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Regulation and Compliance > Legislation

Deal to Raise Nation’s Debt Ceiling Reached in Congress

By Billy House and Erik Wasson

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What You Need to Know

  • If the plan goes through, the debt limit increase could pass Congress before Dec. 15.

Republicans and Democrats in Congress have agreed on a plan to break a partisan impasse and raise the government’s debt ceiling.

“I think this is in the best interests of the country,” Senate GOP leader Mitch McConnell said of the deal he struck with Senate Majority Leader Chuck Schumer on a procedural maneuver that would increase the debt limit with only Democratic votes.

The plan moving through the House would link a procedure to raise the debt ceiling to a bill to prevent automatic Medicare cuts. Lawmakers would then pass a separate bill to raise the debt limit by about $2 trillion to put the issue to rest until after the midterm election in November, according to an aide.

“We think that this is a perfectly appropriate way to handle this,” Senator John Thune of South Dakota, the chamber’s No. 2 Republican, said.

If the plan goes through, the debt limit increase could pass Congress before Dec. 15, the date after which the Treasury said the government may run short of authority to pay its bills.

The maneuver involves a bit of procedural gimmickry. The bill coming before the House this week would need 10 Republican votes in the Senate to advance, but does not itself raise the debt limit.

Instead it sets up a process whereby a separate bill introduced before the end of the year aimed at raising the debt ceiling cannot be filibustered in the Senate. That second bill could be passed with just Democratic votes.

Thune said that he believes he could find 10 Republicans to make it work.

House Speaker Nancy Pelosi sent the legislation to the House Rules Committee, which scheduled an afternoon meeting to advance the measures to potential floor action later Tuesday.

This approach would tie action on the debt ceiling to stave off nearly 10% in mandatory cuts to Medicare payments under the so-called Paygo law set to go into effect on Jan. 1.

The pending cuts have alarmed hospital and doctors groups that say Medicare fee-for-service payments could be reduced by $14.1 billion in 2022 unless there’s action to stop them.

These cuts would also affect trade adjustment assistance, which helps workers who have lost their jobs due to trade-related circumstances, and farm price supports. Congress has previously waived the Paygo rule.

Partisan Impasse

Congressional Democrats found themselves searching for a route to avoid the government defaulting on its obligations as Senate Republicans insisted that Democrats would have to deal with the debt limit on their own. Senate Democrats have resisted for months raising the debt ceiling using a multi week budget reconciliation process.

Treasury Secretary Janet Yellen has warned that the government could hit the debt limit and have difficulty meeting its obligations after Dec. 15, though outside analysts have said the government has a bit more time.

  Image: Adobe Stock) 

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