McConnell, Schumer dig in on contradictory debt limit demands as October deadline looms

Congressional leaders are digging in on their contradictory debt limit positions as the deadline for U.S. default looms in October in a bit of high-stakes political gamesmanship with potentially severe economic consequences. 

Senate Minority Leader Mitch McConnell, R-Ky., and Majority Leader Chuck Schumer, D-N.Y., doubled down Tuesday on their positions regarding how the debt limit should be raised. Schumer is arguing it should be done on a bipartisan basis, while McConnell says Democrats should raise the limit on their own because they're the ones proposing partisan spending bills. 

If the stalemate continues to the last minute, it could affect the United States' credit rating – or worse if the U.S. actually defaults on its debt when the Treasury Department's "extraordinary measures" run out in October. 

"Washington Democrats have spent trillions, trillions of dollars on pet liberal projects. They've been printing and wasting money like there's no tomorrow," McConnell said on the Senate floor. "Democrats have done this proudly on a party-line basis."

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"The debt suspension that just expired in August automatically covered the borrowing that had been accumulated before that date," McConnell added, referencing Democrats' claim that the debt limit hike will pay for spending by former President Trump. 

"This is about the future," the minority leader continued. "This isn't the last four years when we were reaching bipartisan agreement."

McConnell and Republicans want Democrats to instead raise the debt limit via budget reconciliation, either in their multitrillion-dollar spending plan or through a separate reconciliation vehicle. If Democrats are forced to put the debt limit increase in the $3.5 trillion reconciliation bill, it could make it more difficult for their fiscally conservative members to vote for that legislation as well –  another benefit for Republicans of their current stance.

Schumer lambasted Republicans for allegedly playing politics with the U.S. economy. 

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"If the United States defaults on its debt, it will harm every single American in this country, including potentially those who rely on Social Security and members of our military," Schumer said. "The consequences would reverberate around the world." 

Schumer continued: "So any efforts to play nasty political games with the full faith and credit of the United States is reckless, irresponsible, despicable."

Forty-six Republican senators signed a letter saying they won't vote for a debt limit increase in any form, meaning the GOP can stop any effort by Democrats to raise the debt ceiling through a standalone bill, a government funding bill or otherwise. 

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Without movement by either side, the U.S. will eventually default on its debt, an outcome that both sides say would be unacceptable – but say would be their opponents' fault. 

"We have learned from past debt limit impasses that waiting until the last minute to suspend or increase the debt limit can cause serious harm to business and consumer confidence, raise short-term borrowing costs for taxpayers, and negatively impact the credit rating of the United States," Treasury Secretary Janet Yellen said in a letter earlier this month. 

"A delay that calls into question the federal government’s ability to meet all its obligations would likely cause irreparable damage to the U.S. economy and global financial markets," Yellen added. "At a time when American families, communities, and businesses are still suffering from the effects of the ongoing global pandemic, it would be particularly irresponsible to put the full faith and credit of the United States at risk."

Fox News' Chad Pergram contributed to this report.