Dems face government shutdown, debt default as party infighting intensifies

Democrats confronted with calamitous September as party infighting, fiscal cliff threatens agenda

Congress is barreling toward a government shutdown and a debt crisis as a stalemate between Democrats and Republicans pushed the U.S. toward the brink of a fresh economic crisis.

The Senate is expected to vote as soon as Monday on a House-passed bill that will keep the government funded through early December and raise the $28 trillion debt ceiling. But the bill is almost certainly doomed in the upper chamber, where all but four Republican senators have promised to vote against it. Democrats would need to secure the support of at least 10 GOP lawmakers to overcome a filibuster.

It's unclear what comes next: Without a short-term spending bill, the government is set to shut down next week. At the same time, the federal government will run out of cash to pay is bills sometime in October unless the debt ceiling is raised or suspended, according to multiple warnings from Treasury Secretary Janet Yellen. 


Democrats have said a shutdown on their watch is not an option and have pledged to do whatever it takes to keep the government open. That could force the party to delink the debt ceiling from the short-term spending bill. 

Republicans have argued for months that with a monopoly control on power in Washington, Democrats need to go it alone and raise the debt ceiling as part of their $3.5 trillion reconciliation bill, which is not subject to Senate filibuster rules. 

"This is a totally Democratic government. They have an obligation to raise the debt ceiling and they will do it," Senate Minority Leader Mitch McConnell said during a Wednesday press conference.

Democrats have countered that they joined Republicans three times under the Trump administration to suspend the limit, and that the rising deficit is due in large part to spending approved under the former president, including a $900 billion coronavirus relief package that lawmakers approved last December.


The battle to raise the government's borrowing limit carries big risks for the broader economy: With the total debt standing at $28.5 trillion, the government would be forced to slash federal aid programs unless the cap is either suspended or lifted.

If the U.S. failed to raise or suspend the debt limit, it would eventually have to temporarily default on some of its obligations, which could have serious and negative economic implications. Interest rates would likely spike, and demand for Treasurys would drop; even the threat of default can cause borrowing costs to increase.

"The U.S. has never defaulted. Not once," Yellen wrote in a recent Wall Street Journal op-ed. "Doing so would likely precipitate a historic financial crisis that would compound the damage of the continuing public health emergency."

The party's efforts to avert a fiscal cliff come as it's already grappling with a chaotic September, including internal fights over the size and scope of a massive spending bill that includes historic tax hikes on wealthy Americans and corporations. 


President Biden stepped in on Wednesday to personally attempt to head off the brewing intraparty war between moderates and progressives. But despite meetings with a broad spectrum of Democrats, the day concluded with no compromise between the two warring factions, who have for months been feuding over a $1 trillion bipartisan infrastructure bill and a $3.5 trillion family and climate change bill. 

in a readout Wednesday night, the White House called the meetings "productive and candid" but acknowledge there is "more work ahead in the coming days." Biden is expected to hold additional meetings, beginning Thursday, to "continue to advance the process of passing these critical plans." 

Senate Majority Leader Chuck Schumer said Thursday the White House and congressional Democrats had agreed on a "framework" to pay for the massive economic plan, though he did not provide additional details.

"That means we are proceeding," House Speaker Nancy Pelosi said. "We have made great progress."