Before Thanksgiving, Senate Majority Leader Schumer and Minority Leader McConnell seemed to be moving toward an agreement to raise the federal debt limit. But progress froze over the break, and The Hill reported Monday that the two now “don’t appear to be anywhere close to a deal.”
Sen. Joe Manchin (D-WV) says there is still hope.
Manchin told reporters Monday, “I understand there was an agreement from the Republicans to do a very quick reconciliation by itself for the debt ceiling only. I think that’s our responsibility, to make sure that we take care of the debt ceiling. Democrats are now in control, so we want to make sure we do it and do it right.”
Schumer has balked at including a debt limit hike in the Democrats’ Build Back Better bill. But a standalone debt limit bill needing just a simple majority to pass could be a solution.
In testimony prepared for delivery to the Senate Banking Committee on Tuesday, Treasury Secretary Janet Yellen said of raising the debt limit, “I cannot overstate how critical it is that Congress address this issue. America must pay its bills on time and in full. If we do not, we will eviscerate our current recovery. … That would likely be followed by a deep recession.”
Earlier this year, Moody’s Analytics warned that a debt default would wipe out $15 trillion in household wealth, and would drive the unemployment rate up to nine percent – with six million or more jobs lost.
The debt limit itself is nonsensical, but default would be catastrophic. Asked about progress toward an agreement late Monday, Manchin simply said, “We’re negotiating.”