President Joe Biden is headed toward a standoff over the national debt next year, when Republicans newly in control of the U.S. House threaten to demand concessions for raising the government’s legal borrowing limit.

Democratic leaders in Congress say they’ve run out of time to force through an increased debt ceiling this year, with most Republicans opposed. Two Democratic senators—Joe Manchin of West Virginia and Kyrsten Sinema of Arizona—insist that any vote should be bipartisan.

That will push the fight off until 2023, when Republicans will assume the majority in the House. From that perch, they’ve promised to win Biden’s signature on some of their priorities in exchange for a vote to increase the borrowing limit before a default on U.S. payments as soon as July.

Their demands could include large spending cuts—including to Social Security and Medicare, the retirement and health programs for the elderly and disabled—or policies such as stricter immigration controls. Biden has vowed that he won’t yield. The result may well be a crisis.

The last time Republicans and the president engaged in such political brinkmanship, in 2011, the prospect of a default on the nation’s debt caused huge volatility in the stock market. Standard & Poor’s for the first time ever downgraded the U.S. credit rating. Consumer confidence plummeted.

“The situation is far more perilous than it was 10 years ago. The Republicans’ conference is so much further to the right,” said Tom Kahn, a former Democratic staff director of the House Budget Committee who is now a distinguished faculty fellow at American University.

Some conservative Republicans insist a default would simply force government spending cuts without widespread economic repercussions. Financial markets dismissed the S&P downgrade in 2011, pushing the yield on the 10-year Treasury note to a record low just seven weeks later.

But many economists say a default would be catastrophic, especially with a recession already looming for the U.S. economy. 

The 2011 crisis was resolved after then-President Barack Obama agreed to more than $2 trillion in spending cuts over a decade. Republicans are trying to force Biden into a similar negotiation again next year, with their House majority buttressed by Democrats’ narrow margin in the Senate.

“The debt ceiling is a real opportunity to figure out how to live within our means,” Florida Senator Rick Scott, a member of GOP leadership, said Tuesday. 

Democrats will hold a 51-49 majority after Senator Raphael Warnock’s re-election on Tuesday. Because of the Senate’s filibuster rules, 60 votes are required to advance most controversial measures.

The government right now is roughly $98 billion away from reaching the $31.4 trillion statutory limit, although analysts doubt the government is actually at risk of defaulting until the second half of 2023 because of the extraordinary measures it usually uses to avoid exceeding the cap.

Treasury has been cutting the size of its bill auctions as of late, an indication that the department will be running significantly lower cash balances than it forecast in its quarterly financing estimates. Wrightson ICAP estimates Treasury’s cash balance level will be around $500 billion by the end of the year.

Privately, the administration anticipates the government will run out of methods to avert a default on some payments in the third quarter of 2023. The Treasury Department has declined to provide a more specific estimate.

Analysts from Goldman Sachs predict government accounts could run dry as early as July. 

Joshua Frost, Treasury’s assistant secretary for financial markets, said in a Dec. 1 speech that even without a default, a fight over the debt limit can cause real economic damage, citing research on the 2011 confrontation.

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