US president Joe Biden has blamed Republican recklessness for the congressional impasse on raising America’s borrowing limit, warning that the dollar risks losing its status as a reserve currency if the US government defaults on its debt.
Speaking on Monday from the White House, Biden likened the debt ceiling stand-off in Congress to a “meteor” heading to “crash into our economy” just as it is recovering from the depths of the pandemic.
“It will undermine the safety of US Treasury securities, it will threaten the reserve status of the dollar as the world’s currency,” Biden said, adding that the US would also risk rising interest rates and a possible credit rating downgrade.
When asked if he could guarantee the US would not breach the debt limit, Biden responded that he could not. “That’s up to Mitch McConnell,” he said, referring to the Republican minority leader in the Senate.
Biden’s comments highlight the growing anxiety within the Biden administration about the debt ceiling tussle and its potential to wreak havoc on financial markets and the US recovery if no compromise is reached. Janet Yellen, the US Treasury secretary, has said the US risks running out of cash to pay its bills after October 18.
Democrats and the White House insist that raising the debt limit should be a bipartisan responsibility since it reflects spending and tax decisions approved by members of both parties over the years. But Republicans in Congress are refusing to approve any debt ceiling increase, on the grounds that it would amount to an implicit endorsement of Biden’s multitrillion-dollar spending plans.
They argue Democrats — who control both chambers of Congress and the White House — should increase it unilaterally via a legislative procedure known as reconciliation that would require only a simple majority in the Senate. Republicans will not even offer their consent for the debt ceiling increase to advance procedurally in the Senate for now, which would allow Democrats to pass it quickly on their own.
“Democrats are willing to do all the work stopping it. Republicans just have to let us do our job. Just get out of the way. If you don’t want to help save the country, get out of the way so you don’t destroy it,” Biden said.
Votes to raise the debt limit are particularly difficult for Republicans, although they can also be awkward for Democrats, particularly those in swing states or battleground congressional districts.
Biden’s renewed focus on the debt limit follows days of tensions and infighting among Democrats on Capitol Hill over the fate of the US president’s plans to reshape the economy with trillions of dollars of new investments over the next decade, funded by tax increases.
Biden and Democratic congressional leaders last week failed to forge a compromise that could pave the way for passage of both a $1.2tn infrastructure plan and a $3.5tn package of measures, including investments to fight climate change and expand government support for education, childcare and healthcare.
Speaking to reporters, Biden said he had “closed the deal” with 99 per cent of his party, but only had the backing of 48 out of the 50 senators needed for a majority in the upper chamber, suggesting Joe Manchin and Kyrsten Sinema, two conservative Democrats, were the main obstacles.
Biden’s comments on the debt limit came as Chuck Schumer, the Senate majority leader, said he wanted Biden to sign an increase in the borrowing limit by the end of the week.
“We do not have the luxury of waiting until October 18, as it is our responsibility to reassure the world that the United States meets our obligations in a timely fashion and that the full faith and credit of the United States should never be in question,” he said.
McConnell sent a letter to Biden on Monday morning saying the “nation is sleepwalking toward significant and avoidable danger”, placing the blame squarely on Democratic congressional leaders. Biden said he expected to have an “honest” conversation with the Senate minority leader.