Senate Majority Leader Chuck Schumer and GOP leader Mitch McConnell said Tuesday they are still working on a solution for raising the federal debt ceiling, as the Congressional Budget Office delivered another warning that the government risks running out of money in December.
“What we need to do is come up with an agreement that doesn’t risk the full faith and credit of the United States,” Schumer told reporters. “It’s never been risked before, in a way that both parties can support. And that’s we’re trying to achieve.”
McConnell said, “The government will not default,” and added that the two leaders have had “useful discussions.” But there was no public signal that either had budged from previous positions that have left action on raising the debt limit in a partisan limbo.
The Senate leaders spoke as the CBO echoed a warning by Treasury Secretary Janet Yellen that the federal government risks defaulting on obligations after mid-December without action by Congress.
The CBO noted that the Treasury plans to transfer $118 billion to the Highway Trust Fund on Dec. 15 -- a move that follows the passage of President Joe Biden’s infrastructure package earlier this month.
“If the debt limit remained unchanged and if the Treasury made that transfer in full, the government’s ability to borrow using extraordinary measures would be exhausted soon after it made the transfer,” the CBO said. “In that case, the Treasury would most likely run out of cash before the end of December.”
Yellen earlier on Tuesday reiterated her call to lawmakers to address the debt limit, saying: “If we do not, we will eviscerate our current recovery.”
Senator Dick Durbin, the No. 2 Democratic leader, said the CBO estimate didn’t change the calculation for leaders pushing for a debt limit hike by mid-month.
“We don’t want to default,” Durbin said. “We’re going to wait for the counsel of the Secretary of Treasury.”
The discussions between the Senate’s top two leaders are aimed at finding a smoother path to addressing the debt ceiling following an October clash in the chamber that had started to rattle financial markets before a short-term increase was ultimately approved. In the House, Majority Leader Steny Hoyer said on Tuesday he’s confident that the House could clear legislation raising the debt limit, just as it did the last time around.