Appending to an earlier announcement by House Majority Leader Kevin McCarthy, according to whom the House would not add Harvey disaster funds to any debt ceiling bill, Dow Jones reports that Republican lawmakers are set to vote on the Harvey aid bill on Wednesday, and instead of raising the debt ceiling, they - or rather the Senate - will suspend it, likely kicking the can until some time in December when the whole farce would repeat itself again, although the exact length of the extension remains under discussion.
According to Bloomberg, the House still plans to pass a Harvey aid bill without debt language, leaving Senate to add it in. Keeping the House's hands clean, Senate Majority Whip (R. Tex) John Cornyn told reporters that debt limit raise, or rather extension, will likely to be tied to Harvey aid and approved by the Senate.
"It's imperative that we get that supplemental passed. And the leader has made the decision to attach the debt limit to that, and I support that," Cornyn, whose state was hit hard by the hurricane, told reporters.
The reason to simply extend, instead of raise the debt limit, is because the former is considered a politically less difficult vote than raising it by a specific dollar figure, which would likely be well over $1 trillion; Such a move would also provide more predictability on the timing of next action and would come as House conservatives have warned against attaching the two issues.
To be sure, with the Treasury rapidly running out of cash, and down to just $32 billion as of today's close, some sort of Federal debt extension would need to be taken to unlock the funding needed for the Texas recovery efforts.
Earlier, the White House suggested that lawmakers attach a debt ceiling measure to the Harvey bill, but the request stopped short of explicitly asking for that, due to opposition from House conservatives. Instead, White House budget director Mick Mulvaney suggested that relief operations could be disrupted if the debt limit isn’t addressed quickly.
"If the debt ceiling is not raised, it may not be possible to outlay the requested supplemental appropriations or funds for other critical government operations,” Mulvaney wrote Friday night in a letter to Ryan.
It’s unclear whether Republican lawmakers will go along with the idea of pairing the two measures. The Senate could add a debt ceiling provision to the Harvey bill after the House passes it, but House conservatives have demanded spending cuts or other cost-cutting changes in return for raising or suspending the debt limit. Representative Mark Walker of North Carolina, who heads the conservative Republican Study Committee, on Monday said his stance hasn’t changed.
Potentially complicating matters, Cornyn, the No. 2 Senate Republican, added it was his "understanding" that the increase in the debt ceiling would be "clean", or that it won't be tied to spending cuts, a move that could antagonize conservatives according to the Hill. Cornyn also downplayed any conservative backlash over the move, while noting that "none of this is easy."
Senate Majority Leader Mitch McConnell (R-Ky.) listed passing money for Hurricane Harvey recovery, raising the debt ceiling and funding the government as the three biggest priorities as Congress returns from its August recess. Republicans will need at least eight Democratic votes in the Senate to clear any of the proposals.
But McConnell didn't signal if the debt ceiling vote and Harvey aid would be linked. Asked about Cornyn's comments, a spokesman for McConnell noted they "have not made any announcements on procedure."
Finally, if a debt limit provision isn’t added to the Harvey bill, GOP leader could still add it to the stopgap spending bill, which is also likely to contain necessary extensions for other expiring programs like federal flood insurance and the Federal Aviation Administration, and whose passage could be just as problematic.
Meanwhile, sensing the a near-term resolution is at hand, the Bil "fear premium" for October Bill posted its first notable drop today as the market appears to have breathed a sigh of relief that a technical default has been if not avoided, then delayed for at least a few months.