Dec 2, 2021 - Politics & Policy

Senate Republicans shrug off debt default deadline

Treasury Secretary Janet Yellen is seen testifying to Congress on Wednesday.
Treasury Secretary Janet Yellen testifies before House members Wednesday. Photo: Al Drago/Bloomberg via Getty Images

Senate Republicans are feeling far more relaxed about the impending Dec. 15 federal debt-default deadline this time around, with many suggesting the real drop-dead date isn't until January.

Why it matters: Their attitude toward the deadline set by Treasury Secretary Janet Yellen is distinctively different from the hair-on-fire rhetoric before the initial Oct. 18 date. But a Congress discounting the advice of a Treasury secretary is risky financial practice — and has the potential to affect markets itself.

  • This time, some Republicans tell Axios, they think Yellen may be bluffing with an early deadline, trying to force Congress to act sooner rather than later and not give markets agita over a true default.
  • "They can transfer money from the Highway Trust Fund for it, and take us probably into January," Sen. John Cornyn (R-Texas) told Axios.
  • Republicans also appear more open about allowing Senate Minority Leader Mitch McConnell to cut a potential deal with Senate Majority Leader Chuck Schumer.
  • For his part, McConnell has tamped down the anti-Democratic rhetoric he was using in October.

Between the lines: Yellen continues to warn about the consequences of cutting it too close or missing a debt payment, using her congressional testimony on Tuesday and Wednesday to implore Congress to act.

  • "America must pay its bills on time and in full," she told senators Tuesday. "If we do not, we will eviscerate our current recovery."
  • However, some Republicans are pointing to a section from the Congressional Budget Office's Tuesday's report that stated Treasury could "defer all or part of" the $118 billion the department plans to transfer to the Highway Trust Fund on Dec. 15.
  • If deferred, the "government would be able to pay its obligations for a few weeks longer than it would if the payments were made in full — until sometime in January."

What they're saying:

  • "We're going to have to deal with it at some point, and I'm happy to deal with it sooner rather than later," Cornyn also told Axios.
  • Sen. John Boozman (R-Ark.): "I don't know [what the real date is], to be honest," Boozman said in an interview. "You hear those things really from people you respect that January is a big tax-imports month, so I don't know."
  • Sen. Rick Scott (R-Fla.), chairman of Senate Republican's campaign arm, told Axios he doesn't think a default will happen on Dec. 16: "I mean, no one knows," Scott said.

The bottom line: Republicans are giving McConnell a wide berth.

  • "Senator Schumer and Senator McConnell are talking," Cornyn told Axios. "They both seem to be pretty positive in terms of getting something done."
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