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Wake Up To Politics - October 7, 2021

Wake Up To Politics: Has Congress found a debt ceiling fix?
Wake Up To Politics - October 7, 2021

Good morning! It’s Thursday, October 7, 2021. Election Day 2024 is 1,125 days away. Election Day 2022 is 397 days away. The debt ceiling deadline is 11 days away.

Has Congress found a debt ceiling fix?

The Senate was scheduled to vote Wednesday on a Democratic bill to lift the debt ceiling through 2022, a bill that was expected to be blocked by a Republican filibuster.

But then something interesting happened. Senate Minority Leader Mitch McConnell (R-KY), known more as a hard-nosed political tactician than a conciliatory dealmaker, extended Democrats something of an olive branch.

Although McConnell had previously insisted Democrats could only use the one-party reconciliation process to raise the debt ceiling, he announced that Republicans would help them pass a temporary debt ceiling extension through December of this year. Then, McConnell said, Democrats would have to use reconciliation for a more permanent extension.

“This will moot Democrats’ excuses about the time crunch they created and give the unified Democratic government more than enough time to pass standalone debt limit legislation through reconciliation,” the Kentucky Republican said in a statement.

McConnell’s offer only kicks the can further down the road (one of Congress’ favorite tactics), but it does assure the United States would avoid the catastrophic effects of defaulting on its debt later this month.

Senate Majority Leader Chuck Schumer (D-NY) tentatively accepted the short-term fix, although he still insists Democrats will not use reconciliation after December. The Senate went into recess for eight hours on Wednesday as talks on the specifics of a deal dragged on, until Schumer appeared on the floor just after midnight to announce they would pick back up this morning.

“We’re making good progress,” Schumer said. “We’re not there yet, but I hope we can come to agreement [Thursday] morning.” (According to Punchbowl News, the main hang-up is whether to suspend the debt ceiling through December or raise it to a specific dollar amount.)

Senate Minority Leader Mitch McConnell extended something of an olive branch to Democrats on Wednesday. (Nathan Posner / Wake Up To Politics)

Why did McConnell move (at least slightly) from his once-firm position that Democrats had to deal with the debt ceiling themselves? The dominating theory in Washington is that he was concerned Democrats were planning to create a filibuster carve-out that would allow them to raise the debt ceiling without Republican votes or reconciliation.

According to CNN, McConnell told his members that he was worried Sens. Joe Manchin (D-WV) and Kyrsten Sinema (D-AZ) would bow to pressure on a carve-out, which would have been their first step toward dismantling the legislative filibuster, one of the main arrows in McConnell’s quiver as minority leader.

So who won this skirmish? There are two ways to read what happened.

The first is the message Democrats have been trying to promote: McConnell blinked. He acted impervious to the consequences of the debt ceiling, this theory goes, but once the deadline was approaching, he was the one to bend to the other side and propose a compromise. (For what it’s worth, former President Donald Trump feels the same way: he blasted McConnell in a statement for “folding to the Democrats, again.”

But there’s also a second angle worth pointing out: This solution shows the power McConnell still wields even as minority leader. Because Democrats don’t have the votes to nuke the filibuster, they still have to go through McConnell to continue governing. The deal is being done purely on McConnell’s terms, this read would emphasize, and it’s not like it does away with the debt ceiling for good.

Instead, it ensures that the Senate will be right back where it is now at the end of the year, only now McConnell has defused one of the main Democratic arguments against using reconciliation — that they don’t have enough time — since he just handed them an extra two months to go through the process.

Senate Majority Leader Chuck Schumer has tentatively accepted McConnell’s offer. (Nathan Posner / Wake Up To Politics)

The debt ceiling is not the only deadline Congress is punting to December. Government funding is also set to expire on December 3, meaning the twin shutdown/default threats that originally loomed over this month have just been moved together down the calendar.

Democrats are acutely aware that they’re not out of the woods yet. “How do we ensure that we’re not just doing the same thing in November?” a reporter asked Sen. Chris Murphy (D-CT) on Wednesday.

“We will be,” Murphy responded.

What else you should know

A federal district court judge issued a temporary injunction of Texas’ restrictive abortion law on Wednesday, granting a Justice Department request to halt enforcement of the statute while legal challenges make their way through the courts. Texas quickly appealed the injunction.

Pfizer announced this morning that it has asked the FDA to authorize emergency use of its COVID-19 vaccine for children ages 5 to 11, opening the door for 28 million more Americans to become vaccinated. The announcement comes as coronavirus cases and deaths have been dropping in the U.S.

President Biden and Chinese President Xi Jinping will hold their first summit, a virtual meeting, before the end of the year, the White House announced on Wednesday.

The Senate Judiciary Committee has issued a new report detailing former President Trump’s efforts to overturn the 2020 election, including his Justice Department pressure campaign and the White House counsel’s threat to resign in early January.

Chinese President Xi Jinping will meet virtually with President Biden sometime this year. (Luci Harrison)

Look ahead: The Supreme Court’s new term

Every Thursday, Wake Up To Politics legal contributor Anna Salvatore gives an overview of the legal news to know that week. This week, she’s looking a little further ahead, offering a preview of the new Supreme Court term that launched this week:

The Supreme Court is poised for a historic term, Anna writes. Having released several procedural rulings this summer against Biden administration policies, the court will now take a close look at cases on abortion, gun rights, and affirmative action.

