WASHINGTON (Nexstar) — Everyone in Washington agrees that raising the debt limit is necessary to prevent dire consequences to the US economy. Still, Congress is unable to come to an agreement to ensure the government can pay its debt.
On Tuesday, Democrats in the House approved a combined bill that would avoid a government shutdown and raise the debt limit. Republicans agree with both of those goals, but GOP senators said they won’t support the bill.
As the economy recovers from the impact of the pandemic, Democrats like Virginia’s Mark Warner say if the government doesn’t raise the debt ceiling and pay its loans, the cost will be huge.
“Nothing would be more irresponsible at this moment than messing with the full faith and credit of the United States,” Warner said. “If interest rates go up due to a default by only 1%, that adds an additional $200 billion a year on interest costs.”
Senate Majority Leader Chuck Schumer said not raising the debt limit is like playing with fire.
“It could stop payments to Social Security recipients, it could stop payments to veterans. It could raise interest rates, making a mortgage, a car loan more expensive,” Schumer said.
GOP leader Mitch McConnell of Kentucky agrees. The consequences of defaulting on US loans would be dire.
“I want to repeat once again, American must never default,” McConnell said. “We never have and we never will.”
Utah’s Mitt Romney explained why Senate Republicans refuse to help raise the debt ceiling.
“If they’re goint to spend all the money on their own,” Romney said of Democrats, “then they’re going to pay for it on their own.”
The GOP opposes plans by the Democrats to spend trillions in coming years on measures like universal pre-school, community college, childcare subsidies and green energy.
Democrats say raising the debt limit is necessary to pay for the spending the US already did to deal with the coronavirus pandemic.
Some economists say defaulting on the government’s debt for an extended period could send the US economy into recession and cause the unemployment rate to spike. But the GOP said Democrats are going to have to raise the debt limit alone by including it in the reconciliation package.