As expected, in a surprisingly close, 220-211 vote, the Democratic-controlled House passed a bill that would suspend the U.S. debt ceiling into December 2022 and provide the government funding to operate past Sept, 30 if it passes the Senate which it most likely won't because Senate Republicans, even RINOs such as Mitt Romney, have vowed to block it over the debt limit provision which Democrats purposefully included in the provision.
House approves bill to avert government shutdown/suspend debt limit. The vote was 220-211. Party line vote.— Chad Pergram (@ChadPergram) September 22, 2021
The political standoff raises the chances of twin fiscal disasters -- a government shutdown and a default -- that could have devastating consequences for Wall Street and the broader American economy.
It's not yet clear what Democrats' plan B would be if the effort to avert a shutdown and suspend the debt limit runs aground in the Senate, as it appears is on track to happen.
If Machin sides with Senate Republicans to block the stop-gap funding measure over the debt limit, there could still be enough time to strip the debt limit measure out and pass a stand-alone spending bill to avoid a shutdown. But the vote would take place perilously close to the shutdown deadline - the drop dead date is sometime in mid/late October - and would likely require cooperation on both sides to process a quick Senate vote. It also would leave the debt ceiling problem unresolved, setting up yet another flashpoint issue to be dealt with by Congress in the weeks to come.
And just to assure that the bill in its current format will not get the support of republicans, moments after the House vote, Senate Republican Leader Mitch McConnell and Republican Senator Richard Shelby introduced a new stopgap measure that keeps the U.S. government funded through Dec. 3 but does not suspend or increase the debt limit. The Senate bill includes funding for disaster aid, assistance for Afghan allies and Israel’s Iron Dome missile defense system, a provision which was struck from the Democrats' bill to obtain support of progressive democrats.
Earlier on Tuesday, House Majority Leader Steny Hoyer left the door open on what measures the House would take if the Senate is not able to pass what the House sends over before the government runs out of funding next week.
"We want to send it over to the Senate, and give the Senate an opportunity to consider it, figure out what they're going to do and they may send it back to us, at which point in time we will have to make a determination, but we want to pass that bill," he said.
Meanwhile, as reported earlier, the current standoff in Congress makes a government shutdown and a debt ceiling breach increasingly likely according to Goldman, which said in a note published overnight that while "a shutdown October 1 is not the base case, in our view, because there is a fair chance that Democrats will shift strategy before the deadline. However, the longer Congress remains on this course, the more likely a shutdown becomes."