The Senate on Thursday passed a short-term, $480 billion increase in the debt ceiling that lasts through Dec. 3 — a move that prevents the U.S. government from failing to pay its financial obligations. 

Minority Leader Mitch McConnell, after vowing not to help Democrats with the issue, rallied 11 Republicans to end debate and allow the measure to move to a floor vote. Then  passed 50-48, with only Democrats voting in favor. The bill now moves to the House.

“Tonight’s votes are welcome steps forward in averting a default that would have been devastating for our economy and for working families. President Biden looks forward to signing this bill as soon as it passes the House and reaches his desk,” said White House Press Secretary Jen Psaki. “As we move forward, there must be no question of whether America will pay its bills; Congress must address the debt limit in December and beyond – just as we’ve done almost 80 times over the last 60 years.” 

Dec. 3 is the same day Congress must pass the fiscal year 2022 budget or another continuing resolution to keep the government open, setting up another possibility that the government will once again come close to default and a government shutdown.
 

Federal funds that states depend on for low-income students, special education and school nutrition programs could be at risk if Congress doesn’t lift the government’s debt limit, the White House warned states last month.

The U.S. could be in default by Oct. 18, which could disrupt global financial markets and trigger what Senate Majority Leader Chuck Schumer last week called a “parade of horribles.” Democrats have been trying to get bipartisan support to raise the limit — the total amount the Treasury Department can borrow to meet its financial obligations. But Republicans have balked, leaving Democrats to deal with the politically unpopular issue.

“Raising the debt limit comes down to paying what we already owe,” President Joe Biden said Monday, stressing that the matter has nothing to do with his agenda for infrastructure or social programs.

While most education funds — about 90 percent — come from state and local revenues, some programs rely more on federal sources, such as Title I, the Individuals with Disabilities Education Act, Head Start and child care. A from the White House to state and local governments estimated that up to $50 billion in K-12 education funding could be affected. The standoff over the debt limit adds to the list of major budget challenges currently facing Congress. Members still need to pass the fiscal year 2022 budget and Democrats disagree over a major social spending package that includes funding for schools and early-childhood programs.

Default “would have reverberating effects for states and school districts, whose own finances would be thrown into uncertainty,” said Whitney Tucker, the deputy director of research at the Center on Budget and Policy Priorities, a left-leaning think tank. “Title I will have to stand in line with all the other federal obligations due.”

Tucker wrote about the last week, saying that if the issue isn’t resolved, states would have to turn to reserve funds to cover costs.

The potential loss of funds creates headaches for district finance officials.

“On top of everything else they’re managing right now, the last thing district leaders need is another layer of contingency planning,” said Jonathan Travers, a partner with Education Resource Strategies, a nonprofit that advises districts on financial matters. “As a field, we don’t have the extra bandwidth available right now to respond to debt ceiling brinkmanship in any sort of proactive, planful way.”

A default would impact the National School Lunch and National School Breakfast programs as well as other federally funded nutrition efforts totaling $30 billion, according to the White House memo.

School meal programs are “incurring costs and they rely on the federal government for reimbursement after the meals are served,” said Diane Pratt-Heavner, spokeswoman for the School Nutrition Association.

Because of supply chain delays and shortages of typical menu items, school nutrition programs are already spending higher prices on food. The U.S. Department of Agriculture last week announced in assistance to help them cover those costs.

that benefit children, such as Medicaid and the Children’s Health Insurance Program, would be affected as well. Treasury Secretary Janet Yellen noted that parents receiving monthly child tax credit payments, part of the American Rescue Plan, could .

But Marguerite Roza, director of Georgetown University’s Edunomics Lab, cautioned that while a default would certainly impact the stock market, states shouldn’t be worrying about their account balances running low.

“States are sitting on a lot of cash right now,” she said, referring to the American Rescue Plan, which included $122 billion for K-12. But most of those funds, she added, are still at the state level and haven’t reached districts.

