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WASHINGTON, Oct.4 (Reuters) – President Joe Biden on Monday said the federal government could exceed its $ 28.4 trillion debt limit in a historic default unless Republicans join Democrats in voting for increase it in the next two weeks.

Senate Republicans, led by Minority Leader Mitch McConnell, have twice blocked action to raise the debt ceiling in recent weeks – saying they want action but won’t help. Republicans say Democrats can use a parliamentary maneuver known as budget reconciliation to act on their own. The best Democrats have rejected this approach.

“Raising the debt limit is like paying what we already owe… nothing new,” Biden said at a White House press conference.

When asked if he could guarantee that the United States would not exceed the debt ceiling, the President replied, “No, I can’t. It depends on Mitch McConnell.” He said he intended to speak with McConnell about it.

McConnell has been saying for months Democrats should use budget reconciliation to get around the Senate filibuster rule, which requires 60 of 100 members to agree to pass most laws. Senate Majority Leader Chuck Schumer, a Democrat, refused the approach and Biden pleaded Monday for Republicans not to use filibuster to block action.

“Just walk away,” Biden told Republicans. “If you don’t want to help save the country, stay away so you don’t destroy it.”

But Sen. Joe Manchin, a moderate Democrat who has disagreed with many in his party on other major issues, said Democratic leaders should not rule out using budget reconciliation to raise the cap on the debt.

“Well, they shouldn’t rule anything out – we just can’t let the debt ceiling expire,” Manchin said, according to CNN reporter Manu Raju, who tweeted the senator’s comments.

At the end of last month, the United States House of Representatives passed and sent to the Senate a bill to suspend the limit on Treasury borrowing until the end of 2022.

Schumer said on Monday that later this week the Senate would vote on a measure to suspend the debt ceiling, the third time he has sought to raise it.

Treasury Secretary Janet Yellen last week warned lawmakers that the United States government was on the verge of exhausting its federal borrowing capacity around October 18.

US President Joe Biden delivers remarks on the US Debt Ceiling from the State Dining Room of the White House in Washington, United States, October 4, 2021. REUTERS / Jonathan Ernst

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Failure to act could have catastrophic economic consequences. Last month, Moody’s warned it could lead to a nearly 4% drop in economic activity, the loss of nearly 6 million jobs, an unemployment rate of nearly 9%, a sell-off in stocks that could wipe out $ 15 trillion in household wealth and spike interest rates on mortgages, consumer loans and corporate debt.

Democrats voted to increase the debt ceiling under the administration of Republican Donald Trump, even though they opposed significant tax cuts that made the debt worse.

Biden said the United States had accumulated nearly $ 8 trillion in new debt over Trump’s four years in office, more than a quarter of total debt outstanding.

“The Republicans in Congress have increased the debt threefold” under Trump, he said, supported by the Democrats.

STOCK SLIDE

Concerns about the debt ceiling helped push the stock market down on Monday. Major Wall Street indices fell on Monday as investors turned away from tech stocks amid rising Treasury yields, with concerns over U.S.-China trade, Taiwan and the debt ceiling to the fore.

McConnell held on Monday.

“The majority must stop sleepwalking toward another preventable crisis. Democrats must tackle the debt ceiling,” McConnell told the Senate.

In an open letter to Biden, McConnell said Democrats did not need Republicans’ cooperation to pass a bill to raise the debt ceiling. Democrats received nearly three months’ notice from Republicans regarding their position on the issue, McConnell wrote.

McConnell is known for holding on once he takes a controversial stance. For example, in 2016 he refused to allow a Senate hearing on then-President Barack Obama’s appointment of Merrick Garland to a Supreme Court seat – keeping the seat open until Trump took office almost a year later.

Schumer said the Senate will have to remain in session throughout the weekend and possibly in a scheduled hiatus next week if no progress is made on raising the debt limit.

Last week, the Senate parliamentarian ruled that Schumer could use the budget reconciliation process to introduce a debt ceiling bill in the Senate, according to a source familiar with the decision.

According to the parliamentarian, this would not jeopardize the efforts of the Democrats to submit a second bill to the Senate as part of the reconciliation. This is the multibillion-dollar bill that embraces Biden’s national agenda in expanding social services and tackling climate change that Democrats are developing.

Reporting by Susan Cornwell, Richard Cowan and Jarrett Renshaw; additional reporting by David Morgan, Jeff Mason, Steve Holland, Diane Bartz and Eric Beech; Editing by Scott Malone, Mark Porter and Grant McCool

Our Standards: The Thomson Reuters Trust Principles.

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Julio V. Miller

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