Chip Somodevilla/Getty Images; Alex Wong/Getty Images
- Biden shrugged off GOP threats on the debt ceiling on Wednesday.
- "Nope, they're not going to let us default," he told reporters.
- Both parties are on the verge of a clash, given that Republicans are refusing to raise the debt limit.
- See more stories on Insider's business page.
President Joe Biden dismissed threats from Republicans who say they won't strike a deal on raising the debt ceiling, a fresh sign that both parties are on the verge of a major clash that raises the threat of default.
"Nope, they're not going to let us default," he told reporters. "$8 trillion of that is on the Republicans' watch."
-JM Rieger (@RiegerReport) August 11, 2021
Biden's remarks come only a day after 46 Senate Republicans signed onto a pledge led by Sen. Ron Johnson of Wisconsin agreeing they will not assist Democrats to lift the debt ceiling – something the GOP did under President Donald Trump, but now say Democrats should do alone using a procedure known as reconciliation.
"We should not default on our debts under any circumstances," the letter said. "If Democrats threaten a default, it will only be because they refuse to vote for the debt ceiling increase necessitated by their own irresponsible spending."
Only four Republicans withheld their signatures: Sens. Lisa Murkowski of Alaska, Susan Collins of Maine, John Kennedy of Louisiana, and Richard Shelby of Alabama.
Democrats plan to press a $3.5 trillion spending plan through reconciliation, which allows passage of bills with only a simple majority instead of the 60 votes typically needed in the Senate. The nascent Democratic plan doesn't include a debt limit hike. It's possible to do it in reconciliation, but it may scramble Democrats' legislative agenda.
Treasury Secretary Janet Yellen recently called for Congress to raise the debt ceiling in a bipartisan fashion. The Treasury Department is currently financing federal operations using its emergency powers because Congress missed a July 31 deadline to either raise or suspend the debt limit. Treasury could exhaust its cash reserves sometime next month or October. If Congress fails to act before that point, it could prompt a devastating default.
Raising the debt limit doesn't pave the way for additional federal spending - instead, it allows the government to pay off its debt and other financial obligations.
Senate Minority Leader Mitch McConnell has been the chief Republican insisting the GOP will delegate that task to Democrats. Republicans are demanding spending cuts in exchange for their support.
"If they want 50 lock-step Democratic votes to spend trillions and trillions more, they can find 50 Democratic votes to finance it," he said Tuesday on the Senate floor. "If they don't want Republicans' input, they don't need our help. It couldn't be simpler."
Senate Majority Leader Chuck Schumer didn't rule out passing a debt-hike using only Democratic votes on Wednesday. But he echoed Biden and said he believed Republicans wouldn't cause a devastating financial crash.
"I cannot believe Republicans would let the country default," Schumer said at a press conference. "It has always been bipartisan with the debt ceiling. When Trump was president, I believe Democrats joined with him to raise it three times."