Appending to an earlier announcement by House Majority Leader Kevin McCarthy, according to whom the House would not add Harvey disaster funds to any debt ceiling bill, Dow Jones reports that Republican lawmakers are set to vote on the Harvey aid bill on Wednesday, and instead of raising the debt ceiling, they – or rather the Senate – will suspend it, likely kicking the can until some time in December when the whole farce would repeat itself again, although the exact length of the extension remains under discussion.
According to Bloomberg, the House still plans to pass a Harvey aid bill without debt language, leaving Senate to add it in. Keeping the House’s hands clean, Senate Majority Whip (R. Tex) John Cornyn told reporters that debt limit raise, or rather extension, will likely to be tied to Harvey aid and approved by the Senate.
“It’s imperative that we get that supplemental passed. And the leader has made the decision to attach the debt limit to that, and I support that,” Cornyn, whose state was hit hard by the hurricane, told reporters.
The reason to simply extend, instead of raise the debt limit, is because the former is considered a politically less difficult vote than raising it by a specific dollar figure, which would likely be well over $1 trillion; Such a move would also provide more predictability on the timing of next action and would come as House conservatives have warned against attaching the two issues.
To be sure, with the Treasury rapidly running out of cash, and down to just $32 billion as of today’s close, some sort of Federal debt extension would need to be taken to unlock the funding needed for the Texas recovery efforts.
This post was published at Zero Hedge on Sep 5, 2017.