Centrist Democrats plotting fallback plan if Biden fails to strike debt deal

Ryan King

April 03, 08:36 AM April 03, 08:36 AM

A cohort of centrist House Democrats is reportedly in the early stages of hatching a contingency plan to muffle fallout from a debt ceiling negotiation breakdown.

For weeks, the band of Democrats has been molding plans for a deal with centrist House Republicans in the event that the country winds up on the precipice of default, riling both their progressive peers and the White House, which has sought a united front against the GOP, Politico reported.

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“You’ve got party leaders in both houses that don’t want us to talk to one another," one centrist Democrat said.

Specific details of the plan remain sparse, as it is still in its infancy, but the group of Democrats has met with centrist Republicans since February, per the report. They fear that the possible ramifications of blowing past the deadline to resolve the debt ceiling impasse could be dire.

Democratic leadership has sought a clean bill to raise the debt ceiling without making any concessions to Republicans and believes they have the advantage. Earlier this year, the White House was adamant there would be no negotiations with Republicans on the nation's borrowing authority, though President Joe Biden later met with House Speaker Kevin McCarthy (R-CA).

In January, the United States hit its $31.4 trillion debt limit, meaning it can no longer borrow additional money. However, Congress approved a budgeting package last year that relies on massive deficit spending. At the moment, the Treasury has been undertaking "extraordinary" measures to keep national payments going by moving money around for various accounts.

But those measures are projected to run out by June, according to the Treasury. The Congressional Budget Office is more optimistic and projects the Treasury will run dry on cash between July and September.

Members of the House Problem Solvers Caucus, a bipartisan group of lawmakers that seeks to find common ground, have long signaled plans to try to concoct a solution to the stalemate. Further complicating these efforts is the fact that Congress has adjourned until April 17.

Biden unveiled a $6.9 trillion budget proposal last month seeking to increase pressure on Republicans. GOP leadership has so far been unable to produce a counterproposal, though members of the Freedom Caucus have outlined demands that the White House has dubbed a "five-alarm fire."

McCarthy, who wrote a letter to Biden last week demanding he step up, has insisted that a GOP budgeting plan is not needed to resolve the debt ceiling impasse. But Democrats see GOP complacency as an advantage.

“We’re gaining ground because of [House Republicans’] inability to put together a plan,” Senate Majority Leader Chuck Schumer (D-NY) said. “I’m certainly willing to entertain a mix of things on the budget. Not on the debt ceiling.”

In addition to sensing an advantage, Democratic leadership views granting concessions to McCarthy as emboldening him to strong-arm them with the debt ceiling in the future. They want the debt limit off the table.

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Should the two sides fail to broker an agreement, the U.S. runs the risk of default, which economists argue would ravage the economy.

Some solutions that have floated around include prioritizing spending so that the interest payment is always met regardless of whether the extraordinary measures run out. However, some Treasury Department officials have cast doubt on the ability to move money that way.