The call presents a challenge to Republicans, who have opposed in Congress supporting an increase in the debt limit.
Treasury Secretary Janet Yellen is calling on lawmakers to raise the debt ceiling in a bipartisan manner, rather than using a process that allows it to be carried out solely with Democratic support.
“In recent years, Congress has addressed the debt limit through a regular order, with broad bipartisan support,” Yellen said in a statement Monday. “Congress should do it again now by raising or suspending the debt limit in a bipartisan way.”
The call presents a challenge for Republicans, who have opposed supporting an increase in the debt limit, a way of highlighting their opposition to Democratic plans to increase social spending. One option for Democratic lawmakers has been to include an increase in the debt ceiling in an impending budget resolution that will serve as a vehicle for that social spending package.
But Senate Democrats allowed an increase in the debt limit of the text of that resolution. The $ 3.5 trillion package sets the stage for the so-called reconciliation bill, which only requires 50 votes to pass in the Senate, eliminating the need for Republican support.
Until now, President Joe Biden’s administration has been silent on the idea of using reconciliation to increase the debt ceiling.
Yellen said that “the vast majority of the debt subject to the debt limit accumulated” before the start of Biden’s term.
“This is a shared responsibility, and I urge Congress to come together on a bipartisan basis as it has done in the past to protect America’s full faith and credit,” he said.
Senate Republican Leader Mitch McConnell has said Democrats’ efforts to pass new spending through reconciliation threaten Republican support for an increase in the debt ceiling.
“If they don’t need or want our input, they won’t get our help with raising the debt limit that these reckless plans will require,” McConnell said last week. “It couldn’t be clearer.”
The other option for Democrats would be to convince at least 10 Republicans to vote for the debt ceiling in an interim funding measure that must be passed in late September to avoid a government shutdown.
It is not yet known how quickly Congress must act to prevent a potential default, which would wreak havoc on financial markets and could trigger a government credit downgrade.
The debt limit, or the total debt that the Treasury can issue to the public and other government agencies, went back into effect on August 1, when a two-year suspension expired.
Yellen has told lawmakers that the Treasury could exhaust its special measures and run out of cash “shortly after Congress returns from recess” in September.
The Congressional Budget Office projects that lawmakers will likely have a longer window of time, until October or November, to raise or suspend the debt limit. The outstanding public debt is currently US $ 28.4 trillion.
Bond market participants warned last week that, in some scenarios, the Treasury might need to execute steep drops in the issuance of bills, a crucial component of financial markets.