Sanders Wants Debt Limit Raised in Lame Duck If GOP Wins Midterms

(Bloomberg) -- Senate Budget Chairman Bernie Sanders wants Democrats to raise the $31.4 trillion US debt limit in a lame-duck session if Republicans win control of the House or Senate in next week’s midterm elections to preempt their plan to use it as leverage to force spending cuts next year.

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Doing so would be “a wise course of action,” he told The New York Times in an interview published Thursday. “I think Democrats have got to be very, very strong in making it clear that Republicans cannot hold hostage the entire world economy in a desire to cut Social Security, Medicare and Medicaid.”

Sanders’ committee has jurisdiction over the budget reconciliation process, which would allow Democrats to raise the debt limit on their own and bypass a Republican filibuster, though it would chew up floor time and require Democratic unity in the evenly divided Senate. An aide to Sanders said Thursday Democrats need to do whatever it takes to prevent Republicans from using the debt limit as leverage to cut Social Security and Medicare if they win control.

Alternatively, Democrats could try to get 10 Senate Republicans to support making a debt limit hike part of legislation required to fund the government, which will be needed in December. Senate Majority Leader Chuck Schumer of New York has not yet indicated a plan to deal with the debt limit.

House Republican Leader Kevin McCarthy of California, who is in line to become speaker if the GOP takes over, has said Republicans would use the debt limit as leverage to extract spending cuts. And some other Republicans have cited the debt limit as a leverage point to trim entitlement programs like Social Security and Medicare, with possibilities including a higher retirement age or means testing.

Wall Street has started to warn about the potential for a debt limit crisis similar to 2011. Then, the standoff between a newly Republican House demanding spending cuts and President Barack Obama distressed markets and crushed consumer confidence. It was only defused after Obama agreed to about $2 trillion in discretionary spending cuts over a decade shortly before federal coffers ran dry.

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