senate Republicans to support the bill.The inclusion of the debt limit in the stopgap measure is not final, the sources cautioned, and discussions will continue as the House returns from a summer recess. It could still be added to a disaster relief bill, for instance, or be tackled in a standalone bill.Part of the worry for top Democrats is that the path to 60 votes in the Senate was significantly narrowed last month after the majority of the Senate Republican conference signed on to a letter vowing to block any bill that attempted to raise the debt ceiling.Only four Senate Republicans – the Senate appropriations committee chairman, Richard Shelby, Lisa Murkowski, Susan Collins and John Kennedy – declined to sign the letter, a number far short of the threshold required to defeat an expected filibuster.TopicsUS politicsDemocratsNancy PelosinewsReuse this content More
