Speaker of the House Nancy Pelosi (D-Calif.) on Sunday released a “Dear Colleague” letter addressing ongoing tensions between Republicans and Democrats over raising the debt ceiling, urging Congress to ‘come together’ to raise the debt limit.
The current battle over the debt ceiling began in August, when Senate Republicans, unhappy with Democratic spending, signed a letter vowing to not vote for an increase to the debt ceiling. Forty-six Senate Republicans, led by Sen. Ron Johnson (R-Wis.), prepared the strategy as a way to force Democrats to bear full responsibility for the politically unpopular (pdf) move of raising the debt ceiling.
They explained the move as a response to Senate Democrats moving Sen. Bernie Sanders’s (I-Vt.) expansive $3.5 trillion budget out of committee without a single Republican vote. “In order for this spending to occur,” the delegation notes, “our nation’s debt limit will have to be increased significantly.” Republicans refusing to participate in this, Johnson’s group said, “would appropriately require each and every Democrat to take responsibility for their out-of-control spending.”
Since then, these forty-six Republicans have remained steadfast in their commitment. In the House, a similar petition was signed by over 100 Republicans as well.
In an interview with Punchbowl News, Senate Minority Leader Mitch McConnell (R-Ky.), a signatory of the petition, said “I can’t imagine a single Republican in this environment that we’re in now—this free-for-all for taxes and spending—[will] vote to raise the debt limit.”
On Fox Business, Sen. Rick Scott (R-Fla.), another signatory, said that a caucus of Republican senators agreed that they “would not raise the debt ceiling without structural change.”
The deadline to raise the debt limit is fast approaching, with Secretary Janet Yellen warning that the Treasury will run out of ways to fund the government by around the middle of October. Should Congress fail to raise the borrowing limit, the U.S. government would face default, a move which Yellen warned, “would have absolutely catastrophic economic consequences.”
But despite their ability to raise the debt ceiling on their own through budget reconciliation, the party has been hesitant to take on the full weight of the measure. At a Sept. 8 press conference, Pelosi announced that the Democratic budget bill would not include a debt ceiling increase.
Pelosi’s “Dear Colleague” letter appears to be an attempt to defuse these tensions as October’s default looms nearer.
She promised in the letter that “Congress, as always, is ironclad in its commitment to never letting the full faith and credit of the United States come under threat,” noting that historically, this has been a bipartisan endeavor.
“Indeed,” writes Pelosi, “since 2011, every time the debt limit has needed to be raised, Congress has addressed it on a bipartisan basis, including three times during the last Administration.”
Congress is returning to session on Monday, and raising the debt limit will be one of its many priorities. “When we take up the debt limit this month, we expect it to be bipartisan once more,” she said.
Pelosi emphasized that raising the debt limit is not only about new commitments contained in the not-yet-passed budget bill, but is also about old ones.
“Addressing the debt limit is about meeting obligations the government has already made, including the bipartisan COVID relief legislation from December, as well as vital payments to Social Security recipients and our veterans,” she says.
Failure to raise it, she warns, “would … have absolutely catastrophic economic consequences. It would be utterly unprecedented in American history for the United States government to default on its legal obligations.” Among these consequences, Pelosi predicts “it would precipitate a financial crisis” that “would threaten the jobs and savings of Americans, and at a time when we are still recovering from the COVID pandemic.”
She pointed to warnings from financial analysts and institutions on these risks.
One such warning comes from Moody’s Chief Economist Mark Zandi, who warned that a default would be “financial Armageddon.”
Another came from Jamie Dimon, the CEO of JP Morgan bank, who said that a default could “cause an immediate, literally cascading catastrophe of unbelievable proportions and damage America for 100 years.”
She also noted that in 2019 then-Senate Majority Leader Mitch McConnell (R-Ky.) supported raising the debt ceiling. Pelosi quoted McConnell as having said that raising the debt ceiling “ensures our federal government will not approach any sort of short-term debt crisis in the coming weeks or months. It secures our nation’s full-faith and credit and ensures that Congress will not throw this kind of unnecessary wrench into the gear of our job growth and thriving economy.”
Pelosi concluded, “The debt limit is a shared responsibility, and I urge Congress to come together, in that spirit, on a bipartisan basis as it has in the past to protect the full faith and credit of the United States.”