Debt Limit Looms… Again

December 1, 2021

Congress averted a potential default on the debt limit last month when it approved a short-term patch that hiked the nation’s borrowing authority by $480 billion. But in a letter to House and Senate leaders, Treasury Secretary Janet Yellen cautioned that while she has “a high degree of confidence that Treasury will be able to finance the US government through Dec. 15, . . . there are scenarios in which Treasury would be left with insufficient remaining resources to continue to finance the operations of the U.S. government beyond this date.”

Exactly how congressional leaders intend to address the pending debt cliff remains unclear. Senate Minority Leader Mitch McConnell (R-Ky.)—after lending his support to the stopgap debt limit increase last month—has stated that the Republicans will not provide the votes to help Democrats raise or suspend the limit again and has insisted that Democrats solve the problem on their own through the budget reconciliation process.

Majority Leader Schumer (D-N.Y.) and other congressional Democratic leaders have been equally adamant that the debt limit requires a bipartisan solution since both party’s bear responsibility for running up the nation’s credit card. Invoking budget reconciliation would require Democrats to amend the already-adopted fiscal year 2022 budget resolution to include reconciliation instructions calling for such a policy. It also could also entail at least one additional marathon “vote-a-rama” session in the Senate in which unlimited amendments may be offered and voted upon with little or no debate.

Sens. Schumer and McConnell met to discuss the issue on Nov. 18 but were relatively tight-lipped in their comments to reporters afterwards.

In other budget-related news, Democratic and Republican leaders of the two congressional appropriations committees appeared resigned to the fact that Congress likely will have to adopt another short-term continuing resolution (CR) to keep the government’s doors open past Dec. 3, when the current stopgap funding measure is set to lapse. Fiscal year 2022 began on Oct.1, and in the absence of a set of 12 full-year spending bills approved by both the House and Senate, the government has been operating under a CR that funds operations at fiscal year 2021 levels.

There has been some talk on Capitol Hill that a new funding patch would run through Dec. 17, but Rep. Rosa DeLauro, D-Conn., who chairs the House Appropriations Committee, was less precise in comments to reporters this week, stating, “I’m not putting a fixed date on it. I’m looking at December.”

For his part, Sen. Richard Shelby (R-Ala.), the ranking member of the Senate Appropriations Committee, appeared doubtful that a CR running through mid-December would buy enough time for negotiators to secure a long-term agreement.

The primary sticking point between the two parties relates to spending on defense-related programs. Senate Republicans have objected to what they argue is a disparity in the overall level of increases proposed by Democratic appropriators for nondefense discretionary spending (13 percent over FY 2021, according to an Appropriations Committee release) compared to defense spending (5 percent over FY 2021 levels).