A gush of corporate tax payments come the middle of next month could make the accounting trick work, filling federal coffers enough to keep Treasury from reaching the absolute breaking point now that the nation has again exhausted its roughly $28 trillion debt limit. While the delay is unlikely to hold up any transportation projects, the bookkeeping maneuver shows how Republican intransigence continues to pinch Democrats unable to suspend the debt ceiling on their own.
Yellen concluded her letter Tuesday with a plea to leaders on Capitol Hill: “To ensure the full faith and credit of the United States, it is critical that Congress raise or suspend the debt limit as soon as possible.”
Outside forecasters have said the influx of revenue on Dec. 15 could give the Treasury enough cash to keep paying the government’s bills until late December. The Bipartisan Policy Center, which consistently forecasts the debt limit with accuracy, predicts that Treasury might even be able to stave off a debt crisis until mid-February.
Senate Minority Leader Mitch McConnell has said his party won’t help Democrats avert the next debt limit cliff, after 11 GOP senators ended up voting last month to raise the nation’s borrowing limit by $480 billion. Instead, the Kentucky Republican insists that Democrats use the budget reconciliation process, which they’re using to pass Biden’s sweeping safety net bill, to act alone on the debt limit. That pathway is more time-consuming and would likely require the majority party to raise the debt limit to a specific number, further fueling Republican campaign attacks characterizing Democrats as reckless spenders.
Top Democrats on Tuesday declined to rule out using the special budget maneuver to lift the cap on the nation’s borrowing ability, as they have for the last several months. Senate Majority Leader Chuck Schumer said he wants the upper chamber to pass Biden’s social spending package by Christmas.
“Look, we must pass the debt limit,” the New York Democrat said. “We cannot let the full faith and credit of this country lapse, and we hope to do it in a bipartisan way.”
When asked about removing reconciliation as an option for raising the debt ceiling, Senate Budget Chair Bernie Sanders (I-Vt.) said, “We’ll look at all the options, but this country cannot fail to pay its debt.”
Along with action on the debt limit, the next government shutdown deadline could also get punted into the new year. Federal funding runs out on Dec. 3, but Republicans are blocking spending negotiations, demanding that Democrats acquiesce to a slew of conservative stipulations on how government money is spent.
Kate Davidson contributed to this report.