US Democrats set to drop debt limit from funding Bill

WASHINGTON • Senate Democrats were seeking to vote yesterday on a stopgap funding Bill to avert a US government shutdown, but without a provision to increase the federal debt limit.

The temporary funding measure does not include additional money for Israel's Iron Dome missile defence system, which was part of an earlier proposal, according to a copy of the Bill obtained by Bloomberg.

Democrats are seeking consent from all senators to bring the Bill to the floor as a way to expedite passage, before funding for the government runs out after midnight today at the end of the fiscal year.

The Bill extends funding until Dec 3 and includes disaster aid as well as money for Afghan refugees.

Republicans on Monday foiled an attempt by Democrats to include a debt ceiling increase with the temporary funding.

Senate Republican leader Mitch McConnell on Tuesday blocked Democrats from advancing a standalone debt ceiling increase.

Failure to pass the Bill would shut down government services. This would typically mean the shuttering of some national parks, fewer airport security screenings, an interruption to public health services (amid the Covid-19 pandemic), and eventually an interruption in benefit cheques to military veterans and retirees.

Democrats and Republicans mainly agree on the need to act promptly to keep the government running, and the House of Representatives has already approved the Bill.

But Republicans can block the Bill under Senate rules that require 60 of 100 senators to agree on most legislation.

Republicans say they oppose the Bill because it includes a temporary suspension of the debt limit. And while the Republicans oppose allowing the US government to default, they want Democrats to suspend the debt limit without their votes.

If Senate Republicans carry out their threat to block the funding Bill, Democrats will have little time to act before the government starts to shut down.

They could simply delink the debt-limit provision from the Bill and rush to pass the revised Bill in the House and then in the Senate.

This could be accomplished in just hours, depending on how close lawmakers are to the midnight Sept 30 deadline and if both parties agree.

Passing the funding Bill would head off one crisis for President Joe Biden's Democrats - who campaigned on a platform of responsible government after Republican Donald Trump's turbulent four years in office.

But more risks are ahead as progressive House Democrats are vowing to vote against a US$1 trillion (S$1.35 trillion) infrastructure Bill set to come to the floor today, due to intra-party fights over a much larger social spending Bill.

Behind it all looms the threat of the federal government hitting its US$28.4 trillion debt ceiling around Oct 18, an event that could cause a historic default.

With such a daunting agenda hanging in the balance, Mr Biden cancelled a trip to Chicago yesterday so that he could lead negotiations with Congress, the White House said.

BLOOMBERG, REUTERS