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Mitch McConnell's Senate GOP votes for the US to default on its debt and for the government to shut down

Senate Republicans led by Minority Leader Mitch McConnell blocked a measure on Monday evening that would have averted both a debt default and a government shutdown, bringing the US another step closer to a financial debacle.

Article originally published by Business Insider. Hargreaves Lansdown is not responsible for its content or accuracy and may not share the author's views. News and research are not personal recommendations to deal. All investments can fall in value so you could get back less than you invest.

  • Senate Republicans blocked a measure to avert a federal default and fund the government.
  • It ensures that political brinksmanship will intensify over the debt ceiling, bringing the US closer to potential economic chaos.
  • Democrats could lift the ceiling on their own, but there's no guarantee of success.

Senate Republicans led by Minority Leader Mitch McConnell blocked a measure on Monday evening that would have averted both a debt default and a government shutdown, bringing the US another step closer to a financial debacle as Republicans escalate their efforts to derail President Joe Biden's domestic agenda.

All 50 GOP senators voted against the House-approved legislation that funds the government through December 3 and suspends the debt ceiling until the end of next year, heightening the brinksmanship over the federal government's ability to pay its bills that has roiled Congress for months. The measure also included $28 billion disaster aid funding for communities ravaged by a recent pair of hurricanes, along with aid to resettle Afghan refugees in the US.

The vote was 48-50, and the bill failed to clear the 60-vote threshold to end debate known as the filibuster. After the vote, Senate Majority Leader Chuck Schumer assailed Senate Republicans, saying they "voted to drive our country straight to a government shutdown and the first default in our country's history."

McConnell has insisted since June that Republicans will not sign onto a debt limit hike - or a an increase of how much the US government can pay back its bills - even as he said earlier this month it was a necessary step because "America must never default."

The Kentucky Republican ripped into Democrats once again on Monday and said "bipartisanship is not a light switch: a light switch that Democrats get to flip on when they need to borrow money and switch off when they want to spend money."

Republicans contend Democrats can take unilateral action to raise the ceiling and finance their party-line spending this year from the stimulus law and a $3.5 trillion social spending package.

"There's no confusion about who runs this country, [Democrats] have both chambers," Republican Sen. Kevin Cramer of North Dakota told Insider last week. Many Republicans, including McConnell, say they can support a stop-gap bill to keep the government open past September 30, but only if it doesn't include a debt ceiling increase.

Democrats have assaulted the GOP's rationale for opposing lifting the debt cap, arguing that both parties are responsible for piling onto the federal debt with emergency spending during the pandemic and domestic spending increases under President Donald Trump. Some Democratic lawmakers are proposing to scrap the debt ceiling, which needed to be raised this year regardless of the party's hefty spending proposals.

The debt ceiling clash evokes a previous showdown between Republicans and the Obama administration in 2011 that caused turmoil in financial markets and led to a first-ever US credit downgrade. Now Republicans are voting against raising the debt ceiling in an effort to try to force Democrats to do it alone, even though the GOP backed lifting it three times under the Trump administration.

It's not immediately clear whether Democrats will push for a party-line debt ceiling increase using reconciliation, the same process they're employing to sidestep Republicans on their social spending plan. The tactic allows Democrats to approve their package with a simple majority vote instead of the 60 typically needed in the Senate.

But it could be a time-consuming endeavor stretching on for weeks with no guarantee Democrats can pull it off due to the strict guidelines governing reconciliation.

"We've never done one to create a debt limit spinoff, it's not like this is a well-understood concept," Charlie Ellsworth, a former Democratic Senate budget staffer and now a partner at Pioneer Public Affairs, told Insider. "There's a lot of things that need to be worked out for that pathway to be pursued."

The consequences of a potential default could be immense and ripple through the American economy. The Bipartisan Policy Center projects the Treasury will run out of cash to meet the government's financial obligations sometime between Oct 15 and Nov 4.

After that, millions of seniors could face an abrupt halt in Social Security checks, and US soldiers could miss out on scheduled paychecks. The White House has warned of potential federal funding cuts for safety net programs like Medicaid.

This article was written by jzeballos@businessinsider.com (Joseph Zeballos-Roig) from Business Insider and was legally licensed through the Industry Dive publisher network. Please direct all licensing questions to legal@industrydive.com.


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    Article originally published by Business Insider. Hargreaves Lansdown is not responsible for its content or accuracy and may not share the author's views. News and research are not personal recommendations to deal. All investments can fall in value so you could get back less than you invest.

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