Chief Justice John Roberts has a diminished role compared to prior terms. Though he was once the almighty swing vote — someone who could narrow the scope of majority decisions — the arrival of Justice Amy Coney Barrett means that his more conservative colleagues no longer need his support in order to overturn Roe v. Wade or bolster the Second Amendment. Here are the main cases to watch this term:

Dobbs v. Jackson Women’s Health Organization: In what is widely considered the most important abortion case in a generation, the justices will rethink whether the Constitution protects the right to an abortion. They will examine a Mississippi law that bans nearly all abortions after fifteen weeks of pregnancy — and conservatives may now have the votes to uphold it.

New York State Rifle & Pistol Association, Inc. v. Bruen: What is the scope of the Second Amendment? More than ten years after ruling that Americans can keep firearms in their homes for self-defense, the justices will now decide whether that right extends outside the home. Given Justice Barrett’s prior rulings on gun rights, the Court is expected to rule in favor of New York gun owners.

Carson v. Makin: Here the justices will consider an important question of religious freedom: namely, whether states violate the Constitution when they provide vouchers for private schools but forbid students from choosing religious ones. The case will have implications for voucher systems across the country.

United States v. Vaello-Madero: Supplemental Security Income is a form of disability benefits available to nearly all Americans — all, that is, except Puerto Ricans. The question is whether Congress violated the Equal Protection Clause by denying these benefits to disabled Puerto Ricans.

United States v. Tsarnaev: The justices will consider whether to reinstate the death penalty for Dzhokar Tsarnaev, one of the two brothers who bombed the 2013 Boston Marathon. Last year, the First Circuit undid his sentence after discovering potential errors in his trial.

The Supreme Court is headed for a historic term. (Thomas Hawk)

Ask Gabe: Your questions, answered

Let’s take another question in response to my newsletter on the debt ceiling last month:

Q: You mentioned the U.S. government’s various creditors — American banks and investors, foreign countries, even the government itself. While I don't see this as a possibility for the latter two, could any American banks and/or investors forgive any of the government’s debt?

I don’t know if they have the flexibility to do that, but if they did, would that help? Why would or wouldn’t the American banks and investors do that? And to my “would that help” question: does the money borrowed from domestic banks account for a substantial percentage of the debt relative to the debt owed to the other creditors? — Sara S.

A: Let’s take the last question first. As of 2018, almost $7 trillion of the national debt — around a third of it — was held by the type of U.S. investors that Sara is asking about. So is there a way for them to forgive U.S. debt, and would that help avoid a debt ceiling crisis?

I’m not an expert on law or economics, so to answer that part of Sara’s inquiry, I asked someone who’s both: David Super, the former general counsel of the Center on Budget and Policy Priorities, who is now a professor of law and economics at Georgetown. Here’s what David had to say:

“Banks are accountable to their shareholders and would be taking a loss if they wrote off or wrote down any debt. To justify that, they would have to be able to argue that the debt was not collectible. A major bank doing that would be devastating for the U.S. economy, which rests on the assumption that the Full Faith and Credit of the United States Government is beyond question (and that U.S. Government debt is the most secure financial asset in the world).”

“Any such write-off or write-down could spark a financial panic that would sweep the world. Even write-offs of debt in countries, such as Argentina, that have no significant structural role in the world economy have been destabilizing; for that to happen with U.S. debt would have destructive effects vastly greater than any short-term benefit from lowering the national debt. And it would raise U.S. borrowing costs in the future to offset the savings many times over.”

So, in conclusion: the maneuver Sara described might be theoretically possible, but the drawbacks would far outweigh any benefits. And most importantly, it wouldn’t quite fly as a work-around for the debt ceiling, since the impact — a global financial meltdown spurred by uncertainty about the “full faith and credit” of the United States — would be exactly the same.

Do you think this piggy bank fits $7 trillion? (Stock photo)

Do you have a question on American politics that you want answered? Email me at gabe@wakeuptopolitics.com and your question might get featured in a future issue of the newsletter.


All times Eastern.
President Joe Biden will receive his daily intelligence briefing at 9:30 a.m. He will then travel to Chicago, departing at 12:20 p.m. and arriving at 2 p.m. He will visit a Clayco construction site in Elk Grove Village, Illinois, at 3:10 p.m. and deliver remarks on COVID-19 vaccine requirements at 3:45 p.m. Biden will then depart Chicago at 5:15 p.m. and arrive back at the White House at 7:20 p.m.

Vice President Kamala Harris and Labor Secretary Marty Walsh will host the second meeting of the White House Task Force on Worker Organizing and Empowerment at 11 a.m. Harris is the chair of the task force and Walsh is its vice chair.

White House Principal Deputy Press Secretary Karine Jean-Pierre will hold a press gaggle aboard Air Force One during the flight to Chicago.

The Senate will convene at 10 a.m. The chamber could vote as early as today on an agreement to extend the debt ceiling through December.

The House is out for a “Committee Work Week” and isn’t scheduled to hold any votes until October 19.

The House Oversight and Reform Committee will hold a hearing at 10 a.m. on the Republican-led audit of the 2020 election results in Maricopa County, Arizona, which ultimately concluded that President Biden won the county. The chair and vice chair of the Maricopa County Board of Supervisors, both Republicans who opposed the audit, have been called by the committee’s Democrats to testify.

Republicans have tapped former Arizona Secretary of State Ken Bennett, who helped oversee the audit, as a witness. Democrats also invited the CEO of Cyber Ninjas, the company that conducted the audit, to testify, but he declined.

The House Foreign Affairs Committee will hold a briefing at 2 p.m. with Daniel Foote, who stepped down as U.S. Special Envoy for Haiti last month in protest of the Biden administration’s expulsion of Haitian migrants who arrived at the U.S.-Mexico border, calling the decision “inhumane” and “counterproductive” in his resignation letter.


The Supreme Court will not meet for oral arguments today.

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