Debt Limit in Lame Duck?
November 7, 2022.
The debt ceiling will need to be raised in 2023. The U.S. has never defaulted on its debt, but some Republicans want to use the future vote to extract spending concessions from Democrats if Republicans take the House (and maybe the Senate) in Tuesday’s midterms.
Why it matters: There is growing agreement among many Democrats that the debt ceiling must be resolved if at all possible before the end of the year to avoid possible disruption under a Republican-controlled Congress.
What they’re saying: A group of 31 House Democrats is calling for abolishing the debt ceiling, but this is doubtful as the President believes it an "irresponsible" idea, and an advisor admitted, “It would be a very hard vote to explain to people that we will borrow as much as we want to borrow with no limits.”
By the numbers: The debt ceiling is $31.4 trillion, which the Bipartisan Policy Center estimates will be reached in early 2023. But the Treasury Department has a few accounting tricks, called "extraordinary measures," to buy time, putting the actual deadline in the third quarter of 2023, when it is possible the economy will be in recession.
What’s next:
- The Biden administration may seek to negotiate with Senate Republicans to lift the debt ceiling in the weeks after the midterms, in hopes Minority Leader Mitch McConnell will want to avoid economic and political damage of a debt limit standoff.
- Alternatively, Democrats may try to raise the debt limit through budget reconciliation during the lame-duck session; the procedure allows Democrats to pass legislation with 50 Senate votes and no Republican help.
The big picture: Democrats are juggling several priorities for the Lame Duck: pass a major defense bill, finish outstanding energy-permitting legislation, and vote on proposals protecting same-sex marriage and shoring up the electoral process. Congress also needs to reach a government funding deal before a December 16 deadline.