First look: White House seeks to coordinate debt-ceiling message
Biden administration officials are briefing senior Democratic Senate aides about why Congress needs to raise or suspend the federal debt limit.
Why it matters: By coordinating its message with Congress, the White House is trying to ensure Democrats stay unified on a simple argument: that 97% of the $28.7 trillion national debt was incurred before President Biden assumed office.
- Both the administration and Senate Democrats face a battle with Senate Minority Leader Mitch McConnell (R-Ky.) about how to protect the full faith and credit of the United States.
- He continues to warn that Republicans will not vote to raise the debt ceiling.
Driving the news: Bharat Ramamurti, a deputy director on the National Economic Council, and Ben Harris, a counselor at the Treasury Department, are dialing into the weekly meeting of Senate chiefs of staff held Wednesday mornings, according to a person familiar with the matter.
- Ramamurti, a former aide to Sen. Elizabeth Warren (D-Mass.) who is well-known on Capitol Hill, is explaining to his former colleagues why Congress should vote to increase or suspend the debt ceiling. He notes a Republican-controlled Senate did, with bipartisan votes, three times under President Trump.
- The officials will note the national debt increased $7.8 trillion during Trump's presidency, which accounts for 28% of its total.
- The national debt has increased by about $670 billion during Biden's first seven months in office.
- The officials have a similar briefing scheduled for Thursday for House staff.
The big picture: On Aug. 2, the Treasury Department was forced to resort to "extraordinary measures" to service debt.
- The last debt-limit suspension, passed in 2019, lapsed on July 31.
- The federal government will run out of money in either October or November, the Congressional Budget Office estimates.
- Predicting when the cash will dry up, though, is more of an art than a science. It's been made more difficult by the various tax and spending programs Congress passed to address the economic fallout from COVID-19.
What we're watching: The White House is nervous there will be turmoil in the financial markets the closer Treasury gets to default. That turmoil — and the threat of default — could drive up borrowing costs.
- There’s also a risk that veterans and Social Security recipients miss monthly payments.
Flashback: In 2011, Standard & Poor’s downgraded the U.S.’s AAA credit rating, as President Obama and congressional Republicans deadlocked about how to reduce annual budget deficits and increase the debt ceiling.
- They eventually cut a deal, but in 2013, Obama drew a line in the sand.
- He vowed he would “not negotiate over whether or not America should keep its word and meet its obligations.”
Between the lines: Democrats need Republican votes in the Senate to suspend the debt limit until a future date, but they can increase the total amount through their proposed $3.5 trillion budget reconciliation package.
- McConnell urged Democrats to pay any increase through reconciliation, which the party plans to pass without any Republican support — making it easier to saddle his opponents politically with greater debt.
- The reconciliation process, however, may not be completed before the debt limit is breached.
- That creates the potential for some Republicans to be forced to vote for an increase.
Go deeper: Get ready for debt-ceiling drama