Tucker agreed that the relief funds could provide a cushion, but some states haven’t yet received all of the funds and others have already allocated them.

from Politico and Morning Consult shows that voters would hold both parties responsible if the government goes into default, but they’re more likely to blame Democrats than Republicans.

In 2011, during the Obama-Biden administration, the U.S. came close to the , with Tea Party Republicans ultimately winning budget cuts in exchange for an increase in the limit. The debt limit became an issue again in 2014, but at that point, Republican Senate Minority Leader Mitch McConnell voted to allow the measure to to a vote. Democrats also helped Republicans increase while President Donald Trump was in office.

This time, Democrats wanted to lift the debt limit by adding language to a short-term continuing resolution to keep the government running through Dec. 3. The Republicans didn’t go for that and President Joe Biden ended up signing a resolution Thursday night without the debt limit increase.

The Democratic majority in the House on Wednesday passed a separate , but the Senate is not expected to pass it. Republicans want Democrats to lift the debt ceiling as part of Biden’s proposed social and education package. But that plan is on shaky ground, with Democrats divided on how much to spend and Biden already conceding that it will probably amount to much less than the $3.5 trillion he proposed.

Democrats could also move just to lift the debt ceiling using the budget reconciliation process, meaning they would only need a simple majority to pass. Biden asked Republicans to allow Democrats to do that.

“Republicans just have to let us do our job. Just get out of the way,” he said. “Let us vote to end the mess.”

The House will resume consideration of the $1.2 infrastructure bill Friday morning after Thursday night slipped away without a vote. 

Negotiations that would secure moderate Democrats’ support of President Joe Biden’s separate social spending bill — the deal that progressives are waiting for in order to vote for the infrastructure package — are continuing.

 â€œA great deal of progress has been made this week, and we are closer to an agreement than ever,” White House Press Secretary Jen Psaki said in a statement. â€œBut we are not there yet, and so, we will need some additional time to finish the work, starting tomorrow morning first thing.” 

Meanwhile Biden signed a continuing resolution Thursday night, avoiding a government shutdown and giving the Senate until Dec. 3 to work on the fiscal year 2022 budget. The president’s proposed budget includes significant increases for Title I, special education and community schools.

“There’s so much more to do,” the president said in a statement. “But the passage of this bill reminds us that bipartisan work is possible and it gives us time to pass longer-term funding to keep our government running and delivering for the American people.”

Democrats, however, wanted to include language that would lift the debt ceiling, which the government will hit Oct. 18. Republicans voted against that plan.

With Congress tackling overlapping budget issues this week, advocates are most focused on saving President Joe Biden’s bold agenda for schools and families.

The proposed $3.5 trillion “Build Back Better” plan, which would lower costs that are “squeezing families month after month and year after year,” includes major increases for early-childhood education, teacher and principal preparation, school construction and community college. But Democrats don’t have enough support to pass it, even though they’re using a process known as reconciliation, which doesn’t require a single Republican vote.

Sen. Joe Manchin of West Virginia, who along with fellow Democrat Krysten Sinema of Arizona to such sweeping legislation, made it clear in a statement Wednesday night that he can’t be convinced otherwise.

“Since the beginning of this reconciliation debate, I have been consistent in my belief that any expansion of social programs must be targeted to those in need, not expanded beyond what is fiscally possible,” Manchin . “While I am hopeful that common ground can be found that would result in another historic investment in our nation, I cannot — and will not — support trillions in spending or an all or nothing approach that ignores the brutal fiscal reality our nation faces.”

The debate over the president’s agenda has revealed sharp divides among Democrats, while Republicans have held a united front against compromise proposals. Disagreement among Democrats is most obvious over the $1.2 trillion infrastructure package, which House Speaker Nancy Pelosi was weighing whether to bring to a vote Thursday. Moderates have demanded a vote on the funding for roads, bridges and broadband, while progressives have said they won’t support the infrastructure bill unless they first get a vote on the larger reconciliation bill.

It’s not the infrastructure bill THEN maybe the Build Back Better package down the road. That wasn’t the deal.

