A High-Stakes Political Game Of Chicken Is Playing Out In Washington This Week
LEILA FADEL, HOST:
There's a political game of chicken playing out in Washington this week, and the stakes could not be higher. This evening, as expected, Senate Republicans blocked an effort to increase the government's borrowing power. Unless Democrats find a workaround, the government will not have enough cash to pay its bills in just a few weeks. That could mean missed payments to Social Security recipients, Medicare providers, members of the military and other government employees. It could also raise the cost of future borrowing for both taxpayers and consumers. NPR's Scott Horsley joins us now with more.
SCOTT HORSLEY, BYLINE: Good to be with you, Leila.
FADEL: So, Scott, there are a couple deadlines staring lawmakers in the face. Can you help us sort them out here?
HORSLEY: Sure. The first deadline's just driven by the calendar. This Friday marks the start of a new fiscal year for the government, and Congress needs to pass a stopgap spending bill so government agencies can continue to keep the lights on. Senate Republicans are willing to go along with that, but they're balking at a provision that House Democrats attached which would suspend the government's debt ceiling. Republicans insist they won't vote to raise or suspend the debt ceiling, even though they acknowledge it needs to be done. They want Democrats to do it on their own.
So somehow, that's got to be worked out by Friday, or we're going to have a partial government shutdown, which would be bad. Worse, though, would be missing or even coming close to the second deadline, which is a little further off in the future but not much.
FADEL: OK, so what is that second deadline?
HORSLEY: Well, it's the deadline to increase the government's spending limit - borrowing limit, rather - the thing that Democrats tried to attach to the stopgap spending bill. Every year, the government spends more money than it collects in taxes, so it has to borrow to make up the difference. And Congress has not been very good about limiting spending or trying to match spending with tax revenues, but it has limited borrowing.
And right now the federal government is bumping up against that borrowing limit. Unless it's increased, the government is going to run short of money sometime in the next few weeks. This deadline is not driven by the calendar but rather by the money that flows in and out of the government's coffers. Shai Akabas of the Bipartisan Policy Center has been tracking those cash flows. And he notes the government has a lot of bills coming due at the end of this week.
SHAI AKABAS: There are Medicare provider payments. There are Social Security benefits. There are federal salaries. Lots of bills come due at the beginning. And after that, their cash balance will be dangerously low.
HORSLEY: Akabas estimates that unless the debt limit is increased, the X date when the government runs short of cash will fall sometime between mid-October and the first week of November.
FADEL: So what happens then?
HORSLEY: Some people won't get paid - government employees, Social Security recipients, veterans, really anyone who's expecting a check from the government. Tax receipts will only cover about 60% of the government's bill. So unless the borrowing authority is increased, the rest will just have to wait. We've never actually had a default like that, although we did come close back in 2011. And Akabas says just coming close is enough to rattle the financial markets.
AKABAS: You can be sure that investors are going to get even more worried as we get closer to the X date and certainly if we cross the X date. It's a whole world of unknown, and most of that world is likely not pretty.
HORSLEY: Investors who lend money to the government have always been pretty sure that they're going to get repaid. And if that confidence is shaken, they're likely to demand higher interest rates in the future. That would mean higher costs for taxpayers and probably higher costs for anyone else who borrows money as well.
FADEL: So how does the country get out of this jam?
HORSLEY: Well, Republicans might blink in the coming weeks and decide to stop playing chicken with the full faith and credit of the government, but don't hold your breath. So that means Democrats will have to find a way, most likely through a procedural move that would avoid the threat of a filibuster. However, that would take cooperation from both the moderate and progressive wings of the Democratic Party. There's not a lot of time. And with razor-thin majorities in both the House and Senate, there is very little room for error.
FADEL: NPR's Scott Horsley.
Thank you, Scott.
HORSLEY: You're welcome. Transcript provided by NPR, Copyright NPR.