GOP plan to block House measure could trigger an unprecedented $28tn default

www.theguardian.com
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Opposition from Mitch McConnell means the spending package is dead and the US faces a shutdown and default
Top Republicans in the Senate are poised to block a key spending package advanced by Democrats in a move that could precipitate the dual fiscal crises of a government shutdown and an unprecedented US default on its colossal debt obligations.

The House has approved a combined stopgap funding measure that would keep the federal government open until early December and suspend the debt limit until after the 2022 midterm elections, sending the legislation to the Senate.

But the Senate minority leader Mitch McConnell swiftly announced that Republicans would sink the measure with a filibuster and prevent it from receiving the 60 votes needed to pass – causing a government shutdown on 1 October and a default weeks later.

The opposition from McConnell means the Democrats' proposal is dead on arrival. And with no serious discussions to resolve the high-stakes showdown in sight, the US now faces the prospect of a shutdown government defaulting on $28tn of debt.

At issue are the consequences of an unprecedented default on federal debt, which could plunge the economy into an immediate recession, trigger a meltdown in global financial markets and lead to the downgrading of America's credit rating. Economists say a prolonged impasse could cost the US economy millions of jobs, wipe out trillions in household debt and send unemployment rates surging.

The debt limit corresponds to the amount the US government can borrow to pay its bills. Most recently, Democrats joined Republicans to suspend it until the end of July, after which the Treasury Department has used emergency measures to finance obligations.

The US has previously avoided defaults at the last minute but with Republicans entrenched in their refusal to tackle the debt limit problem in bipartisan fashion, the latest…
Hugo Lowell
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