Progressives won’t back down. We’re fighting the people’s fight and we’re going to deliver the entire Build Back Better agenda.

— Pramila Jayapal (@PramilaJayapal)

Adding to the tension, Congress will try to avert a government shutdown Thursday by passing a continuing resolution that keeps the government open past the end of the fiscal year. Democrats are also faced with meeting an Oct. 18 deadline to keep the U.S. from defaulting on its loans.

The House on Wednesday passed, along party lines, a bill to raise the government’s $28 trillion debt limit — the total amount the government can borrow to cover its obligations. But the bill is not expected to pass in the Senate. Defaulting can lead to , hinder and make it much harder to cover the costs of the reconciliation bill if it passes.

Democrats argue that the Trump administration was partially responsible for the increase in spending, so Republicans should bear some of the responsibility for raising the limit. But Republicans have said as long as Democrats control Congress and the White House, they can add it to their reconciliation bill.

The ongoing stalemate has some wondering whether the bill will survive.

“You’ve got to figure there’s now a chance, very small but real, that the bill stalls out,” Rick Hess, a senior fellow at the conservative American Enterprise Institute, said about the proposed $3.5 trillion package.

Dropping the total price tag, perhaps as low as , could “set off some brutal intramural battles among the [Democrats],” Hess said, and would “certainly offer a stress test of various Democratic priorities.”

Mary Filardo, executive director of the 21st Century School Fund, which advocates for modernizing schools, is among those lobbying to keep their priorities in the final package. She’s been meeting with Senate staff members about the $82 billion slated for school construction and repairs.

“They seem pretty subdued, like they don’t really know what is going on,” she said, adding that they “support the issue, but it doesn’t seem to be a must have.”

Cutting school construction funding, she said, could impact another key priority in the package — universal preschool. While Biden’s $200 billion plan would put some classrooms in community-based centers, schools would also need to accommodate more pre-K students.

‘Could still be effective’ 

Some observers suggested there’s room to negotiate amounts over the big-ticket provisions, such as pre-K, child care and free community college.

“All of these could still be effective even if the top line numbers go down,” said Julia Martin, legislative director at Brustein and Manasevit, a law firm specializing in education.

But Shantel Meek, a professor at Arizona State University and director of the Children’s Equity Project, said she hopes lawmakers don’t trim the preschool proposal by “pitting access and quality against one another. In order for [universal pre-K] to meet the promise we know it can, we need access to quality — that means supporting the whole child, whole family.”

Others are concerned whether some of the smaller provisions would get cut from the package, such as the $4 billion to continue the Emergency Connectivity Fund, which addresses the digital divide for students learning at home.

“We want to make sure the connectivity [and] devices provided … aren’t in a position to go dark and disconnect students,” said Noelle Ellerson Ng, associate executive director for advocacy and governance at AASA, The School Superintendents Association.

Originally part of the American Rescue Plan, the $7 billion program allows school districts to purchase devices for students and cover the cost of at-home internet service. According to the , more than $1.2 billion in funds have been awarded so far to 3,040 schools, 260 libraries and 24 organizations that include both. A second application window runs through Oct. 13.

Even if all of the education-related proposals stay in the package, Martin warned that one way negotiators could lower the final figure is to increase states’ share of the cost. The for example, currently calls for the federal government to pick up 100 percent of the cost of serving all 3- and 4-year-olds for the first two years, with states contributing increasing percentages of the cost over time.

“My concern would be if the state matches were to go up,” Martin said. “I think that would result in a patchwork implementation at best, and may make it more difficult for states to access funds.”

Linda Smith, director of the Bipartisan Policy Institute’s Early Childhood Development Initiative, said another option would be to limit the number of years covered by the legislation or to limit the program to children with greater needs. But she said that would be hard to do after the president pledged it would be universal.

Nonetheless, she remains hopeful that the early-childhood proposals would remain a centerpiece of the final plan.

“It always gets a little crazy when the sausage-making gets into high gear,” she said. “I still think something will come out of this.”