Failure to ease the borrowing cap in time would be unprecedented. It could lead to Treasury delaying critical payments like Social Security benefits, military salaries and the like, as well as defaulting on interest payments to bondholders. That could lead to investors demanding higher interest rates to compensate for a greater perceived risk, which in turn would drive up borrowing costs further.
Republicans in the past have tried to attach spending cuts or budget process changes to debt limit increases — mostly when Democrats were in control of the White House or Congress. In April, the Senate GOP conference adopted a nonbinding rule requiring any debt limit increase to be offset with spending cuts or “structural reforms” in federal spending.
Last week one of the authors of that rule, Sen. Rick Scott, R-Fla., led eight other Republican senators in introducing legislation to require the Office of Management and Budget to declare a “federal debt emergency” in any fiscal year when public debt exceeds the size of the U.S. economy. That point already has been reached, as debt hit 100.1 percent of gross domestic product in fiscal 2020 and is projected to rise to 102 percent of GDP this year.
During a debt emergency, the government would be required to terminate unobligated funding from the $1.9 trillion COVID-19 relief bill passed in March and prior aid packages. The proposal would require legislation that increases spending or deficits to include offsets or be subject to a point of order that requires two-thirds of senators to waive. The bill would provide expedited procedures for legislation that would reduce the deficit through spending cuts by at least 5 percent over 10 years.
'No budget, no pay'
Scott's measure is unlikely to advance. But Senate Budget ranking member Lindsey Graham, R-S.C., told reporters last month he’d like to attach strings such as withholding lawmakers’ salaries unless they adopt a budget resolution or pass the annual appropriations bills. He said such a measure would be “responsible” and wouldn’t lead to dangerous debt limit brinksmanship. “I mean, we’re not going to play chicken here,” Graham said.
"easy" - Google News
June 14, 2021 at 09:45PM
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Democrats have no easy options for raising the debt limit - Roll Call
"easy" - Google News
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